Protection News (April 2013)08/04/2013
Don’t forget the added value benefits
Mortgage Introducer – Protection News
One of several trends in the protection market over the last decade or so has been the ongoing addition of added value product benefits, which look to reduce the focus on price.
While some advisers might see these as ‘bells & whistles’ others are strong supporters and have experienced the benefits first hand with their own clients.
Red Arc is a care advisory service providing information, advice and emotional support to people when they need it most. They provide counselling to people diagnosed with a serious illness, as well as their families and according to Red Arc 85% of those who have the service made available to them go on to use the service.
Best Doctors provides access to a second opinion database of 50,000 leading medical specialists. The numbers suggest 15% of users experience a change in diagnosis while almost 45% result in a change of treatment. However, often the second opinion isn’t about changing the diagnosis; it is also about the peace of mind in knowing that the original diagnosis was right.
According to the World Cancer Research Fund up to 40% of cancers can be prevented through exercise and healthy living. The Vitality programme is a simple premise which aims to reward those who look after their health by reducing their monthly insurance premiums as well as offering a range of discounts including gym membership, holidays and cinema tickets.
Road to Health provides an online health assessment system which scores your progress and compares it with people of the same age and gender. The system calculates how healthy you are on a regular basis and suggests simple steps to help achieve personal goals. Those who engage can earn points which can be redeemed against a range of products.
Those insurers who have offered Children’s Critical Illness Cover for a number of years know that the number of claims is unfortunately high. Most CI insurers automatically include cover for the policyholder’s children, although the details will vary from insurer to the next. Research suggests that around two thirds of people do not have any financial support in place should their children suffer a serious illness, and that a third of people who hold CI cover aren’t aware that their children are automatically covered.
When most insurers in the market offer a certain condition on a CI policy, the ABI will agree a minimum baseline definition so that insurers can’t make up their own definitions of what is and what isn’t a claim. When a provider improves on this minimum standard by making their own definition better for the client (because it makes a claim more likely) this has become known as an ABI+ definition. While it is difficult to tell just how much more likely a claim might be the more favourable the definitions are the better the chances are of a claim being paid.
For policies such as Income Protection some insurers will try to encourage people back to work by paying for Rehabilitation services, counselling or in some cases even continuing to pay the claim for a short period after the client has returned to work. The reality of course is that most people really do want to get back to work and as with Red Arc and Best Doctors, helping to improve a policyholder’s health is often just as important and helpful as the money itself.
Protection sellers’ trade body moves a step closer
A new steering group for those involved in the distribution of protection has held its first meeting.
Based on an initial code of conduct created by the co-founder of LifeSearch, which received support from more than 50 major firms, the group now represents all forms of protection distribution, including advised as well as non-advised.
The code includes points such as sellers must state clearly to customers at outset whether they provide regulated advice or not, and called on sellers to demonstrate that they have provided properly for the repayment of indemnity commissions on lapsing policies.
The committee includes Mike Ward of payingtoomuch.com, Luke Ashworth of protected.co.uk, LifeSearch, Roy McLoughlin at Master Adviser, Claire Limon of Countrywide.
• Legal & General paid 97.6% of life claims, 93.1% of critical illness claims in 2012 and 91% of income protection claims. The provider paid a total of £483m combined death and critical illness claims, up from £441m in 2011.
• First Complete has introduced a notification system to warn advisers when a client misses a regular protection policy payment putting the adviser at risk of commission clawback.
• Aegon paid 83 per cent of the IP claims it received in 2012.
• PruProtect saw its new protection sales jump 40 per cent year-on-year in the second half of 2012. The insurer has not released sales numbers broken down by product type but its combined protection sales reached £25.4m in the last six months of 2012, up from £18.1m over the same period in 2011.
• Zurich has published claims data for its income protection business for the first time which shows the insurer paid out on 90 per cent of IP claims. Of the 765 Zurich customers currently receiving an IP payment, 121 submitted new claims in 2012 with 90 per cent of claims accepted. It paid out a total of nearly £14m in IP claims last year.
Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting
This article first appeared in Mortgage Introducer