With the COVER campaign ringing bells across the industry, Peter Le Beau explains how his passion for promoting protection dates back to one memorable student party
When I was 18 I went to a student party. I was not a student as I had just joined Commercial Union but I think my hair was long enough to pass for one and I dressed down to some effect.
I felt a little like an undercover agent who could be unmasked at any moment and, sure enough, during the course of the evening I was revealed in my true colours - an employee of an insurance company. Shock and horror ensued as I was derided as a capitalist pig and someone who exploited the working classes by taking their money while never intending to pay a claim.
I began a passionate defence of what I did, pointing out the part insurance plays in the social fabric, how it contributes to the economy and then started to illustrate how it could help to rebuild peoples' lives or provide huge financial support at a time of crisis. My rhetoric won a few people over yet I came away from the party feeling strangely hollow.
I felt that there was a very real purpose to the industry I was in but that very few people in that industry seemed to share my passion for what they could do to help people protect and reshape their lives. I remember vowing that when I reached a position to do so I would do everything I could to impress on people the value of protection.
Now that I am an independent consultant I feel I have the freedom to focus on the things that I believe are valuable and important. In my previous role as a reinsurer at Swiss Re I was lucky enough to work for a company that did first class research and that uncovered some of the current deficiencies in the protection market, including a protection gap of well over £2trn.
That platform has helped me to establish myself in the current protection industry and to attempt to voice some of the major concerns that I have about the current market situation.
I therefore needed little encouragement when kindly asked to write an article about why promoting protection matters and what it can achieve. But, in fairness, I feel I must also address the obstacles I feel it has to overcome. It is not enough to send out a clarion call to the British public that they need what we have to offer - although this would be a very good starting point - when the industry may not be able to respond positively to the sort of influx of business this could give rise to. I will return to the subjects of structure, service and distribution in due course but initially I would like to outline the way I believe protection needs should be prioritised.
When Clive Waller and I set up the Income Protection Task Force a couple of years ago, we felt that it may be enough to rally support in the industry and to publish a White Paper setting out a new direction for the product.
Such has been the response to that work that a bigger and more diverse group is carrying the baton into 2007 to try to realise some of the key recommendations of the White Paper. One of these involved setting up a 'Protection Hierarchy'. The starting point of this is an acknowledgement that if financial resources are limited applicants must prioritise their needs. We believe that the biggest need is protection of income.
In promoting protection it is axiomatic that the industry wants to present the best advice and best products to the public, not help in a mass deception because it bumps up lenders' profits. Therefore, we believe that protection of income matters most because if income disappears for most people and they must depend on long-term state benefits there is a huge risk of social drift and family break-up.
Case study
I recently watched the descent of a friend into a hostel for homeless men. Five years ago, he was a company director with a good family life and a lovely home. A combination of medical problems has led him into a nightmare existence where his marriage broke up, his house was sold and his income dried up because of his inability to work. It is a truly terrifying example of what awaits a large number of us if we lose our job and effectively our income. Cover against premature death is also vitally important and then some critical illness cover can be taken out in conjunction with these products if income allows, so that an injection of capital is available upon suffering illness.
The industry's products may not yet meet all of the needs of the insuring public in exactly the way we need them to. We need a better combination of hybrid products to provide capital and income, we need to make income protection much easier to write with an acceptable premium and we need to look at whether protection as a concept can transcend artificial regulatory boundaries and whether there is potential for more imaginative packaging of 'general' with 'life' products as Axa tried to do a couple of years ago.
We need other things too. We need better education of advisers and bank staff so that they can give the appropriate advice to customers. We need better, slicker underwriting and customer service so that advisers do not become disenchanted with protection - especially if we have just convinced them of its value. One of my projects this year is to look at ways in which we can improve customer service and I believe the industry realises that it can be much better. We have yet to harness the value of technology, consistently, for our customers' benefit and we must do so much more effectively if we are not to lose the faith of advisers and their customers.
We also need to make the industry that exists to offer financial protection to the public much less risk-averse. As prices have ostensibly gone down, more and more lives are receiving ratings, decisions are slower, smaller amounts of cover are placeable and there exists in some areas serious distrust between some providers and some reinsurers. This is not a sound platform upon which to base such a worthwhile concept as promoting protection.
While the supply chain of protection insurance is potentially flawed, perhaps the most important thing we need to develop within the industry is trust. After all, if we do not trust each other how can we expect the public to trust us to deliver on the very important promises we make to them?
Above all, we need to realise that the industry will only start to convince the public of the value of protection if we develop a united front rather than criticise competitors, effectively undermining consumers' faith in the benefits we have to offer. Whether this could stretch to a strong generic advertising campaign or not is a moot point but I contend it is an idea that is very well worth considering.
Mutual support is not anti-competitive, it is an important prerequisite of any industry that the public is prepared to rely on.
A very experienced sales manager of long acquaintance reminds me that he can look in the mirror with a clear conscience because he has sold countless policies to people who have died prematurely or suffered serious ill-health. Often he had a difficult job to convince them to do this but he managed to do so because he believed in the value of those products and stressed to them how vital it was that they did something to cover themselves.
It is a bittersweet situation when you draw satisfaction from knowing that you helped to alleviate financial disaster, in sad health circumstances, or early death but there must be immense satisfaction in looking at the financial lifeline you helped to provide.
Sometimes I think we forget just how important what we do can be to our clients. It sounds an old-fashioned message but time has not eroded the importance of what we provide.
Only the UK protection industry can provide this lifeline so it is with a real sense of conviction that I urge you to throw your weight behind COVER's Promoting Protection campaign. It could be one of the most important things this industry has ever done.
Peter Le Beau is the founder and chief executive of Le Beau Visage
