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What can be salvaged from the protection campaign?

Was it ever going to be possible to bring together a group of insurers and reinsurers with competing commercial interests and varying distribution strategies to fund a protection campaign to benefit themselves and wider society?

Lifesearch managing director Tom Baigrie should be congratulated for leading the Consumer Protection Insurance Engagement Campaign with such energy and passion.

Baigire, and a number of other tireless volunteers, invested considerable time and resource into pulling together over 20 reinsurers and insurers in an attempt to create a hard-hitting media campaign to impress on the general public the need to protect themselves and their loved ones.   

It was an achievement in itself to get 22 insurers and reinsurers to raise £110,000 to create the research and a plan of action. It concluded that £5m was needed for the first year and perhaps another £3m each year to fund the campaign with this split depending on annual premium income.

The idea was that by focusing on confused and disengaged consumers the campaign would serve a public good, by getting more people protected, while the insurers and reinsurers would benefit from a general uplift in protection sales.

So far so good. Unfortunately the realities of a competitive marketplace and a diverse range of providers with varying distribution strategies have stopped the campaign in its tracks.

Although costs were a factor, the biggest barrier was the split between insurers who rely on the IFA sector and those who do not.

On top of this the reinsurers could not reach agreement on what they should contribute to the campaign.

Providers reliant on the IFA sector were suspicious the campaign would drive new sales down the online non-advised route. They believed IFAs needed a more focused approach that the campaign did not offer.

No sensible business wants to throw money at a marketing campaign that will primarily boost its rivals but perhaps these providers have underestimated the IFA sector’s ability to take advantage of an uplift in consumer engagement with protection?

With such as clear split within the provider camp the campaign was unable to proceed. Baigrie says he has run out of resource and leadership ability to continue, although he hopes someone will take over his efforts.

But will anyone take up the reins? The ABI would face a similar problem to the campaign in terms of a split of members on distribution lines. It is unlikely that a smaller group of providers would want to proceed on their own.

Increasing protection provision should be a top priority for the Government’s proposed financial education body- the CPIEC campaign should be required reading for those charged with running it.

This body, which will be funded by the industry and taxpayer, could do much worse than plough the required resources into such a consumer protection campaign, but perhaps that is wishful thinking.

Moving on to regulation, is it time for the FSA to be given a direct remit to increase the provision of financial services, including protection? Do more radical solutions, such as auto-enrolment into certain types of cover, need to be seriously considered?

In the meantime, the FSA is to publish a further RDR paper this month which will include its latest thoughts on any protection read-across. The £2.3tn protection gap should be weighing heavy on the regulator’s mind. Not just the dangers to consumers of slashing the availability of protection advice but the huge future benefits of a regulatory environment which allows protection advice to blossom.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. The FSA is the problem and not the solution.
    It’s RDR is a regulatory equivalent of the a kings invisible suit where the king is hoodwinked by weavers who claim to make a suit of clothes invisible to any man not the son of his presumed father.

    The FSA has failed every test ever put it and yet still more money is pumped into this Leviathan which draws cash like a financial black hole. If protection comes into the grasp of RDR then watch it head the same way as stakeholder pensions following the removal of distribution fees (yes commission).

    Tom Baigrie campaign may be inspired but how inspiring is our regulator who plots the removal of half of the adviser community by 2112 and who is saying what over this insanity. RDR is a regulatory invisible suit and no one is standing up and saying – actually I can’t see the benefits!

  2. I just want to add my voice of congratulations to Tom Baigrie for taking the project so far and echo the disappointment felt by many that the outcome wasn’t as positive as we had hoped.

    However, I feel guilty that I did little but watch from the sidelines. Raising the profile of protection has to be a collaborative process. I also think product providers should share some of that guilt. To my mind there has to be a way to facilitate mutual agreement on cost allocation for a campaign that ultimately should increase revenue across the industry.

    I only hope the work done to date will be a springboard for the next stage.

  3. I would echoe what Louise has said, thank you for trying Tom and I’m sorry I didn’t help more and I’m sorry that the UK polulation will now be so let down…….

  4. The biggest boost that could possibly be given to the protection market (IMHO) would be for the reintroduction of term insurance as part of a Personal Pension ~ subject to a minimum level of ongoing contributions to retirement benefits.

    Unfortunately, we have a government that seems obstinately opposed to such simple solutions. There are none so blind as those who will not see.

  5. We have many years experience running TV Advertising campaigns to raise awareness of the need for families to consider life and other protection products.

    When our commercial first aired we were almost overwhelmed by the response from the public, and achieved a close rate of one in four, with Level Term cover being, by far, the most popular product. The level of enquiries was such that we decided to offer other IFA firms the opportunity to purchase some from us, having secured agreement first from the enquirer. This then became our revised business model, and we had nearly eighty IFA firms buying from us.

    The FSA then contacted us and advised that
    our company would need to be fully regulated, even if we were offering absolutely no advice, because we were involved in an activity that might result in the purchase of a regulated product.

    The reason I write this is because I think it is important to be clear about two points:-

    1) The public have an appetite for protection products, and will respond to clear advertising messages

    2) Until FSA, or its Goverment sponsors, really embrace the issue all attempts at raising awareness are likely to be thwarted.

    If these two issues can be resolved, and the level of public interest can be proved with cost-effective test campaigns, real support from the life offices will follow. They can then compete on price, and service for the benefit of everyone concerned.

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