View more on these topics

Roger Edwards: Penny drops on price and complexity in protection

Roger-Edwards-Brightgrey-2013-700x450.jpg

We are finally seeing companies try new things in the protection market. And it is about time. We have been stuck in a rut for far too long. Everyone could see it but no one wanted to be the first to try and break free.

Look at price competition. To maintain pole position on iPipeline or Iress, companies reprice their rates constantly. But for many years cheap rates have been an illusion. A customer might find a rock-bottom quote from a portal but they often face a loading when they start answering the underwriting questions. As many as one in three applicants can find the quoted price is not the one they end up with, which might be due to something as simple as their BMI score.

But the penny has dropped here. Portals are starting to ask more questions up front (namely height and weight) so customers are more likely to get the correct price in the first instance. UnderwriteMe is trying to take this further by including more information. It is a step in the right direction.

Product complexity is another one. I can remember being in product development meetings where we sat with our reinsurers and trawled through the medical dictionary trying to find new illnesses to add to our critical illness product. This was not because our customers were asking for it but because it would lift us higher up the rankings in product comparisons.

But again the penny has dropped. Last year, AIG launched Key3: a simple critical illness product covering just three conditions, rather than the 80 or so on mainstream products. We will see more of this type of product over the next few years, perhaps tailored to specific market segments.

Meanwhile, we have realised we need to engage with customers more. The Seven Families campaign showed the power of storytelling. Content like this, particularly video, is clearly the way to go. Vitality’s approach to marketing also shows that people value non-insurance benefits.

This is all encouraging but the industry still has a long way to go. Do we ever ask customers how they feel about filling in a 36-page application form? Or about having to wade through 100 pages of policy definitions? Or what it feels like to hang on the phone for 45 minutes to report a family death?

Many companies struggle with empathy. I sadly lost my father last year. The experience of claiming on his life policies was long, drawn out and complex. And I knew what to ask and what to expect. The majority would struggle.

So the penny has dropped on price and complexity, and we are working on making marketing more engaging. But I am not sure the same can be said for empathy. What will it take to give that penny the nudge it needs?

Roger Edwards is managing director of Roger Edwards Marketing and marketing director of Protection Review

Recommended

Money-Cash-Coins-GBP-Pounds-UK-700x450.jpg
64

How much are advisers charging for pension transfers?

Advisers and networks are charging wildly different prices for advising on defined benefit to defined contribution pension transfers, Money Marketing research suggests. As well as a split between charging on a time cost or percentage basis, some firms appear to be charging as much as two times more than others. Firms that offer pension transfer […]

Strong dollar can be a powerful driver of UK dividend growth in 2015

By Robin Geffen, fund manager and CEO 

This year threatens to be a challenging one for UK dividend hunters. Last year saw an all-time record amount paid out in UK dividends — some £97.4bn, according to research from Capita Dividend Monitor. Yet as Capita also pointed out, out the biggest single factor driving the growth in the fourth quarter of last year was easy to identify: the rising US dollar. 

In our view, this trend is much more than simply a one-quarter phenomenon. It is actually the most profound issue to get right as a UK equity income investor in 2015. We believe that the US dollar will continue to strengthen significantly from its current level. This is due more to the US economy’s demonstrable de-coupling from the rest of the world than to a view on the UK. The US has a strong chance of tightening monetary conditions this year without jeopardising growth or de-stabilising its housing market. The same can unfortunately not be said about the UK.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment