The failure of insurers and reinsurers to agree to fund the Consumer Protection Insurance Engagement Campaign is depressing news.
It was looking to increase provision among the public by shocking them out of their complacency and high-lighting the benefits that polices can bring to individuals and their loved ones on death, disability and critical illness.
Thanks to some sterling work by Lifesearch managing director Tom Baigrie and others, £110,000 was raised from 22 insurers and reinsurers to research proposals for a hard-hitting media campaign. Around £5m was needed to fund the campaign, plus perhaps £3m per year. Not an inconsiderable sum. The idea was that by focusing on confused and disengaged consumers, the campaign would serve the public good by getting more people protected while providers would benefit from a general uplift in sales.
So far so good. Unfortunately, the realities of a competitive marketplace and a diverse range of providers with varying distribution strategies have stopped the campaign in its tracks.
While the reinsurers could not agree on their rightful costs, there was a split within the insurers on distribution lines between those supporting the campaign and those suspicious of it.
Providers focusing on IFA distribution were concerned that the campaign would drive people down the online non-advised route. This is an unfortunate conclusion which we believe underestimates the IFA sector’s ability to take advantage of an uplift in consumer engagement with protection.
Perhaps it was inevitable that the campaign would find these hurdles too big to jump but the hard work of all those involved must not go to waste.
Increasing protection provision should be a top priority for the Government’s proposed financial education body and the campaign should be required reading.
Encouraging greater take-up of protection provision should be a Government priority whether that is through giving regulators responsibility for increasing provision or investigating more radical proposals such as auto-enrolment for some types of cover.
The FSA is to publish a further RDR paper this month which will include its latest thoughts on any protection read-across. The £2.3tn protection gap should be weighing heavy on its mind. Not just the dangers to consumers of slashing the availability of protection advice but also the huge benefits of a regulatory environment that allows protection advice to blossom.