Income protection
Income protection (IP) insurance must undergo fundamental changes if the market is ever to escape dwindling sales figures, claimed Nick Kirwan, protection market director at Scottish Widows.
Addressing delegates, Kirwan said that providers would have to rethink both the product's design and its presentation if they wish to see an end to the current trend. "There is a massive need for income protection, but despite this it accounts for only a tiny proportion of protection sales. Other insurance products like mortgage payment protection insurance outsell it five to one," he said.
Kirwan argued that the lack of interest in IP is not due to the lack of need for the product or its pricing, but because of its complexity, which has left many consumers confused as to what the product actually offers. "Customers choice correlates to what they understand and not to what they need," Kirwan said. "This is an important lesson for us. We need to simplify the product so that consumers will understand what it offers."
The industry has sold six million critical illness insurance policies, but only two million IP policies. "If we do it the right way, we have got an opportunity here to sell another four million IP policies. This would amount to £1.24bn in commission," added Kirwan.
