I spent a fascinating day at the Institute of Economic Affairs Future of Protection Forum last week and left with some optimism, which makes a change frankly.
Legal & General’s protection leader John Pollock started us off by making clear that the Government badly needs our industry to help it resolve the issues that will be caused by its determination to cut £18bn from the welfare budget in the next four years. We have the covers people need and a far better rehabilitation record, though it will need some outstanding lobby to get the Government seeing the ABI and its members and their distributors as key allies to be supported in transferring this burden from the clumsy state to the deft private sector.
That left us all wondering how we got on to the front foot and Andy Chapman chief executive of the small but highly effective IP specialist Exeter Family Friendly, told us unequivocally that should be through a very small levy on all protection revenues to fund a consumer awareness campaign. In truth, such a plan can only become reality if the ABI wish it so. A previous effort at a similar campaign foundered in those pragmatic halls. Any future one, and there is already good ABI work going on, needs leadership from the top of that organisation if it is to be properly funded and not simply an attempt to leverage the Government’s own consumer education efforts in our favour. Andy also thought that Twitter, Facebook and Linked In should be far more actively used by protection marketers.
I agree whole-heartedly, but the room shuddered when I announced that I had just tweeted his words, so perhaps we have a way to go before we run the risks of telling our truth out loud like that.
Martin “Two Brains” Werth then summed up all our frustrations with a Bruce Lee quote: “Knowing is not enough, you must apply, willing is not enough, you must do.”
Happily Unum’s new Brazilian striker Marco Forato brought a costed, clever and do-able plan to the room. In an outstanding fact-packed talk, he shocked us by demonstrating that the UK’s state protection is an amazingly low eighth among developed Western economies and that even, in the US, four out of seven employees have employer-paid IP, whereas here we are at a pathetic one out of seven. We really do need to tell all that IP is the number one cover everyone needs. Marco explained that a total £1bn payroll tax rebate for those businesses setting up all-employee IP of £1bn would save HMG £3bn. Now the ABI should be able to sell that in Whitehall surely?
And the session was rounded off by a wise voice from the front line. Peter Chadborn made clear that IFAs who know what they are talking about prefer products that allow regular claims. He is clearly an advocate of severity- based and own-occupation cover, as was Hannover Life Re’s underwriter Julie Hopkins. Me too, guys. Claims are the lifeblood of any insurance market, charging peanuts for policies on which minuscule numbers claim is just a slow way to die.
That is another point that needs ABI leadership, which, perhaps counterintuitively, is why I left feeling positive. For the ABI has a new man who is a proven lobbyist and who shakes up sleepy organisations. Otto Thoresen would have been my pick to lead an activist ABI driving through the excellent plans Alistair Darling, Andrew Moss and the IIWG team laid out back in 2009. Carpe diem, please Otto.
Tom Baigrie is managing director at Lifesearch