Industry reaction: Guardian CIC and terminal illness

Yesterday we announced Guardian's simplified definitions and the removal of exclusions for critical illness cover and terminal illness (for life cover).

In reaction, Roger Edwards, marketing director at Protection Review, said: "We're delighted to welcome this fresh approach from a new entrant. For a long time, Protection Review has been urging the industry to consider ways to create more trust with consumers - to be simpler, more human, and braver.

"Over the years we've seen providers tinkering with definitions, reducing the scope of what they cover or adding more options. Guardian, by contrast, are taking the industry in a different direction," he added. "We really like this approach - it's grown up protection insurance that will change the market for the better."

Ian McKenna, CEO of F&TRC, agrees. He believes it is clear evidence that "tides have changed" for protection.

"A decade ago we were seeing increasingly complex wordings and a conditions race where insurers were competing on the number of conditions covered, with little attention to how much value was actually added for the customer," he said.

"Over the last year or so the focus has become around the actual quality of cover provided and delivering greater clarity to the customer. Guardian's launch cements this as where the smart money is going. Their wordings are a joy to read compared to some other insurers. This is a real win for the industry, advisers and most importantly consumers."

Adviser viewpoint 

"It's great to see a new entrant in the protection market, especially one that comes free of legacy systems and with a desire to bring some new ideas to the market," said Lucy Brown, head of protection at L&C Mortgages. "Guardian's aim to provide something different rather than a ‘me too' approach is welcome and its clear and transparent proposition will hopefully provide better outcomes for our customers.

Focus on clarity of definitions for CIC will help drive better customer understanding and with it will come successful claims, she said.

"We also like the ability to flex the amount of cover and the policies that the customer holds within the first two years, which should allow advisers to engage with customers around their broader protection needs and ultimately increase the number of families we protect," she said.

LifeSearch's Life office relationship director Emma Thomson is similarly encouraged.

"It's great to have another insurer on the market to push some boundaries and hopefully help grow the market by doing something different rather than just competing on cost," she said. "They are looking to do different things to help policyholders going forward; it appears their approach is not just a case of taking out a policy and then job done, it is about looking after customers after that to let the policy flex and grow as a customer changes their circumstances."

Menu-based solution

With regards to Protection Builder, Guardian's menu-based solution for advisers, while offering similarities with what other insurers already provide, she highlighted a few key differences.

"Protection Builder is a menu-based proposition where you can add different levels of cover, where you can add different lives into a policy - a lot of insurers offer that," she said. "However Guardian don't offer joint life, first death policies and they also don't offer accelerated CIC - their approach is that they want the best outcomes for customers - so if somebody does suffer a critical illness, they still have the life cover; their philosophy is two single life policies are effectively better than a joint life, that way both people are independently insured.

"This is what a lot of advisers would recommend anyway, so for Guardian to build their proposition around what advisers would see as best advice is for me a positive move," she added.

In the long run this is likely to make life easier for advisers, however Thomson anticipates a "transition phase" for advisers "to get their head round the fact that once they quote a joint life policy it will come up as two policies". However she also said that ultimately the customer will end up with cover that was better than what they were perhaps anticipating.

Another key introduction is pay-out planner to combat that issue that not enough policyholders put their policies into trusts.

"It's a very simple way of nominating a beneficiary rather than appointing lots of trustees and sending trust forms around the country to get signed," she said.

While Thomson welcomes the move, one thing to bear in mind, she said, is that policyholders will need to remain informed as to who their main beneficiaries are to avoid future complications during the life of the policy. More on pay-out planner in due course.