The Financial Conduct Authority has joined forces with partners from industry, government and consumer groups to tackle the protection gap among consumers.
Around 58% of adults have no life insurance, critical illness cover or income protection and 59% of that group has never considered it. However, the regulator warned millions could be left vulnerable in the event of a death in the family, serious illness or loss of income.
To help more people consider whether protection insurance is right for them, a new initiative will seek to raise awareness of the options available.
The Money and Pensions Service and the Digital Property Market Steering Group will prompt people to think about protection at key moments, such as becoming a parent or buying or renting a home. The FCA said it is also exploring how other partners can help put protection on people’s radar when it matters most.
At the same time, the Protection Distributors’ Group will lead a consumer awareness campaign, targeted at groups who are less likely to take out protection products.
Finally, the Association of Mortgage Intermediaries will work with advisers to improve how they discuss protection with their customers.
The work follows the FCA’s Pure Protection Market Study and will focus on groups who are disproportionately unprotected, including the self-employed, those on lower incomes and people with pre-existing medical conditions.
Graeme Reynolds, director of competition at the FCA, said: “Competition in protection insurance works well for existing customers. But we’re working with partners to increase coverage so that more people are protected when they or their families need it most.”
The regulator said it also wants to see greater innovation in the market and will hold a webinar for firms to address any misunderstandings about its rules and expectations that may be seen as barriers.
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