2013 has been largely free of regulatory change. So what should the protection sector be building on? Emma Thomson investigates.
This year began with a degree of uncertainty and apprehension for many. It was unclear what the effects of the RDR, I-E and G-Day would have for intermediaries, insurers and consumers. So what have we seen this year?
2012 saw little innovation, because insurers were focusing on regulatory changes, but this year has seen an increased number of proposition enhancements. Critical Illness has been the dominant area of product development, with some providers making nominal tweaks, while others, such as LV=, made significant changes.
There has been criticism in the past towards providers that have played the numbers game, adding on illnesses which few would claim on. What has been interesting is there has been an increased focus on improving definitions, adding on partial payments that have value and improving critical illness provision for children.
PruProtect has further integrated its wellbeing programme, Vitality, into the cover offered, and enhancing its Serious Illness Cover to provide even more extensive coverage. All of this adds up to welcome news for consumers.
The poor relation
Income Protection (IP) is the poor relation when it comes to development, despite being the product most clients should prioritise. Thankfully, it has not been completely forgotten, with British Friendly launching a new product and Scottish Provident enhancing its own. Hopefully, 2014 will see providers doing more to make IP a leading part of their propositions to encourage take-up.
We also saw LV= launch a direct to consumer offering called ‘Sick Pay Insurance’, a response to the government’s simple products initiative that aims to get more people buying financial products. While it has real limitations compared with full IP, it is an innovative product that should encourage more people to protect themselves against being unable to work due to sickness.
LV= should be congratulated for trying something new. Sceptics may have dismissed this initiative as ‘not proper IP’. But we can all agree that not enough people are buying these products.
Overall, the Simple Products initiative has this year featured in many industry forums,this year at conferences and in the minds of product developers. There has also been an overwhelming desire from many to simplify not just the products but the processes, too.
We need to make it easier for clients and intermediaries to process applications, and intermediaries need simpler systems to help them manage the pipeline and, perhaps most importantly, support their existing clients to improve retention rates.
An effective, yet straightforward e-commerce proposition might not win business from IFAs in the same way that products and pricing will, but it should not be neglected. Margins are tight and IFAs will be attracted by systems that keep costs down. Providers will benefit from cost savings that could be invested in other improvements.
This year has seen a few small changes to underwriting rules, but systems development has largely been held back as a result of the regulatory changes.
There are a number of projects being worked on which is encouraging, but we won’t see the results of these until 2014 or 2015.
What do consumers and intermediaries need in terms of systems? There are three key aspects that an online proposition should have: Quote & Apply, Pipeline Management and Existing Business. Most offer the first, a few offer the second, but the third has been largely ignored.