Well I didn’t expect that. Most of the big protection providers have issued their sales numbers for the first half of 2013, showing some serious falls. While this could be due to many factors, the underlying truth is that for a decade or more, provider CEO’s and heads of distribution have been telling me that although the overall market is ‘flat’, their market share is rising or is about to.
Indeed, I have heard tell of many who have, including fast growing networks. And in my business we are a long way ahead of last year’s numbers.
So given that focus, I expected protection sales to rise strongly post-RDR, especially amongst those with historically strong distribution in the IFA and tied sectors. I accepted that the shrinking of the advisory sector would deal a bit of a blow but I also thought that would be more than offset because many of those erstwhile IFA’s would focus on protection.
A while ago I spent a lot of time begging life offices to get together to try and grow the whole market but for a many reasons, including one or two good ones, providers have always thought marketing efforts are best focused on their distributors and making sure they are well supported. In short they have all focused on B2B rather than B2C, if you’ll allow the jargon.
So what is happening to the providers?
The decline in sales is near universal amongst those that have reported, so it looks like while some distributors can buck trends, the issue is market wide and not down to the failings of individual management teams.
The economy cannot be to blame, it is doing fine. In fact it has been doing fine all year, but the GDP data machine does not recognise micro business growth as well as it needs to in this digital age.
Premiums have only risen a bit, and besides, all market research reveals that consumers think that life and protection products cost far more than they actually do, so that’s surely not the issue. So what is?
As Sherlock Holmes said: “When you have eliminated the impossible, whatever remains…must be the truth.”
Well what’s left is the thing that routinely culls whole market sectors: consumers simply losing interest in a product set.
Think of whalebone corsets say and realise that we are not talking about changing consumer trends caused by the internet or technology but rather a simple loss of interest.
Perhaps this is because sudden early death is becoming ever rarer and we have collectively failed to promote the more relevant disability covers. Perhaps this is because PPI has caused a terminal lack of trust, but it is frankly more likely to be because consumers have just moved on.
They do not see what we sell as being something they should even think about spending money on. They do not actually think about us at all.
Now of course, I am not talking about all consumers. Even whalebone corsets still have their devoted fans. But life insurance was never that fashionable, so ours is not a sudden collapse, just a gentle generational fading away.
Barring famine or plague, or some decent consumer marketing and more buyable products, the trend looks set to continue. I fear that those nice CEO’s will say “Tom, it doesn’t matter because we’re increasing our market share and growing nicely and so are you”.
Is there one though with the vision and desire to re-establish life and protection insurance to a central role in the zeitgeist? If done well the prize is outsized success in a bigger future market. Tempted?
Tom Baigrie is chief executive of Lifesearch