All this talk about equality. The only thing people really have in common is that they are all going to die.” – Bob Dylan.
I am trying to understand what the impact of the gender pricing ban will be in the protection market. I am also surprised about the lack of communication from providers.
The providers, with the exception of Ageas, made no comment on what would happen to pipeline cases awaiting completion. This may have been because the decision could have had such a variety of results they just could not tell – but, from a TCF position, some kind of statement would have helped advisers, who could have been put in a difficult situation if premium increases were imposed.
We do know that from December 21, 2012, providers must use unisex pricing for new policies and there is no risk of retrospection for policies sold before December 21, 2007. This is manageable for advisers as in the immediate future there will be no real change. There will be a lot of providers and reinsurers creating new pricing and possibly trying to find something new as a rating factor over the next 18 months that does not have an impact on the European Court ruling.
Running parallel with this is Solvency II work, so generally we can expect pricing to go up as a result of both of these events at the back end of 2012. There may be a positive side- effect if we see imaginative underwriting factors coming into play. How this will affect the traditional quotation portals remains to be seen.
Will this have a material impact on the amount of business written? No. The cost of life insurance is cheaper than most people think and the range of products available is simply not understood by the public. Simplifying the products and the buying process, supported by a consistent educational message, would increase awareness and encourage sales.
We have a much harder job of getting people to understand the value of protection products, the range of solutions, and making it easier for advisers to be able to select a range of covers to deliver a competitive solution. How easy is it for advisers to find a provider, or range of providers, that can offer a client a level term policy, income protection to cover the mortgage and a top-up through to retirement and possibly some contingency life cover?
Advisers spend so much time generating quotes and suitability texts and processing and chasing the business. Part of the challenge for advisers is to assess how they want to write protection business and how they can generate efficiencies while delivering customer satisfaction. The impact of gender legislation does not matter – a competitive business model and process to help you deliver protection solutions to clients is much more important. Bob Dylan is right – but we can deliver a lot more solutions than just cheap death benefits.
Neil McCarthy is sales and marketing director at Direct Life & Pension Services