The protection gap and pre-sale underwriting are now at the centre of a serious industry debate, prompted by the FCA’s Pure Protection Market Study interim report, which finds that while protection functions reasonably well for existing customers, a substantial portion of the population remains entirely unprotected. For portfolio-focused readers, this is a structural issue worth watching: the gap between those who need protection and those who hold it is a drag on household financial resilience, and the industry’s response may reshape how cover is distributed and underwritten.
The headline number is arresting. Fifty-eight per cent of UK adults hold no pure protection product, leaving their families, financial commitments and mortgage obligations potentially exposed. Of that group, the FCA’s interim report found that 59% have never so much as considered their protection needs, a figure that points to disengagement rather than a deliberate choice to self-insure. Separately, 34% of adults have never reviewed their protection needs, and more than a quarter describe the buying process as confusing or overwhelming. These are not marginal numbers.
Why Distribution Shapes the Protection Gap
Understanding where sales actually happen matters here. Intermediaries, chiefly independent financial advisers and protection specialists, account for around 80% of pure protection sales. That concentration means the quality and efficiency of the advice journey is the single greatest lever available to close the gap. If the journey loses potential customers before a decision is reached, the gap widens regardless of product design or pricing.
Nick Green, strategy and proposition director at Criterion, argues that pre-sale underwriting is the point where journeys most commonly stall. Indicative premiums, offered before underwriting complexity is properly assessed, create a mismatch between expectation and reality. The customer who receives a clean quote and then faces additional medical questions at a later stage is the customer most likely to disengage. As Green frames it, underwriting should function as a concierge welcoming customers at the door, not as a back-office process that surfaces obstacles after commitment has already begun to form.
Pre-Sale Underwriting Tools: Progress and Remaining Friction
The insurer response has been encouraging. A growing number of providers, including FCA-regulated firms such as Guardian, Legal & General, LV=, Royal London, Scottish Widows and Zurich, now offer tools that give advisers upfront underwriting indications: likely decision outcomes, medical disclosure requirements and any need for additional evidence. Aviva is already deploying a generative AI underwriting tool for its direct-to-consumer service, with the explicit aim of reducing drop-out at the point of decision.
Georgia Perkins of Legal & General said at Criterion’s Underwriting and Innovation webinar earlier this summer that introducing underwriting earlier, using the tools available, is making it part of advisers’ standard process. Adam Higgs of St James’s Place was equally direct: ‘Advisers want everything all in one place. They want as simple a journey as possible.’
The problem is fragmentation. Most pre-sale tools remain bespoke, with different interfaces, data requirements and outputs. An adviser comparing several insurers for a single client may need to re-enter that client’s information multiple times. Duplication of that kind increases error risk, adds time and, critically, raises the probability that the customer delays, abandons or accepts unsuitable cover rather than completing the process.
Green’s proposal is not to standardise underwriting decisions or compress insurer differentiation, but to standardise the way underwriting data moves between adviser platforms, sourcing systems and insurer engines. A common data language preserves individual risk appetites while eliminating unnecessary rekeying. The annuity market’s Retirement Health Form, in use for over a decade, demonstrates that the industry can adopt shared frameworks without surrendering competitive underwriting positions.
For the adviser community, and for the clients approaching retirement who depend on that advice, a faster, friction-free underwriting journey is not a technical nicety. It is the mechanism by which more people arrive at completed, appropriate cover rather than remaining among the 58% who currently hold none at all.
