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‘We’re all losers in price war’

The protection industry’s focus on price over product features is leading to harsher underwriting, more work for advisers and falling sales, says PruProtect director of protection development Kevin Carr.

Carr is warning that stricter underwriting could mean that more consumers end up buying ill-suited products or stop buying products altogether.

He says: “For IFAs, the more that the market focuses on price, the harder it becomes to recommend more suitable and better value for money products. The best value is not always the cheapest and for life offices it is often a short-term strategy that does not meet long-term consumer needs.”

Legal & General managing director for protection Bernie Hickman says: “It is important to get a balance between the price that you pay and the features within the contract. The danger would be that providers load products with features that are inappropriate and add no value to that customer.”

Lifesearch policy adviser Matt Morris says price is the last resort of the seller when they have nothing else to compete on.

He says: “An obsession on price is bad for the customer in the long run because they are losing out in other areas.”

Master Adviser IFA Roy McLoughlin warns that the industry must avoid getting into a price war. He says: “People that are selling on price alone are naive. It is an ongoing battle but I do not think the price makes as big a difference as people think. It is the quality of the product and the ability to have a hybrid-type approach. That should be the way forward.”

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