Income Protection
Offering additional support services to clients buying income protection (IP) could finally help the product move away from stagnant sales figures, claims Roger Edwards, products director at Bright Grey.
Edwards told delegates at the COVER Protection Forum that providers need to try to offer more services alongside the product. This is because nearly three in four people are more likely to buy a product if they receive help with rehabilitation as an added benefit.
Quoting research carried out by NMG, Edwards said 92% of consumers would value support services such as trained nurses or counsellors. Despite the additional cost of introducing support services, Edwards encouraged the idea, explaining nine out of ten people wanting extra benefits would also be willing to pay more for them.
Looking at the way the product has developed over the years, Edwards said the problems with IP have remained more or less the same throughout the course of its existence. He cited the product's complexity, "the horrendous underwriting procedure that follows", and the fact that clients do not know how much of a payout they will receive until they claim, as three of the main obstacles standing in the way of IP becoming the number one protection product.
Edwards' comments have been backed by recent findings from reinsurer, Swiss Re, which showed that IP market growth has remained steady since 1999. Worse still, the results indicated that IP sales in 2003 actually fell from nearly 250,000 policies in 2002 to just over 200,000.
Edwards questioned what the industry can do to change the way IP is perceived. "We may have to force Cinderella to go to the ball," he said. "As an industry, we really have to get to grips with these problems and try to solve them."
Edwards stressed the market is calling out for innovation and urged providers to re-assess their propositions.
"Insurers could learn from the simplicity of mortgage payment protection insurance," he said. "Income protection cover could be simplified by allowing people to self-certify at outset and then do the financial underwriting at claim." Another way to incentivise people to opt for income protection, he said, could be to offer some form of guaranteed sum at claim.
