IP White Paper revealed a lack of understanding has stunted product's growth
By Lucy Quinton
Advisers must be properly trained and understand the causes and natures of long-term disability for income protection (IP) to become a success, according to the IP Task Force White Paper published at the end of last year.
The White Paper suggested the industry must also ensure it is profitable for advisers to sell IP.
In addition, it said consumers should be made aware of the risks they face without cover. Applying for IP and getting policies on risk should also be made easy.
The publication argued that sales levels show the product needs more than a face lift. Research in the report indicated IP does not sell because people do not believe there is a need for this product. The report also added that standardisation would be needed to make comparisons possible.
Peter Le Beau and Clive Waller, co-founders and authors of the White Paper, said that professional and trade associations have a huge role to play and said the insurance industry must work alongside the Government as the interests are the same.
Key advisers, insurers and other industry commentators gathered at the launch of the White Paper at the Swiss Re headquarters on 11 December. However, the Financial Services Authority (FSA) failed to turn up.
FSA spokesperson, Robin Gordon-Walker, commented: "We can't always be everywhere" and stressed that it was by no means boycotting it at all.
Le Beau confirmed that the FSA was invited but did not attend. He added: "We are very keen to engage with the FSA in the debate because we believe the application of Insurance Conduct Of Business and Treating Customers Fairly, as we understand them, would suggest IP is a significantly more suitable product in most instances than payment protection insurance. Unfortunately, they could not be there on the day, but Clive and I hope to meet them and invite them to address the IP Task Force early in 2007."
According to statistics provided by Scottish Provident, people currently fail to buy IP because 49% do not understand the need for it; 3% considered the product too complex; 9% said they were deterred because of the perceived claims experience, such as declined claims; and 37% said the product was too expensive. The remaining 11% were spoiled responses.
The White Paper launch back in December was the culmination of a year-long consultation between insurers, reinsurers and intermediaries.
