Well, it has been quite an interesting month. For the last year now, I have been hearing the market ...
Well, it has been quite an interesting month. For the last year now, I have been hearing the market talk about a replacement for Payment Protection Insurance (PPI). The murmurings have been getting ever louder as it became more obvious that the FSA and the Ombudsman Office were going to clip the bancassurers's tail feathers on this one and that the product may not even survive in its present form.
Loudest among the recent commentators was the Income Protection (IP) Task Force which released the second instalment of its well respected IP White Paper (Page 35). It mooted a hybrid IP/PPI product and forecast that the Competition Commission would 'dramatically change the landscape in which any new products can be sold'.
Now we have seen Foresters Friendly usher in an IP style product that can be sold as easily as PPI, essentially by returning to its 19th century roots (Page 5). Pioneer has also taken up the banner with a simplified IP product (Page 6).
This all bodes well. It is obvious the industry is moving to fill a vacuum opening in its ranks and it is highly likely that we will see a raft of other products to market over the summer. However, it is interesting that the general consensus seems to be that IP will fill the PPI gap, rather than the development of a cleaned-up PPI product.
Of course all are not optimistic in other corners of the market. Swiss Re (Page 8) has noted low expectations in the group risk market, as employers look to their employee benefit costs, while Aegon (Page 10) notes that advisers are not particularly upbeat on the business protection sector, presumably for similar reasons.
Mind you, these have to be put in perspective in terms of the entire financial services market. When looked at in these relative terms, we seem to be entering the summer months in pretty good shape and the industry can be proud as it heads toward the year's halfway point.
