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MP warns protection damaged by ‘toxic’ reputation

The chairman of the All-Party Parliamentary Group on insurance and financial services has warned that income protection take-up is being damaged because the word itself is “toxic”.

Conservative MP for Cardiff North Jonathan Evans says two-thirds of products sold are taken out by employers on behalf of their staff, while total penetration is estimated at just 11 per cent.

He says: “It’s not that the product is toxic, but it’s the way that the product is viewed amongst the public.

“Every ten minutes on day-time TV we are being told that protection is a bad thing because of the context of payment protection insurance.”

He adds: “In 2015 all political parties are agreed that the welfare state is going to contract and it’s therefore necessary that we start to stimulate a proper participation market and yet we are struggling to do that against this backdrop.

“We can either invent another word or be much more proactive in encouraging people to take this on.”

One topic floated by attendees at this week’s APPG meeting was that of launching a compulsory scheme, similar to the auto-enrolment programme for pensions which kicked off in 2012.

ABI figures show that for 2013 members of the trade body faced 13,170 income protection claims, with 91.1 per cent paid out by insurers.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Before going headlong into pushing this product, just think very, very carefully about the distribution channel. Do not let the banks or insurers sell this directly or within 5 years you will have a another mass mis-selling scandal on our hands.

  2. Good Mortgage Man 27th February 2015 at 12:20 pm

    If we had an appropriate welfare system that helped the genuinely needy, rather than the work shy, we wouldn’t even need income protection. Just look at Denmark for the model.
    And before you all berate me for the rate of tax in Scandinavia, their system works. I would happily pay more tax if I knew that they state would take proper care of me and mine when I most need it.

  3. IFAs should have no fear. As an ASU provider with 18 years experience of distribution solely via Advisers, we feel it is high time the industry and press (AND MPs!) pointed out that Advisers played little or no part in the PPI Mis-selling scandal. It was almost completely the responsibility of Banks and Secondary Lenders. FOS reported late in 2014 that less than 0.5% of complaints received by them the previous year were about Advisers, and we are not aware of any Adviser having had a complaint against them upheld in respect of one of our policies. James Mather. Sales & Marketing Director. DMS

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