It saddens me that so many of the best brains in our industry languish in the career after-life that is consultancy. If only they would leave their ivory towers and re-join us at the coal-face our industry would be so much better off.
Of course there are a few 180° men (you head in exactly the opposite direction to the one they advise and you win every time), and of course we canot afford any of them, good or bad, except by the hour when we are desperate, but Kevin Carr knows far more about my subject than I do, Malcolm Kerr of Ernst & Young should run at least one of our major providers and Hamish Worsley and the other boffins at NMG should replace all the protection committees at the ABI in one fell swoop.
I read the latter’s UK Protection Insights Report 2012 like a born again Christian reads the New Testament. Every word is true. Find it on their website, or for the lazy just read on below.
They point out that while we think our market is most challenged, and indeed in these dog days of the great European empire we do have a ridiculous number of bodies than can tell us what to do, other markets face their own challenges with much more success.
In the ex-colonies, they are growing their markets, despite their own tough economic times, equivalent welfare state provisions and far higher savings levels. They are not just accepting decline as our insurers seem to be doing, rather they are creating demand and working hard on their regulators to incentivise private protection purchase.
They are not just relying on the internet to generate customers conveniently, but instead are running direct response TV campaigns, not just for the too good to be true over 50’s, but for young families too. They are striving to differentiate not just on price as seems the only tool available to our great insurers, but on service and product and underwriting. Imagine!
NMG see that of the two big changes happening at the year end, it is the more arcane one that is likely to be the game changer. For the conglomerate insurers’ ability to reduce the tax on their investment gains by offsetting their expenses in acquiring protection premiums ends very soon. This quirk has been of huge advantage to the big end of the ABI membership (the bit that has the power and seems to use it to ensure the ABI itself has none) and has seen our biggest insurers play a pricing hand that more innovative newcomers have struggled to match. That the newcomers have still survived and grown says much about what innovation could be achieving on a level playing field.
And abroad, protection leaders have convinced their boards to invest in protection product and distribution, whereas here the money has been poured into investment platforms that offer nothing new and have failed to convince grown up investment advisers. Here, the attitude to distribution is more akin to divide and rule, which has seen the lowest quality rewarded for shabby volume and the highest forced to struggle with antiquated service delivery.
NMG end by recommending insurers invest in advertising campaigns that generate awareness of needs amongst consumers and say they “would encourage protection executives to fight hard for the next round of development capital’. I’m sure I heard that somewhere else a few years ago, but no matter, they are right, though I wonder if progress won’t have to wait until distributors of real scale are created, such that they can take the lead one day.
Tom Baigrie is chief executive of Lifesearch