View more on these topics

Tom Baigrie: Life companies appear apathetic over market decline


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


News and expert analysis straight to your inbox

Sign up


There are 8 comments at the moment, we would love to hear your opinion too.

  1. Protection has always had to be sold, well not always but there is a big section out there that are never going to die, never going to suffer a critical illness, think the state will pay for their funeral and think their families will have a whale of a time if something happens to them. Of course either partner could sell the house and downsize so mortgage protection is not essential is it? Of course these are usually the people who like a drink, smoke and don’t eat healthy food but what the heck they’re sure it will be okay. Okay I’m going on a bit, but this decline won’t stop with less and less advisers out there and apathetic providers who think the great British public will all go online and buy protection from their slick websites.
    What was it they used to say; ‘in a recession the first thing to go is…….?’ That’s not right these days because they don’t have it in the first place.

  2. Hi Tom,

    A very well written and entertaining piece which I completely support.

    Never have product providers needed distribution as much as they do now.

    Kind regards, Mike.

  3. Tom

    Part of the problem is insuirers sticking to an old distribution model- via advisors.

    Thiose who do sell direct generally offer an applaing service as they cannot grasp that a website and terminoligy that works for advisors just turns customers off.

    Aviva says 98% of critical illness claims are from 10 conditions – so why try to sell 40+ conditions with more adds on than a chrstmas tree?

    Why sell IP with complex rules on claims deducted for sate payments and definitions even thoes of us who read policies day in day out -find confusing.

    Life , critical illness, income protection – all terms and basic product designs from 50 years ago

    Would you buy a Ford Prefect or Morris Minor- even with sat nav? – course not.

    The industry need a good kick up the backside to offer new products, simple to buy and undrestand easy to access from hand held devices etc

    Part of the problem is insurers going for ” add another extra ‘ as it gets more stars from a certain advisor

    Cover by quantity for stars is just ego

    Simple products, low prices, easy access, and a buying process that is instant

    I tried to buy simple term life -one insurer took 6 weeks and demanded more and more detail – while another did the deal in 30 minutes; guess who got the business!

    Life insurers are dong little diferent from when it was all post and paper- all they have done is converted the process to online – not rethough the product and process.

    I have this vision of a life company going on Dragons Den and failing to get a deal as the dragons tell then that the product is old fashioned, the process is por, the sales and marketing is 19th century and have they never seen a smart phone?

  4. Well said Mr B!
    So distribution was the solution after all………what a eureka moment for some……..maybe insurers should go and talk to some ‘real’ customers ……advice is the only way forward guys….then protection is valued.

  5. Its even simpler Tom,the providers are no longer interested in new business,none of it is profitable enough for the board and the shareholders due to costs of distribution and the effects of tighter regulation on margins.I predict most traditional insurers will close to new business within 5 years doing protection and annuities via the Internet only.They will sell of their books for big sums and move into other areas as L&G are already planning. The good days are over and advisers will be consigned to the backwaters by these people .Advisers will do business with the smaller innovative niche providers that add value for clients in tax planning and portfolio management. Sales will be run by independent companies who will contract with those who stay in the market at a much lower cost, providing advisers with a much wider range of consulting and support.

  6. Well said Mr B!

  7. The Grey Defector 19th August 2013 at 4:56 pm

    So, has the RDR helped or hindered?

    Regulation scores yet another own goal…it’s a wonder they can find the bloody ball, methinks.

  8. I love life cover and used to sell lots of it
    unfortunately life offices aren’t interested in providing simple cover in the offshore market
    prefering to scam clients with their savings accounts with the aid of offshore advisers
    drags the Investment and life industry through the mud but whatever it takes to pay the gas bill this month
    shame I would like to provide sickness and accident and term cover it gave me a lot of satisfaction

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm