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Protection Watch: the shape of market disruption

Protection Review chief executive Kevin Carr looks at recent market events

Can protection market really be disrupted?
Will a tech giant or global brand one day come in and disrupt the market overnight? And even if so, would much really change?

Compared with other industries, not a lot has changed in protection. We put paper forms online 20 years ago and some would say that is about it.

But is the view that disruption of the protection market has been more subtle, a bit more “Intel Inside” than in-your-face revolution, closer to the truth? There is disruption of sorts. But it is a slow, gradual disruption rather than the imagined cataclysmic arrival of a Google Life, for example.

We have seen technology replace paper; plenty of great apps and tools that make the process quicker and easier; better research systems and portals; improved products with wider cover and more claims being paid; and lots of added-value services, which are all good developments for customers.

But is this evolution or revolution? And even if disruption on the Amazon scale were to come, would a global distributor like that sell its own products in its own way or more likely become a distributor of existing products with existing processes?

There are challenges when trying to disrupt markets and perhaps one of the reasons disruption feels slow in the protection market is that it is relatively small by comparison, with quite a few hurdles to overcome.

And while great ideas on how to do it are plenty, reaching the audience – typically an audience that, unlike many other markets, does not actually want to be reached most of the time – is very difficult. And very expensive.

New plans from Scottish Widows and VitalityLife
Scottish Widows has launched a simple new life and critical illness plan, which pays a cash lump sum if the customer is diagnosed with one of the illnesses covered by five clear body definitions.

There are seven health and lifestyle questions and the plan is available to Halifax, Lloyds Bank and Bank of Scotland mortgage customers in branches.

Meanwhile, VitalityLife has launched a mortgage plan specifically designed for mortgage protection. Serious Illness Cover Protector provides a severity-based approach covering 145 conditions, where 77 conditions are paid at 100 per cent of the sum assured to fully cover the mortgage, including heart attack, cancer and stroke.

SimplyBiz Mortgages chief executive Martin Reynolds says: “We are impressed with the recent changes Vitality has made to its mortgage protection proposition.

“Simplifying the medical questions will help in one of the most sensitive parts of the process and the enhanced product will be welcomed by our members, especially the protected cover. The continual improvement and transformation of the Vitality range of products will allow more of our members to help their clients protect themselves and their families.”

Also on the radar…

  • The FCA has issued a warning regarding life insurance promotions for the over-50s market, where consumers could be led to believe that they are buying a policy that covers all funeral costs in their entirety, rather than a limited amount. In a statement, the regulator said its financial promotions team had seen evidence, and cautioned that if a firm referred to “funerals and associated costs” it was important that consumers were not misled into believing that they were purchasing a plan that covered the costs in full.
  • Technology provider iPipeline has reported year-on-year new business growth of 21 per cent in Q4 2018, with significant growth in protection business being driven by mortgage brokers. Drewberry director Tom Connor says: “It’s great to see portals such as iPipeline and others reporting such strong growth in the protection market, especially from the mortgage sector.”
  • Direct Life and Pension Services has become the 12th member of the Protection Distribution Group. Direct Life joins other members Assured Futures, Cavendish Ware, Cura, Drewberry, Future Proof, Highclere, LifeSearch, LightBlue, London & Country, Seasame Bankhall Group and Roxburgh. Since forming in 2016, the PDG has driven industry changes such as the Funeral Payment Pledge and the PDG Claims Charter.

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