There is no doubt the Association of British Insurers (ABI) is conducting its own analysis of th...
There is no doubt the Association of British Insurers (ABI) is conducting its own analysis of the LifeSearch research on members' views. The coverage - 23 insurers and 5 reinsurers - means it cannot be dismissed as being unrepresentative of the protection market. And the headline findings that only 6% regard the ABI as doing a good job and that 67% believe that the ABI needs to improve its performance, conducting its business and representing the industry, makes grim reading.
The ABI's role has always involved a balance between building consensus when change is needed, leadership when consensus cannot be achieved and lobbying for members' interests with the Government, regulators, and the British Medical Association.
So what has gone wrong? On conducting its business the clue probably lies in the finding that 56% believe in the need for an agreed level of standardisation (of income protection (IP)) and 15% believe that standardisation would be detrimental to consumer and company interests.
Here the ABI and the IP Task Force are stuck between a rock and a hard place. While the majority is frustrated by endless discussions and no progress, a determined minority believes the whole concept is misconceived and possibly illegal under competition law.
Somehow the ABI needs to break this deadlock. I think the key lies in combining the IP debate with payment protection insurance (PPI) and arriving at new minimum standards for a combined mass market product, which does not remove the niche market for more complex products and also preserves and grows the group IP market. For too long, IP has been regarded as good and PPI as bad and these blinkers need to be removed.
On representation, the cause is nearly always to be found in the ABI's relations with the Financial Services Authority and/or the Financial Ombudsman Service. Of the former, the power of the investment life market often means protection insurance gets swept up into investment policy, such as in distribution.
The research is silent on this but some members were not entirely happy about the ABI guidelines on non-disclosure. This will blow over. The ABI deserves praise for its leadership in achieving a significant improvement for consumers and industry reputation.
Overall, the ABI needs a big win for its members' business and resolving the IP, PPI deadlock could provide this.
Richard Walsh is managing director of SPPR Consulting
