We often get beaten up in the protection industry about the ‘small print’. But in truth we have fewer exclusions these days and thanks to the ABI’s standard critical illness definitions, it is clearer what is covered and what is not.
I was looking at other businesses where similar conditions exist and how those industries communicate them. Take the airline industry and the options available for buying tickets. Most people these days will visit a consolidator website like travelsupermarket, or go direct to the airline website to book. They will see a price but often not be completely aware of what the fare conditions are.
For instance, the most expensive BA economy fare will offer full flexibility for unlimited changes and a full refund in the event of cancellation. They will also offer a series of cheaper fares which allow changes to be made for £60 each but no refund at all on cancellation. Most low cost airlines follow the latter model – in fact it was they who forced BA to move to changeable tickets. Before low cost airlines a discounted fare would have been unchangeable and non-refundable.
Interestingly in the business class market, where the low cost airlines do not compete with BA, the discounted fares are still unchangeable and non-refundable. So someone could buy a discounted fare costing £1200 in business class from London to New York but if their plans change and they need to cancel they will lose that £1200. Is that fair? The airline would argue that it is clear in the fare rules (the small print). The customer is getting a much reduced fare (as against £5000 full price) and so loses the flexibility and the refundability, as a result.
These fare rules are available on the website. They are clear and easy to understand, but that still doesn’t stop people phoning up when they have had to cancel a discounted non-refundable fare to ask for a refund.
In the past it was the role of the travel agent to explain the airline fare rules. Now that people are increasingly buying direct the responsibility for understanding the conditions have passed to the customer.
In the protection market we have recently been having a debate about simplified products. While it is difficult to think how life insurance can be simplified (other than removing guaranteed insurability options), there have been suggestions that we need a simple critical illness product that only covers cancer, stroke and heart attack.
But even a three illness CI plan would have exclusions and conditions built into the definitions in the same way as the full plan. Would someone buying this direct be clear enough as to what was covered and what was not? Or would it be like buying an attractive and discounted airline ticket where you might glance over the conditions but click ‘yes’ anyway?
Simplified or not, protection products will always have conditions surrounding the offer. Given the difference between products surely the best approach for a customer is to take face to face advice and have all the conditions explained to them.
If that is the case then perhaps we need to channel more of our marketing spend into creating reasons for people to seek out such advice, rather than looking to create products that are perceived to be simple enough to bypass the advice process. With even the simplest of products there will always be exceptions to that simplicity.
Roger Edwards is propositions director at Bright Grey