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Insurers may quit market if price war rages on

Friends Provident and Bright Grey are warning that more protection providers will leave the IFA market unless the price war eases.

Friends business development manager Mark Jones says price is an area where the company has to compete but if it becomes the most prominent factor in the marketplace, then “something will have to give”.

He says: “Some of the providers could follow Standard Life and leave the IFA market and some IFAs could suggest that the commission is not enough and become less inclined to sell protection.”

Bright Grey product director Roger Edwards says the industry is overly obsessed with price. He says: “Ultimately, we need to break out of this downward spiral but we do not help ourselves when every part of the industry seems geared towards price.

“People are funding low prices with slicker systems, introducing cost savings through technology and, to a certain extent, the baseline price is somewhat more of an illusion now than it used to be. Unfortunately, this game will carry on until it becomes too unsustainable for some.”

Royal Liver IFA marketing manager Aidan Dewhurst says many of the issues still boil down to the protection gap which is not about price but awareness.

He says: “The term, price war, may be a little strong as it does not give an accurate representation of the market. IFAs have an important role to play in the protection marketplace and I cannot see this changing in the near future.”

The warning comes after Defaqto released its income protection report which found that 43 per cent of IFAs feel price is most important factor when recommending income protection cover.

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