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Protection picks up appeal

The protection industry finally appears to be turning the corner and focusing on designing and marketing products that appeal not only to providers but also to consumers and advisers.

We have seen industry giants Prudential and Norwich Union plucking Kevin Carr and Richard Verdin from whole of market adviser firms and installing them in positions of influence.

This has positive implications for the industry because they both recognise what constitutes a high-quality product and, more impor- tant, what consumers will be receptive to and therefore inspired to buy.

Recent innovatory products from Fortis and LV= lend weight to this argument as we seem to be moving away from the “us too” attitude where product designers copy a successful plan or take an existing unsuccessful plan and apply a polish until it resembles fresh produce.

Perhaps we will also shift away from the cost fixation that permeates much of the industry. Numerous advisers believe that they must offer the cheapest product, whether it is it term insurance, critical- illness insurance or income protection.

Similarly, there are product providers which dance to this tune and aim to be the cheapest, with far less thought given to the construction of a superior plan.

The area ripest for innovation and screaming out for a major provider to make a big splash is income protection.

Frequently, these plans mitigate against policyholders, thereby rendering the plans unfair, unclear and generally unmarketable.

It is not beyond the scope of the industry giants to devise a believable and affordable income protection plan that meets the essential requirement of an own-occupation claim definition for the majority of occupations.

Neither is it too problematical to ensure that the resulting policy pays the agreed income without financial underwriting at the claim stage.

If friendly societies such as the Pioneer, LV= and the Cirencester can conceive plans which meet many of these requirements, then why not the big boys?

The success of payment protection insurance sales was down to simplicity and actually asking for the business, so if inferior and expensive plans can be marketed to the masses, then superior and better value alternatives should fly off the shelves.

With this trend of bringing on board whole of market advisers, I have every expectation that progressive changes will be made.

Now all we need is for the FSA to pick up this particular baton and place whole of market advisers in senior positions instead of the current steady stream of bankers and career civil servantsIncidentally, are other advisers outraged by the recent news that PruProtect is reneging on the free gym membership to customers living within the M25 and changing the terms for those outside this area, or is it just me?

Many plans have been marketed on the basis of low cost of free membership and this non-consulted change is reminiscent of the antics practised some years back when Prudential backtracked on pipeline critical-illness insurance business.

Trust is something that is all too easy to lose.

Alan Lakey is a partner at Highclere Financial Services

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