It’s time to innovate protection in the right places for young people

The FCA’s recent interm review of the protection market highlighted that it was, for the most part, working. Claims acceptance rates are high, complaint levels are low, and customer outcomes are largely positive. It was a much more balanced verdict than many had anticipated.

But as with any industry, there’s still more to be done. This is especially the case when it comes to engaging younger audiences with life, critical illness and income protection products.

Traditionally, sales in our industry have relied on life-stage triggers such as buying a home, getting married, having children, or an illness or death in the family that prompts someone to review their own situation. But some of these moments, that once offered a natural opening for advisers to introduce the conversation, are becoming delayed, a lot rarer or simply not happening at all for many young people.

Younger people are renting for longer, having children and getting married later, as well as changing jobs more regularly. These patterns are quite different to previous generations on which the protection industry based its sales rhythms. And, in my view, we’re not always adapting the conversations we’re having with young people to focus on protecting what matters to them now – protecting their lifestyle now and the life they’re building.

As those traditional triggers become less common, the industry has an opportunity to find new ways to start protection conversations that resonate with younger customers. But it’s not just about triggers. Products need to change and evolve too, to create new entry points that fit new customer cohorts.

The FCA has acknowledged that innovation exists within the protection market, but providers should be carrying out their own reviews to understand whether this innovation is happening in the right places.

Are we creating products that not only suit young people now, but also flex with them as their lives change?

A policy taken out at age 22 needs to be able to flex through career changes, the resulting fluctuations in income levels that come with them, and life choices that don’t follow such a predictable script.

If products can’t flex, then switching becomes inevitable. While some effort should be put into improving the switching experience advisers and end customers currently face, should we also be thinking about how we can build better products?

If we can design products that reduce the need to switch in the first place, and that grow with customers rather than requiring them to start again, then the conversations become much easier.

This means cover that adapts, definitions that evolve and structures that reward loyalty rather than penalise it. These sorts of innovations will make protection a more attractive proposition to young people. Providers need to move beyond legacy product frameworks that were never designed with today’s customer in mind.

There are already examples of the kind of innovation that can help change the conversation. At Guardian, we’ve focused on making protection more accessible and relevant to people at earlier stages of life by building flexibility into our products from the outset.

Features like cover upgrade promise, our promise to policyholders that if we improve our critical illness definitions on our Critical Illness Protection for new policyholders after their cover has started, we’ll give those improved definitions to them as an existing policyholder. So their cover keeps pace with medical advancements and stays relevant without the need to switch cover.

We’ve also worked hard to simplify protection conversations by using clearer language, giving advisers more choice in how they build protection plans with our 2 cover ranges. This isn’t about innovation for innovation’s sake. It’s about removing some of the barriers that stop younger people engaging with protection in the first place and ensuring cover remains relevant long after the initial recommendation.

The opportunity for providers isn’t simply to attract younger customers today. It’s to create products and experiences that make them want to stay with us for decades to come.

It’s also important to observe that Gen Z doesn’t disengage from protection because they don’t care about financial security. I think they disengage because the product hasn’t spoken to them in a language or format that feels relevant.

That means plain language over jargon and making what the state won’t cover clearer, prompting people to consider cover provided by their employer if any, and how that can be built upon through taking out protection – rather than just focusing on what a new policy covers. Positioning income protection against the reality of sick pay and benefits will give those that don’t think they need protection a much clearer idea of why it matters to consider it.

The advisers and providers making inroads with younger clients are the ones that are meeting them at their level. Be that through different types of language, more relevant trigger points, and through more flexible propositions.

The FCA’s review represented a moment of validation for the industry. The question now is whether the industry uses that credibility to push further and ask harder questions about where innovation is making a difference, and where it’s still just window dressing.