Economic Abuse Concerns in Life Insurance Market
The extent of economic abuse among insurance clients may be far greater than is generally recognized. This is the assessment of Matthew Connell, the director of policy and public affairs at the Chartered Insurance Institute (CII). Speaking at Health & Protection’s Protection Forum at the Ham Yard Hotel in London, Connell highlighted the severity of the issue.
Connell stated that approximately 16% of adults in the UK have experienced economic abuse based on figures from the charity Refuge. “It’s a sobering figure that underlines the significance of economic abuse in terms of the life insurance market,” he said. “This statistic of 16% of adults in the UK have experienced economic abuse. This is a statistic from the charity refuge, and it’s used by the government in its economic abuse toolkit.”
During his presentation, titled “Spot the signs: How advisers can protect against economic abuse,” Connell emphasized the importance of economic certainty. “I think it is meaningful to talk about maintaining economic certainty as a benefit, and as a professional I think being able to draw people’s attention to the benefits of financial independence throughout their lives.”
He further drew a comparison, noting that “the extent to which being a victim of economic abuse might be a similar size of risk to actually needing to make a claim on your partner for term assurance.” He added, “The chances of experience economic abuse are comparable to the chances of benefitting from a pay-out from the policy.”
Connell stressed that economic abuse is not an isolated incident: “So economic abuse isn’t something that is incidental to a policy for a very small number of very unlucky people. Its something that is prevalent in society. And in some ways it is as important a factor to consider in managing and setting up a contract as the claims process which is obviously the most important aspect.”
Connell also mentioned that “25% of women have suffered their own abuse experience it after leaving the abuser.”
To minimize the risk of economic abuse, the CII recommends the appointment of three trustees when establishing a trust, according to Connell. “We recommend that where people are setting up a trust they appoint three trustees, to that there is three different people, so that if one of them is perpetuating they at least have to overcome the hurdle of persuading the other two that what they are doing is reasonable.”
