In my last run out in this space, I urged the protection industry not to link its future to auto-enrolment but rather to urge the Treasury to acknowledge the economic value of what we do by allowing tax relief on pure protection premiums.
Reading the comments that followed, I changed my mind. Not about making a whole new bureaucracy our route to market (that is indeed a pusillanimous cop out) but about the tax relief. We do not need to burden our broke exchequer with more pay-outs; we need to do our bit to rescue it by paying out more. We need to drive up the number of properly protected families who can claim by good private sector effort.
Analysis from The Syndicate research consortium gives a very clear pointer as to how to do that. It found certainty is what consumers want most and what drives action. We need to get out the loud hailer and boast of how we help those whose financial lives are destroyed by disability, illness or death. We need to evidence the uncertainty those risks can cause and the certainty with which our products sort them out.
Protection policies do pay out when they should. That truth needs to be trumpeted far more persistently. Another way to provide certainty is to demonstrate the effects of what we do. The Seven Families initiative does this in a radical way, by charting the difference a paid claim makes to a suffering family: few who experience that fail to become certain and convincing advocates of properly arranged protection. The challenges of the cynical are endless but consumers can edit that out very successfully if shown testimony from those who have benefited. Social media and more positively minded journalists can and will do this.
However, the other side of the coin has to be radically addressed as well. Any insurer rejecting a claim needs to make sure that decision is utterly fair, not to their shareholders but to the claimant only. While proven liars can be called out, the possibly innocent, ignorant and confused are our fault. We should have got them through that state before we took their money. Insurers cannot hide behind a professional’s ability to make fools of those who briefly think about the world we think only about. In particular, the non-advised sale cannot become a claims reduction tool.
Any rejection based on that should set board room warning lights flashing in real time, for that way lies endless reputational damage and consumer uncertainty, and the consequent destruction of shareholder value. Rather such sales must have fewer and simpler questions and claims on them must enjoy a far lower burden of proof than hitherto. The higher premiums that approach will cause are an honest and better result than any raised risk of not paying out.
As we seek to simplify our processes we need to have the wisdom to pay more claims and the courage to promote what we do. This will gain consumers certainty that protecting themselves and their family properly is a wise thing to do.
Tom Baigrie is chief executive at LifeSearch