One of my pricing colleagues (oh, they are clever) was an octochamp on Countdown.
For those not addicted to teatime television it means he won eight games in a row. He tells me that the most frightening time was the first round in the first game after the Countdown clock started ticking away and then the famous final Countdown jingle came on. Fortunately at the last gasp he managed to improve upon his four letter word to come up with the winning eight letter word “Diocesan”.
I mention this as there is an industry image of a Countdown clock ticking down to zero at midnight on the 20 December, when the use of gender specific pricing for new contracts stops. This almost exactly coincides with the introduction of new tax rules for life and accelerated critical illness business.
The combined effect is that nearly all protection rates should increase at the end of the year. This is a topic I will return to a later date as my pricing colleagues have lots of thoughts about what will really happen (oh, they are clever). However as a reminder Martin Werth, managing director of Living Benefits, has publicly estimated rate increases for males of up to 6 per cent, and for females up to a whopping 22 per cent.
With customers facing such increases it is obviously in their interest for intermediaries to make them aware of the issue and encourage them to bring forward any protection purchases on the cheaper rates. Most insurers can help with this and I encourage intermediaries to take advantage of any free help going.
Meanwhile at Aegon we have been concentrating upon the practical issues of getting business completed before the deadline. There is much discussion of how we minimise the number of unhappy customers sitting with uncompleted applications at the deadline date. We have a number of initiatives planned for the year and I will update on these and other industry ideas during the year.
And intermediaries can help themselves. For example, as Peter Chadborn discussed recently, by collecting the right data as early as possible.
However, the fact remains that for many cases if we are to offer fair terms there is no alternative to getting third-party evidence during an underwriting process. The most used and familiar source is General Practitioner Reports. Our experience is that GPRs can be returned with three days but the average is 22 days and more than one in 10 takes over 42 days.
This takes us back to our fallacious Countdown clock. To be sure of completing business on gender specific rates it is no good waiting for the jingle to go just before the 20 December. You might pull “Diocesan” out of the hat, or you might have an unhappy customer.
Mark Preston is underwriting manager at Aegon