The ABI fails to notice opportunities for IP
While there has been much comment on the proposals for payment protection insurance (PPI) by the Competition Commission, one of the industry's big players could be missing a trick. The Association of British Insurers (ABI) is neglecting to do itself any favours by continuing to support PPI while, at the same time, keeping quiet about income protection cover.
The most-recent happenstance of this is the body's reaction to the provisional decision to ban credit providers from selling PPI at the point when consumers take out credit. The commission proposes that they must wait two weeks before contacting clients, although intermediaries will be exempt. The aim is to eradicate the gross mis-selling that currently defines the PPI market.
Yet the ABI is once again repeating its stance from earlier in the year. Nick Starling, director of general insurance at the body, said in a press statement: "This is devastating news for consumers. By effectively denying consumers PPI in the very economic climate that they need it most, the Competition Commission has got this completely wrong. Unemployment claims on PPI policies have grown by 69% in the last 12 months, showing just how valuable this cover is proving to be."
He may have a point but this may not be devastating news for consumers, as there is already evidence they are capable of finding their own cover (see page 10). Bancassurers could not be allowed to continue selling PPI as they were. This is great news in one sense but only goes part-way to truly reforming the market as it does not encourage consumers to take out protection.
The ABI could see this as an opportunity to grow the protection market through its own actions rather than sitting back and letting the provisional rulings, in the ABI's own words, '... kill the PPI market altogether, leaving millions of consumers with no protection at all'.
People do not buy protection, often because they simply do not know the products are out there. So someone should start educating them.
The Competition Commission has said providers of credit are no longer allowed to approach customers about insurance sales within a fortnight of a loan being taken out. That is a situation that can be worked with, not around.
So how about a generic, non-brand driven information booklet that outlines the need for protection and is distributed to customers at the point of sale? It could outline the protection products available, what is covered and the features behind each policy. And if anyone doubts that generic information-spreading campaigns could work, then they should take a look at the advertising campaign spear-headed by LifeSearch which is gathering pace.
So who could be doing this? Well, how about the ABI? If it wants to improve the industry through its standing with the public and fight for the interests of consumers at the same time, then this is the sort of thing it should be coordinating.
