Spotted this week on the website of a leading life insurance broker in the UK was this, less-than-enticing sales message:
“WE KNOW THAT YOU'RE BUSY. Honestly, we get it! We're people too... with families, jobs, dogs to walk, bills to pay, lawns to mow...Most calls will take between 30-45 minutes, and then that's it."
I was struck by the brutal honesty.
45 minutes to complete the purchase of life insurance in 2025, is ridiculous. I can insure my house, get worldwide travel insurance or insure my car in under 5 minutes, without speaking to anyone. How have we ended up in a situation where the collection and pricing of basic protection underwriting questions requires two humans to be on the phone for 45 minutes, as a best-case scenario?
Those 45 minutes are the direct consequence of the choices the UK protection sector have made over the last twenty years to ‘scale’.
No margin, no momentum
In a Protection Review presentation in 2022, Jason Hurley, formerly global reinsurance consultant for Aon, presented results of an international protection survey. His presentation, (which is here and well worth a watch) showed that the UK protection industry, compared to the rest of the world has:
- Some of the lowest consumer protection premiums
- Some of the smallest protection insurer margins
- Some of the highest sales commissions per £ of premium written
Three years on and the same is true: UK protection products are still cheap to buy, cheap to manufacture and reinsurance costs have been driven down through competition. These foundations of protection were created to effectively and fairly distribute insurance products, the question is, are these foundations still strong?
Protection has been ‘scaled’
The protection scaling process has never been anything other than well intentioned; for twenty years the protection industry has been chasing the protection gap by making more outbound phone calls. However, that model isn't working as well as it once did.
It's easy to find a business willing to sell you life insurance but increasingly harder (as the year-on-year decline in protection sales suggests) to find a consumer willing to submit themselves to an inflexible and needlessly long sales call, that is so out of kilter with modern, digital shopping journeys.
The protection firms that have scaled over the last ten years, grew through economies of scale, by relentlessly replicating successful sales processes and by aggressively squeezing suppliers on price;
Features of protection scaling:
- The rise of limited insurer panels for telephone-based protection firms forced insurers to choose between scale or margin. The resulting merger and withdrawal of insurers who didn’t want to participate in that model, entrenched the focus on small margins.
- The rapid tightening of underwriting risk criteria has created a two-tier insurance landscape: 1) Cheap cover for the ‘thrifty healthy’ that takes 45 mins 2) Expensive cover for the ‘wealthy unwell’ that takes months.
- Large brokers have swallowed smaller, specialty practices. There were 125 broker firms actively selling protection in 2020, that number is now an estimated 70. The Protection firms that have survived have perfected the process of an out-of-date insurance model and have made the best of an imperfect 45 minute process.
Scale has led us to inertia; the protection industry is failing customers because it values the experience and needs of the protection adviser over and above that of the consumer. The current distribution model forces consumers into long conversations about 25-year policy terms because only the resulting commissions (an issue the FCA is clearly keen to tackle) can pay for adviser sales bonuses, aggressive recruitment fees and intermediary dividends.
How will creating more margin change protection?
The last genuine effort to change the protection industry was from Phil Zeidler and Dead Happy. Reducing the standard protection term length to ten years and giving consumers the chance to easily change their cover annually, without full re-underwriting, was a big step forward.
Other businesses are following in these footsteps: Eleos have just unveiled an embedded AI adviser product, the broker Clark UK have launched a fully digital offering via a reinsurer and new insurer entrant, Certua are pioneering new protection business models focused on annually renewable products.
The protection industry is already moving away from scale at all costs by challenging and changing poor customer experience. The ‘race for life’ will feature new customer journeys
that support a 5-minute application process, will remove the artificial subsidy of the current indemnity sales commission model and will reward distribution channels that create consistent and reliable margin.
Change won’t come however, just with faster websites and flashier brands. For this different model to take shape, new insurers will need to enter the protection market with shorter-term products, more suited to online sales. Distributors will have to create better, customer-facing brands and look to increase the amount of risk (and therefore reward) they take by working directly with reinsurers. Reacting to all of this, existing protection insurers will be challenged to confront their lack of direct sales ability or risk becoming completely disaggregated.
The business conditions for protection to have a disruptive ‘Monzo moment’ are forming.
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Alain Desmier is co-founder of Contact State
