Nelson Mandela once said: “Education is the most powerful weapon which you can use to change the world.” Inspired by such words from his idol, Scottish Widows cover and protection marketing director Nick Kirwan is passionate about rebuilding consumers' faith in financial services.
He is regularly working with the ABI to try to help the industry avoid the banana skins that have left the reputation of financial services battered and bruised. Over the course of his 26-year career in protection, Kirwan says consumers' needs have changed little but their trust in providers and advisers has fallen through the floor.
“The biggest single issue facing the industry, head and shoulders above any other, is restoring consumer confidence and trust. Whenever something goes wrong, whether it is pensions or investments, people say 'oh, it's that lot again'. When they read a negative article two months later, they cannot remember which company it was or whether it was an IFA or a direct salesman and we have got to get our house in order.”
Kirwan also faces other battles closer to home. He is regularly fighting his children for the remote control of the family's high-tech flying saucer. A self-confessed gadget shop junkie,it is a toss-up who enjoys Christmas more, the adults or the children, in the Kirwan household. “I am very lucky I have got boys. I am a freak for gadgets and can buy lots of thing on the pretext that they are for them.”
He remembers his days as a direct salesman at Sun Life of Canada and has carried with him a need for a customer focus throughout his career. This has motivated Kirwan to devote a lot of his time to the ABI and a lot of his commitments are centred on educating consumers about the protection gap. How does he compete with the more publicised savings gap, though?
“The protection gap is very much linked to the savings gap and a lot of work has been done on how much needs to be spent to close this. The calculations are subjective but the gap is enormous. We are not protecting ourselves enough.”
He stresses that a savings gap of £27bn means that for many people, if they lost their job or where unable to work through illness, they would have insufficient savings to cover their outgoings, let alone any longer-term income protection. “If we just had no savings, that would be bad enough but we have become a nation of debtors, with personal debt passing through the £1tn mark this year. Many people with protection are just covering their mortgage but still need to pay the bills or credit card debts.”
Perhaps more alarmingly, despite the strength of the property market in recent years, over 20 per cent of the nation's debt is non-mortgage and is typically more expensive credit and store card debt, he says.
But Kirwan stresses that it is not all doom and gloom in the world of protection. As chairman of the ABI's critical-illness committee, he helped oversee the introduction of a standardised list of illness definitions, enabling consumers to compare different companies' offerings more easily.
Initiatives such as this have helped the market grow from one million people covered in 1999 to around 12 million adults and children with critical-illness cover today. “Now critical illness is facing new challenges. Premiums for guaranteed critical-illness cover have gone up a lot and a lot of insurers and reinsurers have pulled out of the market so there is less choice for consumers.” He says the capital-intensive nature of the industry provides a high barrier to entry. To try and maintain consumer confidence, the ABI is drawing up a statement of best practice which will be published next year.
He refers again to Nelson Mandela and one of his sayings: “After climbing a great hill, one only finds that there are many more hills to climb.” Kirwan says this is a fitting analogy for the problems facing the protection market and if it is difficult persuading the man in the street that he needs protection, then trying to sell him long-term care policies is like pulling teeth.Widows pulled out of that market in April and, with many other insurers following suit, the sector is shrinking.
Kirwan says: “Long-term care is being regulated to death. From the end of this month, it will be regulated like an investment product and the economics do not add up. The need is there but IFAs face difficult training and exams and the market is not big enough to support that.”
The decision to pull out of long-term care was taken at Widows before Kirwan arrived. He has been reviewing the firm's plans for the next two to three years. The main focus is to raise awareness of the need for protection and to simplify the group's products and processes so they are more readily understood by the consumer and cheaper to administer.
“There are some things we can do with technology and some simple tweakings we can do to our existing products to make them simpler. We are planning to invest more in-house. I am always asking us to be better, slicker and quicker.”
This will set the life office up for depolarisation and before that the introduction of protection regulation in January. Kirwan believes the additional regulatory requirements around depolarisation will increase costs for advisers and slow sales while the new sales processes are learnt.
“Most IFAs treated protection business as if it was regulated business in the past but for those that are not regulated it will be very challenging and we expect consolidation in the market. We have to get through regulation before worrying about depolarisation.”
Born: June 1957
Lives: Primarily based in Edinburgh but has a family home in the West of Scotland where he lives with his wife and two teenage sons Education: Tonbridge School, City University, London.Career: Started out in protection in 1979 as a direct salesman for Sun Life of Canada, later moving on to Abbey and Scottish Widows. Chairman of the ABI's criticalillness committee Hero: “Hands down, it has to be Nelson Mandela. What vision he had and what changes he was be able bring about and to be incarcerated for so long yet come out without hatred is amazing. When you think about the change that one man can bring about it, inspires you and makes you think, yes, I can make a difference and I should try.”
Hobbies: “I am a bit of an amateur historian and love to read and watch everything on the subject, particularly World War One. I would love to go on a dig and for a couple of months and put my brain in neutral.”
Drives: BMW Z3