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Roger Edwards: Why it pays to break the protection advice mould

Does competitive advantage mean being better than everyone else or different? Or both?

Twenty or so years ago I made weekly trips from Edinburgh to London to meet advisers and journalists. British Airways served gigantic cooked breakfasts in the morning and three-course meals at night, with a couple of drink runs as well.

This was in economy. Its fares were eye-wateringly high, and I know our finance director begrudged signing them off.

Then a Greek entrepreneur bought a couple of second-hand Boeing 737s and painted them bright orange. He offered no free food, no allocated seats and fares so low our finance director danced a celebratory jig.

EasyJet started the low-cost airline revolution in the UK and now, in Europe, is the main way we get about. BA has had to become a low-cost airline to compete. You do not get free food anymore unless you are prepared to pay for business class.

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In many industries, it seems that, while trying to compete, companies just end up being the same. Being the same can lead to a squeeze on margins as price becomes the only thing that sets products apart.

So companies start trying to be better than competitors by tweaking products and promoting those often-spurious advantages.

It is the same in the protection market. Look at critical illness cover.

Since Abbey Life and Allied Dunbar first launched “dread disease” into the UK, companies have played an annual game to add extra conditions or tweak existing ones just to say their products are better than their competitors. But Company A’s competitive advantage only lasts until Company B comes along with a couple more add-ons.

Then Company C pops up with a few extras that make it better for a few weeks. Then everyone goes back to their meeting rooms and starts the entire process again. I have been in those meeting rooms. I remember one heated debate with another finance director who refused to sign off a business case to add five new conditions. His argument was we only needed to add three.

“Let’s keep those other two for next time,” he said. At the time I felt disappointed I could not go out and shout about five new conditions. But he was right, wasn’t he?

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To stand out, companies need to be different. But it is hard to be different in financial services because compliance and comparison sites almost compel them to be similar. At the Lifesearch Awards in 2014, I asked the audience if we would ever see something “different” in critical illness.

Would anyone dump complex definitions and simply say, “we pay on diagnosis of heart attack”? No messing about with troponins or chest pain. Just a diagnosis.

This year, Guardian launched its protection range with just such a simple definition. I was delighted.

It has not extended this across its full list of critical illnesses but is still different enough to stand out.

So far, no one has followed its lead. Is that because it is too different? Or because such a definition is difficult to price? Whatever the answer, it shows that doing something different takes competitors longer to try to do it better.

Roger Edwards is managing director of Roger Edwards Marketing and marketing director of Protection Review

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