Ned explained, in his firecracker, regimental sergeant major fashion, the lunacy of life offices’ historic new business acquisition models and the inevitable doom they now face. Ned’s assembled audience of provider board members, consultants, management consultants and IFA CEOs grew ashen faced at the grim future that awaited the providers. They really are in the last chance saloon. IFAs too came in for serious and thoughtful flak and it was hard to argue that a sector that has so singularly failed to turn in profit (bar those who are not really IFAs at all) was collectively of much use to the economy and public just now despite the many worthy individual efforts all acknowledged.
However, the Treasury were credibly singled out as being the leaders of failure as they have rendered all advice a minefield through the ridiculous complexity of benefit, pensions and tax law and thus witlessly denuding the vast majority of the population from proper financial advice. The FSA too have helped render mass-market advice unprofitable and all agreed that the RDR report this week would be an attempt to reverse this failure.
But few though life insurers would be the instruments of change for the good that they once could have been. Some blamed the ABI and others agreed that the real issue was that bankers or general insurers ran our biggest life insurers and that as long as there was more profit in their customers’ borrowing or insuring their cars, homes and pets with their money rather than saving it through overregulated plans which denied providers any chance of profitability, we would make little progress.
But some managed to get positive and pointed out that many life companies had left the past models long behind. Indeed one, Standard Life, does not even think of itself as a life company at all any more. Its job is now “administering and managing assets” on a huge scale. All then agreed that platforms were the way to go although as Paul Bradshaw and Bruce Wilson had formed a Nucleus on one side of the table to counter my verbose promotion of their competitor at the other, that may just have been cowardice on the part of the other worthies there present.
There was, though, no agreement on what to do to return the life insurance sector to past role as a financial responsibility leader but all did agree that the place to start might be with the surviving profitable and ethical sale to the mass market. If a consumer spends a bit each month on protection, the seller and provider can still profit so perhaps life insurers could well be best advised to focus on that which they can sell profitably. Many are doing just that.
All now agree with Ned that stickiness of business is more important than sales volumes but achieving this needs a positive industry marketing approach, where money is spent on promoting what we do that is best for consumers so that life insurers can regain their once important place in our culture. That will need a concerted effort at persuasion but there is a plan and a team starting to do that and as soon as we fight our first battle, we will go public, win or lose, I promise.
Tom Baigrie is managing director at Baigrie Davies Lifesearch