The simple products report could be the catalyst of a "clear blue water" reputation for income protection, despite its exclusion from the first phase of products, Unum has said.
The final independent Sergeant Review of simple financial products report - published today - stated consumer representatives were highly supportive of trying to develop an income protection product but despite "considerable efforts" no product design was forthcoming.
John Letizia, head of public affairs at Unum, said: "If people believe that the current IP product options in the market are too complicated then this route of simple products marked by an independent assessor might encourage more to go down the route of protection."
The report also highlighted another possibility of delivering the product through employers in the form of group income replacement schemes.
"I take the point that the short-term income replacement proposals in the report do look very similar to existing short-term income protection (STIP) and group schemes are already available," Letizia said.
"But the major difference is that the review will develop products that are approved by the British Standards Institution (BSI). It creates an opportunity to encourage companies to look to simple products as a starting point and a way in to other protection options."
The report said: "...no product design was forthcoming that we could confidently recommend should be immediately included in the Simple Financial Product suite that did not carry the risk of harming the reputation of the initiative through potential regulatory uncertainty, consumer misunderstanding and consequent mis-buying. However, we believe that work on developing such a product should continue."
The ABI has committed to further investigating the available options in consultation with a view to reaching final conclusions and recommendations within six months.
The ABI were unavailable for comment on how the further investigation would take place.
Letizia said: "If the industry is serious about this IP product then it can do that and frankly it is important for the industry to apply an new way of doing business, and not just stand around and dismiss things."
The report stated: "We recommend that an income replacement product is not included in the initial suite of Simple Financial Products, but that further research and consultation is undertaken on a product that could be safely included in the Simple Financial Product suite, i.e. to be sold on a non-advised basis. This remains a high priority."
A whole of life insurance product was flagged up as a high priority to be included in a later phase of Simple Financial Product development.
