Protection News - August 2013


Don’t say it too loud but the protection industry pays a lot of claims.

In 2011 insurers paid out £6.7million on life, critical illness and income protection insurance policies every day.

On average 97% of life insurance claims were paid, 92% for critical illness cover and 85.6% for income protection, all of which are rising year on year.

Yet, research recently carried out by Protection Review found that on average the public believes just 38% of protection claims are paid, compared to the real figure, which is in excess of 90%.

A wide range of consumers were interviewed to gage their understanding of the protection market and while some responses were as high as 95%, the lowest was just 5%, with the average across all respondents levelling out at 38%.

Let’s not be too hasty to blame the media as most newspapers are very positive and balanced towards the protection industry. At the end of the day a policy paying out as it should do isn’t really a news story in the same way that ‘plane lands safely’ isn’t going to sell any papers.

While many life offices publish their statistics on an annual basis it is clear that the positive messages are not getting through, which means we all need to do more.

The good news is that the stats are here now so there’s no point waiting for others to do something. Positive claims figures are do not just help build trust when clients are looking to buy cover, they can also help to attract new clients who were previously doubtful.

Think about how to use the statistics in your marketing, websites, adverts, conversations and more because while the industry may not ever quite reach 100%, anything in excess of 90% is likely to be received very positively.

Income Protection: The long and short of it

There has been debate in the national media about short-term income protection (STIP), and whether this is merely PPI being sold under another name.

The range of products available under the STIP umbrella is incredibly diverse and the PPI scandal has understandably made people more wary about the type of cover they are taking.

Whether or not STIP is short term Income Protection or the new name for PPI seems to depend on opinion. A few pointers to help tell the difference include whether or not the short-term plan is as comprehensive as the version. Companies such as LV=, Exeter Family Friendly, PruProtect and British Friendly all offer good quality short-term products more akin to full income protection in all but the length of payout.

Likewise having ‘own occupation’ cover is vital, meaning that the client can make a claim if they are unable to do their own job. And look at the exclusions too - good quality STIP won’t have any standard exclusions and may not have any financial underwriting requirements.

Round up

  • The Financial Ombudsman Service is receiving 2,000 PPI complaints a day and upheld 78 per cent of cases over the last three months.
  • Income protection provider British Friendly has launched a new simplified income protection product to be sold through advisers, which has no financial underwriting either at application or claim stage.
  • Former Ageas Protect managing director Martin Werth announced the launch of new firm UnderwriteMe, which will provide software allowing advisers to compare fully underwritten protection quotes. A joint venture with reinsurer Pacific Life Re, it is expected to launch in early 2014.
  • Aviva has improved its critical illness policy, adding three new conditions and two new partial payments for bladder removal and non-malignant Pituitary Adenoma, as well as improving its heart attack and children’s cover definitions.
  • PruProtect is offering an extra £10,000 in children’s serious illness cover, free for three years to customers who take out one of its protection plans before the end of August. After three years, the customer can give up the free cover or add it to the policy.
  • Advisers will increasingly hear about regulation issues over social media such as Twitter, according to a Financial Conduct Authority report.
  • According to Defaqto the number of critical illness policies offering severity-based cover has jumped from 14 per cent at the end of 2009 to 62 per cent.
  • The average NHS worker takes an estimated 9.5 working days off sick each year – and the lowest paid staff take the most sick days, according to official figures released today by the Health and Social Care Information Centre (HSCIC)
  • The Longevity Centre -UK, (ILC-UK) has revealed that only just short of a third of the UK population will reach age 65 "healthy".
  • PruProtect and PruHealth have signed up former England international rugby player Johnny Wilkinson as their new Vitality ambassador.

Kevin Carr is Chief Executive of Protection Review and MD of Carr Consulting & Communications.

This article first appeared in Mortgage Introducer