There have been five important updates from the world of protection insurance in recent months, which I shall summarise here.
First, while product development, understandably, has been limited in recent years, the protection industry is beginning to see positive changes.
Mutual society Holloway Friendly recently launched a new income protection plan that replaces its existing products.
The My Sick Pay proposition is based on an individual pricing approach, meaning underwriting will take into consideration the unique circumstances of applicants, such as whether they smoke or what their employment is.
My Sick Pay is based on an individual pricing approach
Protection Review marketing director Roger Edwards says: “This hasn’t just simplified the cover; it’s also taken a red pen to any bloated copy and technical jargon. I don’t think I’ve ever seen anyone go as far.
“The result is easy to read and understand. Advisers and customers will appreciate the clarity, but most importantly they’ll find it engaging too.”
Second, protection adviser LifeSearch has published a report that criticises broker firms operating non-advised and telesales guidance processes, while challenging insurers that support those firms to do better.
Legal & General expects the UK protection market to dip this year
The report includes independently conducted mystery shopping research and reinsurer data, which LifeSearch says shows poor customer outcomes and wider long-term damage to the protection market.
LifeSearch accuses non-advice firms of being able to churn “good policies for worse ones if they are careful to make no specific recommendations”.
It adds: “The situation is now reminiscent of previous scandals in financial services.”
All change at the PDG
Next, the Protection Distributors Group (PDG) has announced three new members and a new chair.
Radcliffe & Co Independent Financial Advisers, The Right Mortgage and Vita have joined the group, whose members solely consist of protection advice firms.
Vita director Paul Reed says: “Our team is passionate about effecting change positively and ensuring we help build trust within the insurance industry.
While product development, understandably, has been limited in recent years, the protection industry is beginning to see positive changes
“Being part of this group can help ensure that we, along with the other members, help drive best behaviour across the board — from intermediaries to insurers — and deliver better consumer outcomes.”
Meanwhile, Alan Knowles has announced he will be stepping down after three years as PDG chair to continue focusing on his adviser business, Cura Financial Services.
Neil McCarthy, who recently retired from LifeQuote after 35 years in the protection industry, has taken over as acting chair of the PDG until the end of the year.
McCarthy says: “I’m really pleased to continue working with the PDG board following my involvement over the past few years.
LV= has announced it will continue to offer its payment break option
“There are plenty of initiatives and ideas that the board have identified to improve consumer outcomes, and I’m looking forward to working with experienced practitioners and business owners to create positive changes.”
Supporting customers
Fourth, LV= has announced it will continue to offer its payment break option in a bid to maintain support for vulnerable customers and the self-employed.
The option was introduced at the start of the pandemic to help members who were facing financial difficulties, enabling eligible policyholders to stop paying premiums for a limited period without the risk of losing cover.
Payment breaks are offered one month at a time, for up to three months, without the requirement for premiums to be repaid.
LV= stated that, since April 2020 — during the peak lockdown period — more than 300 customers have been able to benefit from this payment break option.
The PDG has announced three new members and a new chair
Finally, Legal & General says it expects the UK protection market to dip this year after it reported record retail sales in 2021 driven by the busy housing market. The insurer completed £200m-worth of new retail protection sales last year — up 14% from £175m in 2020 — but warned the UK retail market may decline this year as rising inflation hits family budgets.
L&G paid out £2.1bn of protection claims in 2021 and reported a 42% rise in operating profit to £268m.
Kevin Carr is chief executive of Protection Review and managing director of Carr Consulting & Communications
