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Friends Prov shows commitment to protection

Friends Provident decided last week to do away with its wealth management businesses to concentrate on the life and pensions and protection markets.

So while F&C, Lombard and Pantheon are up for sale, the protection arm is staying put and the word on the street is that there are some exciting new products in the pipeline.

Friends Prov protection and actuarial manager Mark Jones says: “We will not be changing our protection strategy. We have aspirations to grow the protection business and there will be announcements in the next few weeks that show our commitment to the market. Protection remains a core proposition and it’s very much business as usual.”

Highclere Financial Services partner Alan Lakey says: “A company should work to its strengths and Friends Prov’s strengths are protection and pensions so I think it has made the right choice.”

In other news Legal & General has begun its strategic agreement with Nationwide Building Society to sell its protection products, as well as pensions and investments, through the financial consultants in the firm’s branches across the UK. Under agreement, made last year, L&G acquired Nationwide Life and Nationwide Unit Trust Managers for £293m.

L&G group chief executive Tim Breedon says: “This strategic distribution agreement has the potential to become one of our largest. I look forward to working with Nationwide for the benefit of their members, and for the significant opportunities this brings to Legal & General. Legal & General will continue to develop and expand distribution in 2008, through banks and building societies, IFAs, platforms and direct to market. Each channel is strategically important to us and we see opportunities in each to grow market share.”

Meanwhile those protection-loving advisers at Lifesearch have begun trialling the guaranteed life insurance product that the firm developed with Axa last year.

The product will guarantee a full payment if a claim is made after a two-year period, even if the customer has not disclosed important health information on their application form, as they will be underwritten at outset rather than at the point of claim.

All applications will be tele-underwritten, which according to Axa reduces non-disclosure to just 1.23 per cent, and applicants will undergo a medical. But, unlike initially thought, the product will not cost any more than regular life insurance policies which may make it considerably more popular.

Advisers at Lifesearch are offering the product to interested customers over the next few months to test demand and, if it proves popular, it is thought Axa will introduce it on a permanent basis.

Both companies believe the guaranteed product will help to rebuild peoples’ trust in the industry and give customers the peace of mind that their policy will pay out if they need to claim. Axa head of protection Iain Mallon says: “Our claims philosophy is to pay all valid claims and this guarantee is an extension of that belief.”

The concept still has critics who believe a guaranteed product will make other products look like a joke. But if it’s the only life insurance policy Axa is offering then I’m sure it won’t mind making its competitors policies
look farcical.

The question is whether Axa will extend the guarantee to critical illness cover where non-disclosure is much more prevalent? I think a few more people will sit up and take notice then.

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