Supermarkets and banks could be driven out of the protection market if a non-contestability period on insurance products is brought in.
RGA head of sales and marketing Jason Hurley says most supermarkets and banks would not want to deal with the demands of tougher underwriting.
He says many banks in the US, where there is a non-contestability period, have attempted to offer cheaper premiums on protection products but this has been unsuccessful.
Hurley says this is due to the stringent underwriting processes, which include taking blood and saliva tests as standard, which were brought in to reduce the number of fraudulent claims.
He says: “Introducing a non-contestability period could hit banks and supermarkets harder than other providers. It would make it more difficult for them certainly because there is a conflict between the increased cost of more stringent underwriting balanced against being able to offer cheaper premiums.”
Hurley thinks the introduction of a non-contestability period would drive more customers to seek advice because the different types of underwriting and application processes would be confusing for customers, especially for non-standard lives.
Torquil Clark Life Insurance director Jason King says: “Certainly, for non-standard lives it brings in a greater need for advice but I cannot really see that in isolation more underwriting is going to push out the supermarkets and banks.”