LV= says compulsory protection could ‘decimate’ market

Provider LV= has said it hopes protection will not be made compulsory because it could leave individuals who need comprehensive cover under-insured.

However, the provider said it backed a recent debate about whether protection should be mandatory as it was helping to raise consumer awareness.

Mark Jones, head of protection at LV=, told the COVER Health and Protection Forum that he was concerned a low level of compulsory protection would decimate market opportunities.

"I very much support the argument, but very much hope we don't win it," he said.

"I'd like to go out there and make the case very strongly, but hope we lose.

"It's a great debate to have as it raises the profile of consumer need, but even if you win the argument and put a baseline amount [of mandatory insurance] in, the very worst scenario is everyone thinks they've got enough.

"If everyone thinks they're being taxed and from that they have something they think is just enough, it could decimate the opportunity to get full cover.

"So I very much support the debate and will always go out publicly and say ‘yes this is a great idea let's hear it all the way through', but I would be very disappointed if we won."

The concept was originally raised by PruProtect last month. Following Jones's remarks, Deepak Jobanputra, actuarial and product director at the insurer, expanded on his reasoning for suggesting the move.

"Theoretically everyone needs insurance, there may be some who are very wealthy or can't afford it, but generally everyone needs it," he said.

"We need to get consumers to understand that point, that everyone needs insurance - not just life but critical illness as well - and if we lobby for those initiatives it might push forward that debate."

However, Jobanputra was aware that it was unlikely to succeed and that there may be difficulty implementing the change.

"I'd love insurance to be compulsory, that would be fantastic, but it's very unlikely," he said.

"Getting it on consumers' agenda and allowing them to make an informed decision about the risks they're running but are not aware of is the main thing.

"There are lots of issues that surround it - it's by no means simple and I completely understand that nobody wants to be told you must spend your money this way - but it's a case of taking responsibility.

"The adviser's role in this compulsory state would also be incredibly important because consumers don't understand insurance - as hard as we try.

"I've not come across anyone who's been able to define to me what simple products are, so I think the intermediary role as part of this is incredibly valuable," he added.