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Emma Thomson: Reasons to be cheerful about the protection market

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The festive season is under way but should we be feeling jolly? Some might argue not, as new business volumes for protection are down overall and consumers are still not buying enough of what they should.

These are fair points but focussing solely on them is just too gloomy. I believe we do have cause to open the bubbly as we have seen some good developments in 2013, though a bottle of prosecco is perhaps more appropriate than champagne.

Critical illness cover enhancements dominated once again but what was different this year is that providers including Friends Life and LV= placed more focus on quality over quantity. Improved children’s coverage, new partial payments, more ABI+ conditions and re-defining criteria for common conditions such as heart attacks and strokes are positive moves for consumers.

PruProtect improved its serious illness cover with similar philosophy. It feels providers took more care to ensure enhancements were meaningful, rather than simply boosting the numbers with conditions clients are unlikely to claim on which is what has happened previously.

Income protection has not been so lucky. There have been some developments such as British Friendly’s new Breathing Space product, LV=’s Sick Pay Insurance and firms including Scottish Provident and Aviva now assessing more clients on an own occupation basis, but whilst these changes were welcomed, that’s largely been it as far as positive news is concerned.

Unfortunately, IP is the poor relation in terms of securing budget for developments despite it being the cover at the top of the priority list. Will it ever get the focus and resource it deserves? Let’s hope so.

LV=’s risk reality calculator and Aviva’s radio campaign also deserve praise as they tackled the two key challenges our industry faces; apathy and lack of awareness. We also saw Skandia make available its excellent products to Icobs firms – a welcome move.

In addition, we saw initiatives from firms working alongside providers and intermediaries. Some are not yet complete but at least progress has begun. Portals including Iress have developed a means to provide multi-benefit quotes that include the discounts offered; good news for busy intermediaries.

The Finance and Technology Research Centre has been especially busy, producing a fantastic claims comparison, and researching every provider proposition for its Quality Analyser tool to help intermediaries and their clients. Likewise CIExpert is proving very useful for careful advisers.

The development of systems such as UnderwriteMe that improve the way protection is quoted is progressing but although intermediaries are keen for change, providers are less so. We need these changes to improve the consumer experience and encourage more new business, so would urge providers to get on board soon.

While our industry still faces significant challenges, there are reasons to be cheerful. Business has fallen since G-Day but it has not been as bad as some feared and whilst we certainly need to do much more to enhance the customer experience, boost consumer awareness and improve the focus on IP, I think we can still end 2013 with a glass in hand.

 Emma Thomson is life office relationship director at Lifesearch

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There is one comment at the moment, we would love to hear your opinion too.

  1. The protection market still concerns me in that there are still people who have been flogged protection products that are not doing what the client thinks they should be doing. They have been taken up without the benefits and alternatives having been fully explained to them. Yet again this week we have a client who has gone to a mortgage broker who has carelessly added PHI. Great in theory until you point out that it is not own occupation but any occupation. Also why a 3 months dp and not (a more appropriate) 6 or 12 months? Also why an income benefit just protecting the mortgage? In this client’s case the alternatives were never discussed and better (cheaper) options considered. In many ways any occupation PHI is being flogged by mortgage brokers just like PPI and this and a non advised D2C sales process risk more mis-selling scandals.

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