In any normal year, implementing the ECJ gender ruling would be dominating industry discussion but 2012 is not a normal year. For any adviser business involved in the investment market, RDR compliance must be their primary focus.
Last month, Martin Werth wrote in Money Marketing about the importance of more communication between life companies and advisers on this subject, and I fully agree. Information is becoming available from an increasing number of life companies. Ageas, Bright Grey and Scottish Provident have all created valuable microsites on this subject and I particularly like the six-step plan that Ageas has produced for advisers. However, there are still many important questions left unanswered.
Two weeks ago, many leading protection advisers and life offices discussed the operational challenges facing advisers at F&TRC’s protection forum. It was evident that, without exception, life offices have been working vigorously to prepare for the December deadline but a number of key issues were identified which if left unaddressed could pose major problems for advisers.
Insurers have been working hard and almost universally carrying out some really good work in preparation for G-Day. However, the more one looks at the plans that are emerging, the clearer it is that they do not take into account crucial operating issues for adviser firms.
The challenges raised by complying with TCF Outcome 3 requires that “consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale”.
How far in advance of G-Day should advisers start warning clients of the implications for them if proposals are not accepted before the December deadline?
As far I am aware, I do not believe any insurer has publicly stated when its post-G-Day gender-neutral rates will be available for quotations. Current sugges-tions are that at best this may be a matter of a few weeks in advance. It appears several insurers are working on the basis that the new rates will only be released one week before December 21.
If this is right, advisers will be faced with the need to requote for all their pipeline submitted but not accepted business in the week before the deadline.
This would clearly put major pressure on firms and could lead to a situation where new applications might not be underwritten in time to go on risk, especially for mortgage-related transactions. In practice, this would almost certainly lead to a situation where plans might be put in force with the insurer who had previously been most attractive on a gender-specific basis, using the gender-neutral rates as an interim measure while the adviser rebrokes the risk based on new rates.
This would clearly be time-consuming and wasteful for advisers and life offices alike. I believe it is important that the industry finds ways to enable quotation systems to be capable of quoting gender neutral rates well before the deadline to avoid such issues.
If anyone doubts if it is appropriate for advisers to rebroke cases that may not be accepted before the G-Day deadline, it is important to consider TCF Outcome 6 which requires that “consumers do not face unreasonable post-sale barriers imposed by firms to change product, switch provider, submit a claim or make a complaint”.
Reading this, if the provider who had been the most competitive for gender- specific rates is no longer the best for gender-neutral, switching insurers would appear entirely appropriate.
When thinking about such issues, it is important to consider the practical impact of thousands of advisers looking to re-quote vast numbers of cases in the immediate run up to, or in a worst-case scenario after, G-Day. While some observers have suggested that rate changes take place all the time, it is unprecedented to have a situation where every insurer makes changes to rates across their entire protection product range within such a narrow timescale.
If each insurer makes its gender-neutral rates available over different timescales, the potential level of quoting and requoting could be enormous. While entirely mindful of the requirements of the Competition Act, there appears to be some case that it would be in consumer interests for all insurers to make their gender-neutral rates available to advisers around the same time. When one considers the practical issues advisers will face, I can see a strong argument this should probably be at least two months before G-Day.
It is important to stress that it is not too late to address these issues. I would fully applaud the many insurers who are now making significant amounts of information about their G Day plans public but I would urge them to provide more information and to seriously consider accelerating the availability of gender-neutral quotes in order to ensure a smooth transition to the new regime.
To facilitate wider discussion among advisers preparing for G-Day and how to address the challenges it brings, I have set up a LinkedIn group called Protection Forum. Many of the leading figures in the protection industry have already joined. This article only covers a couple of the issues that have been identified on the forum and we will be using the LinkedIn group to distribute further analysis of the key issues and practical steps that advisers need to consider in advance of G-Day.
Ian McKenna is director of the Finance & Technology Research Centre