Building bridges: Six ways advisers can help close the protection gap

Millions of UK adults are currently financially vulnerable. More than half (58%) are living in their own homes, perhaps with dependants, maybe working to maintain their lifestyle – and none of it is protected against a loss of income due to a short-term illness, a critical illness, or worse, death.  

These are the stark findings of the FCA’s interim market study into pure protection in the retail market. While it reveals a broad scale issue, it’s not just about coverage; it’s about engagement and education. Because of the 58% who aren’t covered, 59% say they’ve never even thought about protecting themselves. 

As Nathan Wootton, Operations Director of Waddle recently discussed on our Just Covered podcast, “We identified the issue seven or eight years ago that education was clearly lacking. And now the FCA have identified that the protection gap isn’t getting smaller, it’s getting bigger. More needs to be done to help customers understand what policies are there to do and why insurance is there to protect them.” 

The FCA found there are four key barriers to why the gap exists:  

• Poor awareness – Consumers aren’t aware of their own needs, and haven’t been prompted to think about them.
• Perceived affordability – Some aren’t willing to pay for protection, especially with the rising cost of living.
• Product misunderstanding – The language and terminology can make conversations feel confusing, or product benefits difficult to remember.
• Sales friction – Because of long or confusing processes.

A gap in the market

Pure protection is a relatively mature market, and despite innovations over the last 10-15 years including product comparison platforms, automated underwriting and value-added health services, the FCA’s findings confirm that millions of people’s protection needs are still being missed and unmet.  

More specifically, certain groups have been found to miss out through a lack of access or suitable options that cater for them, including young people and renters, the self-employed and gig economy workers, people with poor digital access, low-income householders, ethnic minorities and women. The FCA also highlights that of those with health conditions who had cover (29%), 52% felt they had to compromise on their cover because of price, compared to 14% of those that didn’t have a health condition.  

Regulatory rethink

The FCA highlights some industry initiatives that are working to close the protection gap, such as BIBA’s Find Insurance Service directory and cross-sector agreements. But, the FCA notes, “Reducing the protection gap is likely to require further coordinated action across industry and regulatory bodies”. It says it’ll engage with stakeholders during Spring 2026 to work on a targeted programme and gather feedback on potential remedies, with a final report due in Q3 2026.

In the meantime, here are a few ways you can ensure clients (exiting and new) are protected.

• Client audit exercise – Get in touch with any clients who haven’t had a review in 12 months or more to revisit their protection needs.  
• Identify new trigger points – Aim to introduce protection in every client conversation to try and capture those who’ve never considered protection. Identify opportunities when specific life events come up such as a new job, new children, a remortgage or a divorce.
• Go deeper – Ask more probing questions of your clients to get them really considering what happens to their family or business if they couldn’t work for six months.
• Simplification and clarity above all – That includes the language you use, the materials you give to clients and the pricing breakdowns. Leave no room for clients to go away feeling confused.
• Introduce overlooked products – Family and Personal Income Plan (FPIP) can be an affordable and flexible way to protect your client and their dependants in the event of death or critical illness (if Critical Illness Cover is chosen) and can be ideal for a broader set of clients.
• Carve a niche – Focus on reaching out to the unmet groups identified by the FCA including young people, renters, the self-employed and gig economy workers, people with poor digital access, low-income householders, ethnic minorities and women. 

Our adviser knowledge hub can support you through your client conversations, offering practical tools, webinars and focus weeks to help you fine-tune your protection business for the best outcomes.

Why not get started with these CPD-accredited webinars?

• Leading with income – Protecting the lifestyle
• Building wealth that lasts – Protection as your edge
• Unlocking trusts – Future-proofing your protection