Protection Watch with Kevin Carr


It might be surprising but sales of protection products fared well in 2012...

1. Movin’ on up

It might be surprising but sales of protection products fared well in 2012 according to new data from the ABI. Non-mortgage term assurance sales rose significantly compared to the previous year while Income Protection sales increased by 20%. Critical illness sales also enjoyed growth as did Whole of Life. The only core protection product not to see an increase was stand alone CI, which is mostly ignored in favour of cover which includes life cover, which is typically better value for money.

2. Simple Simon says life’s ok (but not IP, yet)

Last month HM Treasury announced final recommendations from Carol Sergeant’s steering group looking at simple products. Among its recommendations simple products should undergo a robust accreditation process and be BSI (British Standards Institution) kite marked. It recommended developing three new savings accounts and a fixed term life insurance product initially. The group also recommended that a simple whole of life product should be the next product added to the suite and announced that the ABI would lead further work on a simple income replacement product and report back in six months.

3. The future of commission

Rightly or wrongly there’s a lot being said lately about the future of commission. A new regulator might look around for a few quick wins and might see what looks like an open goal. But things are never quite what they seem of course, especially when it comes to regulation and unintended consequences. We could write a report on why commission should remain; however, the main point to make is that as an industry we must focus on the consumer issues, not those of the seller. Some suggest we shouldn’t talk about commission for fear of increasing the likelihood of action being taken. But when the consumer argument is so strong, and any detriment small, let’s defend the role of commission, but do so based upon the impact on those buying the products, rather than those selling them.

4. Private Most Important

Health insurance (PMI) is the third most valued employee benefit, behind financial bonuses and pensions, according to Aviva’s Working Lives report. 36% of firms provided health insurance and 36% life cover, with the top benefit being a bonus (52% of firms). The report also found that while 55% of large businesses reviewed employee benefits every year, that fell to 49% for medium and 36% for small businesses. 26% of small firms, 7% of medium and 3% of large firms never did.

5. A spring in the step

It might not feel like spring just yet but it’s the time of year when insurers look to publish their claims rates for the previous year. A range of protection insurers including Aegon, L&G, Zurich, British Friendly, Cirencester Friendly, PG Mutual and Bright Grey have recently published CI and/or IP paid claims statistics all in excess of 90%.

Kevin Carr is Chief Executive of Protection Review and Managing Director of Kevin Carr Consulting.

This article first appeared in Professional Adviser magazine