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.