Review: £2.3trn protection gap still exists despite industry efforts
By Lucy Quinton
There has been little movement in closing the protection gap, according to the latest Protection Review Report due to be published this month.
According to Peter Le Beau, managing director of Le Beau Visage and co-author of the review: "The market is holding up reasonably well compared to 2006 but there is still no sign of a real move to close the £2.3trn protection gap."
Roy McLoughlin, senior partner at Master Adviser, said, however, that he believed the protection gap would not close at an efficient pace until an education campaign orchestrated between authorities, insurers and the adviser community gained pace.
He added that income protection (IP) should be at the heart of this but it is still a vastly undersold and misunderstood product.
Andy Couchman, director of Bank House Communications and co-author of the report, said there was a strong focus on IP "suggesting to both IFAs and providers that this product has real relevance" in this market.
Steve Casey, product manager at Bupa Individual Protection, agreed with the importance of IP in this market, adding that the IP Taskforce was going from strength to strength with lots of sub-groups now carrying out specific work targeted at key sectors of the industry. Casey also said Bupa recognised the importance of IP and was looking to enable applications for IP to be made online "by the end of the year, if not sooner".
In addition, Le Beau said the review did show an interest in improving service and administration levels throughout the industry over the past year.
Casey agreed with Le Beau and added that, since he had joined Bupa, it had spent a lot of time working on these areas, which has involved ensuring that it is now possible to trade online. Casey said Bupa still accepted paper applications and would continue to do so for the foreseeable future but that it was easier online. "We are delivering on our promises," he said.
On the private medical insurance (PMI) sector side, the Protection Review highlighted growing concern over the state of the NHS, which translated as "more positive opportunities for PMI," Couchman said.
Phil Taylor, chairman of the Association of Medical Insurance Intermediaries, agreed with Couchman, and added that recent figures from the Association of British Insurers showed the number of people covered by individually-paid PMI policies increased in 2006, reversing the trend of recent years. "Our impression is that this trend is fuelled by the ongoing publicity that the NHS is getting and the realisation that the service it will offer in the future will never meet the requirements of today's consumer society," Taylor said.
