View more on these topics

Race for a piece of protection hots up

With Standard Life&#39s announcement that it wants a slice of the protection

market, this is the hottest new business plan in town.

Scottish Provident has enjoyed a strangehold on the protection market for

the past few years but now it is having to contend with Scottish Equitable

Protect and a bolstered offering from Skandia.

Now Standard wants to jump on the bandwagon and is looking at integrating

its existing protection range with its Healthcare business. A whole new

protection brand could be launched in the same way that ScotEq rebadged its

Guardian business after its acquisition by Aegon in October 1999.

John Joseph Financial Services director John Joseph says: “The insurance

industry is very innovative and competitive and each company will strive to

outdo the other in product development. All these companies coming to the

fore shows the protection market is thriving and I am very enc-ouraged by


As pressure on margins and profitability on pensions increases from

stakeholder, both providers and IFAs are looking at ways to diversify

revenue streams and increase operations in more profitable business areas

such as protection.

Joseph says: “The industry is growing up. It is realising that for too

long advisers have just been pension consultants and forgetting about being

financial planners. IFAs have been looking to reduce the pressure on their

cash flow and move towards fees from commission.”

Increasing public awareness of the need to have adequate protection for

individuals, their family and standard of living is also cited as a major

cause of the growth in protection business.

Standard Life marketing manager Gerry Warner says: “The Government&#39s

message is that it expects people to take more responsibility for their

welfare. People are more aware that they need to protect themselves.”

Portfolio Insurance Consultancy principal Brian Lentz says: “The

protection market is booming primarily because there is an increased level

of understanding by members of the public that the state will no longer

look after them.”

But the number of people without life cover is still high and the take-up

for some products such as income protection is very low. Providers can see

there is still room for the market to grow and there are a lot of

opportunities for IFAs to assess their clients&#39 protection needs.

Scottish Equitable Protect marketing manager Heather Armstrong says: “We

believe the protection market will continue to grow. Evidence suggests

people are still not taking up full protection cover such as

critical-illness cover and income protection so there is a big opportunity

for IFAs to move into those areas.

“Providers taking a specialist approach to protection can do more to help

educate IFAs and their clients about protection benefits. From an IFA

perspective, people will always need protection.”

The demise of the endowment market has left many people who would have had

life cover included in their policy without cover and the move towards

repayment mortgages means people are having to arrange separate protection


Warner says: “People have to buy other products to protect themselves.

They now need stand-alone life cover, critical-illness cover, income

protection and mortgage repayment protection. Also, through pension

changes, people can&#39t buy integrated life cover.”

This is the gap that pro-viders are looking to fill by offering products

on a menu basis which allows the customer to pick and choose different

cover within a single plan.

Standard looks set to follow in Skandia, ScotEq and ScotProv&#39s footsteps

by offering products packaged on this menu basis. ScotEq believes menu

products provide IFAs with the means of building lasting client

relationships with individual and corporate clients and expects that the

protection market will ultimately be dominated by menu-based products.

Armstrong says: “Menu products provide the IFA with a catalyst to revisit

their clients&#39 personal finance or business portfolios on a regular basis

and review their protection needs.”

Products designed on this basis can be administered simply by the provider

and the IFA, making them more attractive to IFAs and product providers.

Skandia senior marketing manager Lynda Cox says: “Companies used to only

sell unit-linked whole-of-life products. But disclosure changes meant it

became a very complicated process, with key features documents and

reasons-why letters. So there has been a move back to term insurance. The

market is picking up its development of new products, all of which are

des-igned for clarity and simplicity and are guaranteed for the lifetime of

a mortgage.”

The regulation surrounding protection is another reason why IFAs will be

keen to reap the growth of protection business. While regulation is driving

some advisers out of the pension market, protection is relatively loosely


Lentz says: “Protection is not an area of extensive litigation and is not

terribly stringently regulated. As an IFA, you can talk to your clients

sensibly rather than from a regulatory approach.”

Providers are obviously convinced that the protection market is set to

grow further and IFAs are also hoping this revenue stream will not be bled

dry by regulation and Government restrictions.

Lentz says: “Undoubtedly, long-term care and income protection is set to

grow provided the Government does not start to meddle. Catmarking

protection products will bring all kinds of complications to the market. If

the Government insists on making protection too rigid, it will stifle the



Former EMX boss joins management consultant

Former EMX chief executive Caroline Lee has been appointed to the wealth management team at financial service management consultancy City Consultants. Lee headed EMX during the period the electronic investment fund trading service was launched.City Consultants provides services to the securities industry and has clients in the UK, Europe and US. Managing director John Rawlings […]

Public don&#39t get a balanced view

The real problem with the endowment review (IFAs slam “scaremonger” FSAover endowments, MM, July 5) is not what the FSA says in its factsheet buthow the media interprets it. That is how most customers will get theiropinions on the subject. Media comment is a real problem. Last week, a reporter on Today on Radio 4said […]

Comdirect expands Isa offering

Online broker Comdirect is to expand its iPlan Isa offer, with the addition of four new iShares, exchange traded funds managed by Barclays Global Investors.The iPlan Isa product allows investors to trade in its iShares at any time during market hours without attracting stamp duty through index trackers. The trackers provide investors with exposure to […]

FSA must come up with answers as Equitable axe falls

The grim conclusion from the Equitable Life debacle seems to be thateveryone who could have got out should have got out but it may now be toolate. Equitable has proved to be a zero-sum game. The axe has fallen onEquitable policies with a drastic 16 per cent cut in pensions while lifeinsurance plans face a […]

International jurisdictions

By Neil Jones, Canada Life Investing through international providers has grown in popularity over recent years as investors seek out the benefits of gross roll-up and the wider range of investment options that can be available. When considering a recommendation for a lump sum investment, not only does the adviser have to select a suitable tax wrapper […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm