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Ian McKenna: Time to fix the broken protection market


With the mortgage market booming, there have been repeated calls by life companies for advisers not to ignore protection when helping people buy property.

Failing to address a clear consumer need that is also a revenue-generating opportunity is not typical adviser behaviour, so why is there such reluctance to write new protection business?

Based on extensive research F&TRC carried out last year, I believe there is a clear
answer – the new business process is just too difficult to work with.

Having engaged with a diverse range of adviser firms, from mortgage advisers to holistic planners and wealth managers to consumer-facing aggregators, everyone had a clear message.

The move to online has resulted in each insurer producing its own very different offering which is an an enormous barrier to setting up a new contract.

Compare the online buying experience for life insurance with virtually any other industry and you will be appalled. 

Some consumer comparison sites report that as many as four out of five potential new customers drop out of the application process before it is completed.

Although no life office is prepared to admit it, new business processes are simply not fit for purpose in the 21st century. We have a marketplace that is seriously broken and screaming out to be shaken up.

One of the things I find most concerning about this is that if you look at other industries where such change has taken place, the biggest loser is invariably distribution
rather than manufacture.

Clearly we have a problem but how do we fix it? Multiple initiatives are underway with the objective of delivering better protection new business processes. Direct Life & Pensions, iPipeline and Underwrite Me are all doing really valuable work in this area but it is fair to say their efforts are far from being universally embraced by the very insurers creating this problem in the first place.

If insurers are not prepared to sign up to substantial change, at the very least they should consider where elements of the process can be improved and this should be done quickly.

A classic example is occupation definitions, primarily in income protection but also in other life products. 

This subject was passionately debated by leading specialist protection advisers at our recent Protection Forum meeting (an executive summary can be found at

There was a universal view from advisers present that the current process which involves databases of upwards of 3,500 different occupation definitions is at best cumbersome and in practice frequently causes avoidable friction between advisers and their clients. 

It was suggested that, in many instances, clients will often contact the adviser on receipt of their policy documentation to ask them to change their job title as they are worried the plan might not pay out because of it. 

Why would a client sign an application that does not describe their exact occupation?

In a world where consumers are constantly reminded that non-disclosure can result in claims not being paid, it is entirely understandable why a client would insist on the precise definition of their occupation, as used by their employer, being disclosed. 

Trying to say to a client that it is okay that the occupation shown on the policy might not entirely match their actual job title obviously conflicts with encouraging clear and transparent disclosure.

The advisers at the Protection Forum felt that if traditional occupation definitions could be replaced by a set of questions focused around the actual duties carried out by an individual this would be a far better process for all concerned. 

Job titles are often subjective and not descriptive of the duties that are carried out. Questions on duties could be far more specific and accurate.

From the insurers’ side, none of the organisations put forward reasons why this would not be possible from an underwriting perspective. Indeed, Legal & General modified its underwriting approach last year along these lines.

In most cases, the only occupational information the providers really need to underwrite a case are the client’s relevant occupational duties, their salary and the industry they work in. 

Why then can’t all insurers adopt a process focused around these points rather than thousands of occupation definitions?

For such a change to take place in the wider market, it would clearly be necessary for the quotation portals to adapt their current services. Having spoken to a couple about this, they share the view that such a change would be beneficial and any additional costs incurred in the short term would more than be offset in the future by savings from not having to constantly update the occupation definitions database.

These changes could benefit the underwriting of all protection products, not just income protection.

We are holding a meeting with life offices and technology suppliers under the auspices of our e-Services Forum on 27 March to look at how this can be put into practice. 

The agenda can be found at I would be interested to hear from any other organisations interested in participating.

If the market is not yet ready for major change in new business processes, as I believe, we should at least look at where simple and effective smaller changes can be made to improve the overall adviser and consumer experience.

New technologies are emerging that can transform underwriting processes. If insurers continue to resist even minor change, the industry will be poorly placed to react. 

At the risk of repeating myself, it is distribution that is usually the greatest loser in such scenarios. Advisers have a right to expect more support from providers to deliver change.

Ian McKenna is diretor of the Finance & Technology Research Centre


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

  1. Ian, enjoyed your article, quite rightly pointing out some of the deficiencies of occupational risk assessment. Particularly when this is based on lists of occupation titles which often give little indication of what a person actually does. A duties based approach will often make more sense and it’s something that we at SelectX have been banging on about for some time.
    Some of the entries on the lists are at best funny and at worst embarrassing. Particularly titles like costermonger, screwman and, my personal favourite, human cannonball.
    We must be able to do better than this.

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