Protection firms wary on innovation risks

24 June 2010 | By Natalie Holt

Protection experts say prov-iders are likely to concentrate their resources on improving service levels and claim processing rather than investing in product innovation.

Bright Grey proposition director Roger Edwards says tighter regulation has triggered a fear among some advisers about the risks involved in recommending new products.

He says that in addition to advisers’ cautious attitude to new products, many providers are also shying away from the long-term investment that bringing out truly different products require.

Edwards says: “If you rule out the possibility of doing something really different with the product, you then find yourself focusing on the customer experience. There has been a lot of work recently on online application processes and tele-underwriting. I think where we will possibly see the innovation move next is on the claim side of things.”

CBK Colchester director Peter Chadborn agrees that improving service would be a valuable area for insurers to focus on.

He says: “As IFAs redefine their service levels to their clients and as we remodel our practices in line with changing consumer buying habits, we are increasingly going to be looking at the quality of the companies we do business with. This will mean not just the products they offer us but the service they offer as well.

“There is too much uncertainty about what the future of distribution is going to look like so I would be surprised if more providers were to start developing new products over the next couple of years.

“I would expect them to concentrate on understanding the changing face of distribution and how to offer a complementary service.”

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