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Bradshaw blasts reinsurers’ role

Reinsurers’ domination of the protection marketplace is detrimental to insurance companies and consumers, warns former Abbey chief Paul Bradshaw.

He says the majority of protection business is supported by capital from a small number of reinsurers and he says this means that while consumers are subject to two lots of marketing from the provider and adviser, the underwriting is driven by what he calls a faceless third party – the reinsurer.

Bradshaw says: “This is a market driven by the reinsurers. It is quite easy for us as marketeers here to identify the difficult issues this presents – the complexity of applications forms, the unacceptable claim declinature rate and, perhaps most ominously of all, the commoditisation of offering sums assured which were quite placeable in my youth are now beyond the market capacity – in huge denial of the explosion of wealth and indeed risk in this country.”

Direct Life & Pensions sales and marketing director Richard Verdin agrees reinsurers have a massive amount of influence and have been the cause of increasingly complex applications forms. But he says he cannot see how this will change unless insurers can find access to other forms of capital.

Verdin says: “A small number of reinsurers have a high degree of influence among all the insurers. The pain the UK protection market is suffering is largely because of reinsurers. They are introducing more complex underwriting and greater segmentation of risk and more detailed questioning around issues such as drinking and driving habits. There is too much power in too few hands.”

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