Last year in COVER, I raised the concept of a consumer focused quality standard for IP (QS) which would be underpinned by an Office of Fair Trading (OFT) approved code of practice.
The idea came from the IP Task Force's suggestion of a kite mark but, unlike their proposal, it would only apply to a section of the market. This is normal practice for OFT codes and has the huge advantage of avoiding the need for cross-industry consensus. While progress has been made on consensus building there seems to be insuperable obstacles in some areas. I believe this QS will break the log-jam for income protection products and be of huge benefit to consumers.
As with all ideas the devil is in the detail, but I am pleased to say Karin Lloyd, a strategic and technical claims consultant, and I am taking the initiative forward and a number of insurance companies have expressed an interest in progressing the proposal. It is, of course, open to other insurers to take part too, provided they are prepared to engage with the QS in a positive way. To be in from the start though, they will need to be on board by the end of January. In addition we have been in close contact with the consumer organisation WHICH? and the IP Task Force to engage their support. At the time of writing, WHICH? commented: "The standards proposed are equal to and, in some cases, better than the criteria we impose on our Best Buy IP products. We believe this initiative should raise the bar in terms of product development at a time when consumers desperately need safer, better financial products that do what they are supposed to do" and insurance consultant Peter Le Beau said that he believed that: "The QS would be very important in reassuring the public and driving forward improvements".
So what kind of things are we looking for the QS to cover? It is early days yet but here are a few of the ideas we are examining: a product envelope that offers the option of unemployment as well as sickness cover - very important in these financially difficult times; IP that is available to the mass market and not just high net worth clients; the end of the ‘continuing obligation to disclose' - consumers do not understand what it means; rehabilitation support available as standard - to support claimants efforts to get back to work, and whether premiums should be guaranteed and exclusions apply.
Developing the QS will not be a back-room exercise and it will be forward looking - rather than rooted in the past. To this end we will be carrying out a series of interviews with key stakeholders from a wide range of organisations using scenario planning techniques. This is so we can be sure that whatever is proposed for the QS is robust against uncertain times.
Research will include distribution and consumer perspectives. Ultimately we will look for the QS to be an OFT and FSA supported code for participating companies.
I do hope this initiative will be a key part of the new dawn for IP in 2010 and beyond. If ever there was a need for reliable cover for sickness and unemployment the time must be now. It's going to be tough out there whichever Party wins the next election.
Richard Walsh is a director and fellow of SAMI Consulting
www.samiconsulting.co.uk
