The Income Protection Task Force says the findings of the Treasury steering group on simple products are a “wake-up call” for the industry and has pledged to support the development of a simple income replacement product.
The steering group, led by former FSA director and Lloyds Banking Group chief risk officer Carol Sergeant, reported its interim findings on developing simple products last week. One proposal was for the introduction of a simple income replacement product.
Clive Waller, co-chairman of the IPTF, says: “ We intend to fully engage in the consultation period with Carol Sergeant and her team to drive this forward.”
The IPTF, which is made up of reinsurers, providers and distributors, highlights research from the steering group suggesting a potential market for income protection products of over 25 million people, while only around 110,000 policies were sold last year.
“Income replacement is a fundamental priority for a huge number of families in the UK and we must find a better solution to this need than we have hitherto. We hope this will be a wake up call for the industry,” says IPTF co-chairman Peter Le Beau.
Highclere Financial Services partner Alan Lakey questions whether a simplified regime, on its own, will significantly boost sales. He says: “What we have to recognise is that it is the behaviours of consumers we have to change
“The best way to do that is the tried and trusted method of some kind of incentive, in this case some kind of tax relief for taking such a policy out, in the same way as we have with pensions.”