The health insurance and protection market covered
Anti-compulsion voices "defeatist" - PruProtect
PruProtect has called critics of its desire for protection to be made compulsory as being “defeatist” and argued that the need is “very clear”.
In a blog written for COVER, Deepak Jobanputra, actuarial and product director at PruProtect, said an element of compulsion could be a very effective catalyst in increasing consumer understanding of protection insurance.
The provider originally kicked-off the debate by making the call for protection to be made mandatory as it released its first half results.
However since then several prominent members of the protection industry have dismissed the suggestion.
Group risk trade body Grid, called for incentives rather than compulsion, while Roger Edwards, proposition director for Bright Grey and Scottish Provident, said the public would potentially see this as another tax and that it did not address people's differing needs.
This latter point was highlighted by Alan Lakey, principal of Highclere Financial Services, who noted that even if it was compulsory through workplace schemes it would still leave many unaccounted for such as the self-employed or homemakers.
The practice of compulsory insurance is also against ABI policy.
Nick Kirwan, assistant director of health and protection at the ABI, said that those insurances currently compulsory were due to covering legal risks associated with them.
He also acknowledged that there would be problems with enforcing such a regime, while the ABI and other industry bodies have also been engaging with government to consider greater involvement in covering the state welfare system.
However, Andy Milburn, interim head of marketing at Ageas Protect, supported the call from PruProtect and cited his experience of the Australian system.
In his latest response, Jobanputra explained that progress in medical science was making protection against death insufficient as many more previously fatal diseases were now treatable but left lasting effects on lives.
He also bemoaned the current state of the market, saying: "It is unfortunate that the value of protection has been eroded over time, due in part to the incessant focus on price. The ‘buy it as cheap as possible' attitude detracts from meeting the real needs of consumers."
Jobanputra continued by supporting the role of advisers in protection sales, adding: "In order to understand and genuinely meet consumers' needs the role of advice cannot be overlooked.
"I believe advisers are best placed to help consumers with this fundamental aspect of their life planning. Absolute compulsion may not be an easily achievable reality but our aim must be to provide protection to our society," he concluded.
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cheers mouse
Thanks "nonny mouse" for your comments. Sorry about the spelling error. You must have nothing better to do. Who said anything about churning? Consumers already have access to discounted life assurance via commission rebating websites. Also, why should I expect you to care about my income whatever the source. All I was trying to point out is that compulsion, which I think is a bad idea, would result in a move away from brokers into the hands of the insurance companies. We can't work for nothing and few clients would want to pay a fee to arrange life assurance, etc. Do you arrange protection for clients? How are you paid for such advice?
Posted by: Peter Baker | Sep 16 2011
Ethics & the FSA
Correct me if I am wrong, but one of the key parts of the RDR is ETHICS. As such the word compulsion and ethics appears at odds. If you remember, at one point we had complusory annuitisation, which was accepted to be unethical as it was contrary to the beliefs of some religious groups including the Plymouth Bretheren and hence ASP. People may also recall that when the FSA tried to put pressure on advisers to only use ASP for people on religious grounds, it was pointed out this was DISCRIMATORY as ASP could not be limited to only one religious group. To then start talking about comulsory lifecover, when that is contrary to several religious groups is somewhat of a backward step. Auto enrolment as with NEST might JUST be an acceptable method,, but compulsion... Next it will be compulsory sterilisation of anyone with a hereditary disease....
Posted by: Nameless | Sep 16 2011
Who is important here?
Re: "This idea would be another blow to IFA's and mortgage brokers but large insurance companies could benefit by using their cheap call centres and email marketing to clean up. Cheers Deepak. Nice to know where you and Pruprotect see your future! Posted by: Peter Baker" Actually it's the general public, the end consumers, who are important, not IFAs (no apostrophe by the way). I couldn't care less about your commission which costs insurance companies so much (especially when you churn), I would rather see consumers buying the cover they need no matter what route they take. And IFAs haven't exactly been successful in selling the products have they, or we wouldn't have such a huge protection gap, would we?
Posted by: A Nonny Mouse | Sep 15 2011
Anti-compulsion PruProtect
The people who need protection the most are the low paid, disabled or unwell but they are having a tough enough time at present coping with 4.5% inflation, getting little or no pay increases, paying for their ever increasing compulsory car insurance, home insurance (If they have any.)train fares and making pension provision. If the Pru guy has his way they might as well start paying over their whole pay chequess to the insurance and utility companies and starve.
Posted by: John Smyth | Sep 13 2011
Nice to know!
As with NEST pensions, compulsion would see commissions vanish. This idea would be another blow to IFA's and mortgage brokers but large insurance companies could benefit by using their cheap call centres and email marketing to clean up. Cheers Deepak. Nice to know where you and Pruprotect see your future!
Posted by: Peter Baker | Sep 13 2011
Not The Way Forward
Compulsion is the action of a state or body that thinks it knows what is best for us. I am a firm believer in personal responsibility and believe that compulsion actually acts against our individual interests. Take pensions, where benign thinking introduced the pension credit which then acted as a barrier to persuading consumers that they should take personal responsibility for their retirement income. There is no means by which a fair or reasonable method of protection can be introduced. Is it based on income, sex, age, family size? In fact, if the state proposed a minimum level of CI or IP cover for all citizens it would act as a deterrent in that it provides an argument against taking out a more comprehensive personal arrangement. This already happens with the state pension being used as an argument against further saving.
Posted by: Alan Lakey | Sep 13 2011
AAAAAAGGGGGHHHHH!!!!
Guys Why don't we consider doing BOTH like the Aussies do! We shouldn't be arguing about one route against the other. Why do we always do this?
Posted by: Andy Milburn | Sep 13 2011
Defeatist? No sorry - realistic.
I stick by what I said in my earlier comment. Am I being defeatist? No I'm being realistic. Is the implication that I do not care about the future of the industry? Come along to The Future of Critical Illness Summit that I am running in London tomorrow and see how committed we are to the future of protection. #FutureofCI http://www.uncovered-uk.com/2011/08/12/cisummit/
Posted by: Roger Edwards | Sep 13 2011
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