The Income Protection Task Force did not anticipate such resistance to its advice, but, as Peter Le Beau explains, the team is still struggling to resuscitate the beleaguered product.
When the Income Protection Task Force was launched, none of its founders realised how challenging it would be to develop a much more positive profile for income protection (IP).
But while some of the problems were anticipated, others were not. It came as no surprise that IP was perceived as a complex and heavily underwritten product, or that people do not seem to appreciate the need for it, despite the fact that it protects their income against continuing ill-health. It was also not unexpected that advisers find it much easier to sell lump sums rather than the promise of a protected percentage of income.
The IP Task Force was, however, surprised at being accused of running a networking club for egocentrics, a promotional vehicle for the founders' businesses.
Well, nobody said it would be easy. But in case there should be any mistake, the IP Task Force remains absolutely determined to succeed in its quest to bring this product to a much wider market and to help many more families avoid the disaster of financial meltdown should the breadwinner become long-term disabled.
It has divided its work into four groups, with the first group looking at product and process. While the task force has an enormous belief in the value of the concept, it is clear that the traditional product has not been successful for a number of reasons. A lot of this is linked to what is seen by many as a very ponderous underwriting process. This group is looking at ideas that may improve this situation and has already held a workshop with the Association of British Insurers Protection Committee to look at ideas.
A second group is looking at regulation and government issues and is particularly interested in the treatment of IP in the new Insurance Conduct of Business rules. It does not seem logical that protection products, in their broadest sense, are split into two categories and it may be more appropriate to look at one regulatory regime for all protection products. The IP Task Force will be outlining its thoughts to the Financial Services Authority.
The two other work groups are looking at improving awareness, with one focusing on the media and helping journalists understand the value of the product better and the other trying to increase adviser awareness.
While the task force is intending to stimulate generic awareness of IP, there can be no way in which individual members compromise the specific initiatives or ideas that their companies are developing. In this sense, the task force is cognisant of the constraints imposed by the Competition Act. Nevertheless, it believes that despite mocking in some quarters, there is an increased momentum about the product and new ideas will emerge in the next few months that drive the product forward.
Perhaps the most important thing that needs to be developed is a series of case studies. A search through the weekend broadsheets will usually reveal real-life examples of how protection products have helped families deal with the consequences of illnesses or accidents. There are not enough written-up examples of how IP has done this and the IP Task Force wants to ensure that it is able to furnish advisers with some compelling stories because there are plenty of cases where an IP product has made an enormous difference to peoples' lives. More companies need to be willing to provide these for the benefit of the industry.
It is ironic that almost everyone the task force speaks to expresses real support for the concept of IP but, at the same time, many articulate various reasons why they do not sell the product successfully.
The industry has a choice. It can walk away from client need or it can look at productive ways of helping people to deal with one of life's major crises. The product may have to change radically, it may have to become much simpler and be underwritten in a more pragmatic way. The indusry needs to show people how real and relevant the risk of disability is and the consequences should it occur, and it should not abdicate its responsibilities. The IP Task Force exists to ensure it does not. n
Peter Le Beau is managing director of Le Beau Visage and co-founder of the IP Task Force
