Always look on the bright side of life (insurance)


Quite a lot of people don’t have any protection insurance.

Quite a few more probably don’t have anywhere near enough. Our industry talks about these people all of the time through various surveys, statistics, sales aids, press releases and of course the infamous UK Protection Gap.

The report for 2012 showed the gap had increased by 20% in the last 10 years; and the income protection gap had risen by 46% in the same period. Sales of new term assurance and income protection policies fell last year by 3.4% and 0.2% respectively.

But does talking about the cover people ‘haven’t’ got really do us any favours? Might we be better off taking a more positive stance and talking about all the cover people ‘have’ got instead?

Aviva certainly thinks so. In fact, they think the protection gap has become such a frequently quoted stat about the market that it has become a cliché that has perhaps become meaningless to its target audience.

The number, currently a whopping £2.4trn is arguably way too big to mean anything to individual families, and is probably so big that it becomes counter-productive. ‘What does that mean to me?’. ‘Just how many zeros is that anyway?’

Could we benefit across the industry if we changed the approach and talked about the group of people of have cover instead? Could we then focus on some different numbers? What is the total sum assured covered across the UK, for example. How many policies are in force right now in the UK? Might such reverse marketing work? ‘Crikey, all those people have got cover and I haven’t, maybe I should get some.’

Each to their own of course; different advisers appreciate different approaches, often depending on the type of client. Aviva aren’t the first to make this point of course, but with their marketing clout they can perhaps say it louder than most, which could make the difference.

After all, life is quite absurd, and death's the final word.

Two-thirds concerned about use of ‘STIP’ product names

The protection industry has said it is concerned that short term income protection is simply a new style of accident, sickness and unemployment cover, according to a poll from Protection Review.
The online poll asked a range of advisers, life offices and reinsurers if they were concerned about the ‘STIP’ name being used for general insurance style cover and 62% said yes.

As this column as commented before, there has been a gradual blurring of the lines when it comes to short term and long term IP products in recent years and several firms have recently launched short term IP products, which aren't much different from typical ASU.

Those who know the income protection market might suggest that STIP is a short term version of a proper IP plan -whereas those in the ASU/MPPI camp might say otherwise. Where exactly is the line drawn? When is ASU not short term IP and vice versa?

In the wake of PPI mis-selling should the industry take a step back and ask itself whether or not we are helping consumers here? I’m really not sure. Could we go back to the drawing board and come up with names that clearly define what the customer is buying? Or is it still all about flogging as much as possible?

‘Oh, but the regulators say its fine.’ Yes they do. But they also said PPI was fine.

Round up

• Zurich has increased the medical and financial underwriting limits on its protection proposition to help people get cover more quickly
• A new protection provider entered the market last month; Beagle Street Life Insurance, part of the BGL group, provides instant cover with no further underwriting that can be bought directly through comparison sites
• The Income Protection Task Force has declared its support for the recognition of the need for simple income replacement products in the recent steering group report on simple products
• LV= has launched a website for advisers on the forthcoming gender directive and I-E tax changes. The adviser site, which is called ‘No more guess work’ summarises the changes, the key-dates and provides tool-kits for advisers to use. This follows guarantees from Ageas Protect, which vows to help customers who cannot be placed on risk immediately before the introduction of gender neutral pricing
• According to L&G almost half of their group income protection claims for cardiovascular conditions, such as heart disease, come from the manufacturing sector. An analysis of all the company’s group IP claims since 2000 show the manufacturing sector accounted for the greatest proportion of cardiovascular claims at 43%
• British Friendly has been added to Sesame’s approved list of protection providers
• Aviva has improved its critical-illness cover by covering three new partial payment conditions and upgrading five of its illness definitions. Each new condition will be eligible for a payment of up to £20,000, which is separate to the main policy, meaning the cover is still in place should the customer need to claim in the future
• Legal & General has made a number of significant changes to its critical illness plans, which now includes additional cover for low grade prostate cancer and has 14 ABI+ definitions including heart attack, cancer, stroke and multiple sclerosis
• Ageas Protect has claimed an 8.2% share of the intermediary market for the first half of this year, up by almost 1% on the previous year

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting
blog first appeared in Mortgage Introducer magazine