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Standing innovation

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Steve Lowe

The past seven years have been busy for Just Retirement. Since the company’s formation in 2004, it has taken the top spot in enhanced annuities and the second spot in equity release as well as being the UK’s second-biggest writer of open market annuities.

External affairs director Steve Lowe says: “We are the market leader in enhanced annuities because we prov-ide a better outcome for customers whose lifestyle or medical condition means they have a shorter life expectancy. The team that set it up saw an oppor-tunity to innovate in the annuity market.”

Innovation is at the heart of Just Retirement’s business strategy and its new fixed-term annuity, soon to launch, continues that theme.

Lowe says: “We are very excited. It is the first capped drawdown annuity to come to market since the new pension rules came into play in April. It has all the benefits that Just Retirement offers customers and all the benefits of the fixed-term market.”

This combination is not the only benefit that the product offers.

Lowe says: “The killer feature is that it allows a customer to move to an enhanced annuity if they become ill. It is a unique feature that we think is going to bring a lot of value to consumers.”

Lowe says he is not worried about increased competition from other providers in this space.

“I think it is possible that someone could copy what we have introduced. But unless they can offer the kind of whole customer experience that we offer, they will find it difficult to provide the kind of service that advisers expect,” he says.

Just Retirement’s comprehensive approach to service has also resulted in a new appointment in the last two weeks medical director Dr Tim Crayford.

Lowe says: “We believe the real winners in the future will be those who have very strong intellectual property in medical underwriting. We already have that today but we are not sitting on our laurels. Tim is going to extend our team in that area by recruiting more statisticians and underwriters as a way to build a 22nd Century form of personalised underwriting.”

Lowe strongly believes that personalised under-writing is the future of annuity provision. “Once the blunt instruments of male and female ratings become outlawed at the end of 2012 with the gender directive, personalised underwriting will be the norm.”

Bespoke underwriting of annuities is not the only arena that Lowe envisages experiencing a boom.

He says: “The battleground for innovation will be capped drawdown. We are going to see providers increase their range because the days of healthy people purchasing annuities are numbered. Why would you lock into a lifetime sentence if you are in good health?”

Lowe believes we will see more people keeping their options open.

Just Retirement’s future will see it making the most of the long-term care gap in the UK by bringing its annuity and equity release arms together.

Lowe says: “We have been saying for some years that we expect the equity release market to explode. I think that once the Dilnot Comm-ission reveals its findings in July, we will see the fusing together of property assets and pension assets and so further market innovation.”

Lowe thinks that Just Retirement’s business model provides it with a perfect opportunity to move into this joined-up market.

“We expect to use our capabilities in medical underwriting and our knowledge of equity release to create new ways of servicing the long term care market.”

The company will also be exploring ways to help trustees in the occupational space bridge some of the gaps they face when they are looking at buyin and buyout arrangements in defined-benefit pension schemes. Lowe believes enhanced annuities offer a solution for these clients.

However, it will not be plain sailing for Just Retirement. Regulatory change is having a serious impact on both pensions and financial advice.

Lowes says: “Advisers are going through a big transformation with the RDR and the challenge for us is supporting them in the best way possible through the distribution transition.”

As well as the RDR, Lowe says the open market option is another key issue for the business and it will be working closely with Pica and Government ministers to deliver a detailed solution to make shopping around a real outcome.

He also sees the gender directive and Solvency II as similarly challenging. He says: “The big one in 2012 will be the removal of gender ratings. Solvency II is also something the whole industry will need to face but we are well prepared to meet both of these issues.”

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