The protection market is in need of reform and the government and insurance industry to work together to ensure customers get the information they need, Aviva has said.
The firm has today published its Rethinking Protection report, which has set out a series of proposals to help raise awareness of protection needs, such as income protection and life insurance, and encourage UK families to plan for the unexpected.
The report stated that efforts to improve the protection market by publishing transparent claims data and making the claims process quicker and simpler were gradually helping to build consumer confidence. But what it called opportunities to remind people of their need for protection are still being missed, and said the government should work with industry to ensure customers get the information they need at the most appropriate times. They should also take advantage of changes in the financial services market to put protection at the heart of financial planning.
Figures from the insurer revealed that less than a quarter of families felt fully protected against unexpected financial chocks such as bereavement and serious illness, yet, for example, only four out of ten families had life insurance in place. Its data also showed that the number of families with critical illness cover or income protection was even lower, at around 12% and 8% respectively.
Louise Colley, protection director for Aviva added that protection was the 'bedrock' of financial planning and could give families the confidence to build for the future.
She said: 'We believe every family deserves to understand the financial risks they face and the importance of protection. By working together, the government and the industry can make sure that families have the stability they need.'
Among its recommendations, the insurer suggested employers are supported to offer income protection through a workplace scheme.
Aviva said: 'Employers have played a crucial role in helping millions of consumers to save for the future through pension auto-enrolment. There is now an opportunity to build on this success, by encouraging employers to offer other financial products, such as income protection.'
Other proposals include: first-time parents should be given information about protection when they have a child; discussing protection should be compulsory as part of the mortgagee sale process; and the level of death benefit needs to be explained to all, so that everyone can make a decision about how it fits within their protection needs.