Several supermarkets have entered into the private medical insurance and protection arenas. Is this good for the industry or will it further tarnish the industry's reputation as retail firms are more likely to offer insurance products without advice?
Stephen Walker, AMIIMarket viewsThe entry of leading supermarket Tesco into the private medical insurance (PMI) market should, in theory, raise public awareness about PMI, its affordability and what it has to offer - effectively benefiting the whole industry by increasing sales.
However, I do not believe that PMI is best sold from a supermarket shelf or website.
In the past, some 'budget' policies were sold through leaflet drops and inserts in Sunday paper magazines. Many people who bought these policies thought that "medical insurance was medical insurance" and that they were fully covered, only to be made aware of the policy's shortcomings when they came to make a claim, which made for bad publicity for PMI.
PMI has evolved dramatically over the last couple of years and there is now a huge array of products from which to choose and an increasing number of different concepts to consider, which the consumer would be hard pressed to understand without proper professional advice.
Different people have different needs and they now have a choice of policies offering no-claims discounts, low-claims discounts, lifestyle discounts, age capping, shared responsibility options, managed care, cash payment plans and personal deposit accounts.
A supermarket policy may do a job at an affordable price, but will it do the best job at the best price? I think not, and the venture could, once again, result in bad press for the industry.
PMI by its very nature is, and should be, an advised sale.Roy McLoughlin, Master Adviser
Statistics litter our industry and are often quite mundane and irrelevant, but I was appalled that four times as many consumers have pet insurance compared to private medical insurance (PMI). I know we are a nation of animal lovers, but since when has people's budgies' health been more important than their own? This tends to make me lean towards the old adage that any publicity is good publicity and that Tesco selling PMI alongside potatoes is a good thing.
What we hope it will do is raise public awareness of this vital protection along with forays into life etc, which companies such as Asda have recently announced. Where we need to be concerned is when the 'advice' giving process is ignored. When you pat your backside at Asda you will, courtesy of LifeSearch, have a certain Mr Carr attending to your needs and that is to be applauded. To sell direct without advice is potentially very dangerous. I worry immensely that the general public will not have the desire to make these choices 'off piste'. If it encourages them to seek out advice then I am fully behind this new distribution channel. When stakeholder was first introduced, certain retailers attempted to jump on the non-adviser bandwagon and that was a complete disaster. In summary, anything that raises awareness of these crucial protection areas is great, but I would implore these new mediums to think carefully about promoting the benefits of taking expert advice.
Gev Lynott, Asda
By being a player in this broad market, supermarkets are successfully challenging the incumbents in what has typically been a closed marketplace.
With life insurance and income protection products, it is essential that customers clearly understand what is and is not covered.
You can choose between seeking advice from an IFA and then shopping around the execution-only providers, or you can consult a provider of advice, such as Asda, which can do both simultaneously.
Through Asda Life's partnership with LifeSearch, we are not tied to any one provider and, as a supermarket, we can reach many who may not otherwise consider their long-term options.
Advice is crucial in this market. If a customer gets it wrong with motor insurance they can change provider upon renewal; if they get it wrong on life insurance they could, at worst, be left destitute. Our aim is to close the protection gap by enabling supermarkets to demystify the process and help individuals understand what products they need for their individual circumstances.
Justin Harper, Liverpool Victoria
We are all too familiar with the ever-widening protection gap and the reasons behind it - including industry reputation, consumer mistrust and accessibility to advice.
Protection is more important than many consumers realise, but remains complex and confusing for many.
While supermarkets are able to provide the accessibility that some consumers seek, there are risks of mis-buying and a clear need for advice remains.
This is backed up by recent research from IFA Promotion, which showed that throughout 2006 personal protection was a consistent key driver for financial advice in the UK.
Asda's recent partnership with LifeSearch to offer online and telephone advice on personal protection products seems to allow consumers to have the best of both worlds, a well known trusted consumer brand coupled with expertise of individual financial advice. We will be watching with keen interest how this relationship develops.
We recognise people want and need advice, and our main choice for distributing our products is therefore through intermediaries and our own advisers.
We consider IFAs as critical business partners in delivering compelling and value for money protection products for consumers. It is a journey however, and there is still much more work to do.
