In February, Prudential published the results of a survey that suggested a staggering number of people had been victims of declined claims. The market reacted strongly against the publication of such statistics, brandishing them "scaremongering". Was this a clever move on Prudential's part and what should the provider do in response to the market's reaction?
Peter Le Beau, Le Beau VisageMarket viewsArsenal fans may remember, several years ago, Lee Dixon chipping in a thirty-yard shot straight from the kick-off, which gave the goalkeeper no chance. All would have been well had it not been his own goalkeeper that he chipped it past. I still remember his look of anguish and embarrassment as if hoping the ground would swallow him up.
I guess much the same feelings would (or certainly should) have been shared by staff at the Pru after its marketing fiasco when it claimed the industry had rejected claims of £43.9bn over the last five years. It truly was the mother of all own-goals.
Normally, I wouldn't worry too much about a bit of embarrassment for the Pru. The firm is big and ugly enough to look after itself, but there is an important principle at stake here.
I did most of my early research at Swiss Re and it was - and still is - utterly scrupulous in doing everything it can to ensure the numbers it arrives at are accurate.
Stage one was a sanity check to ensure that the numbers were broadly sensible. The Pru seems to have missed this bit out.
This is misinformation on a truly epic scale, designed to popularise a new product but which, in reality, has dragged the reputation of the protection industry through the dirt. I desperately hope that, in so doing, it hasn't dissuaded young couples from taking out cover that they now desperately need because a breadwinner has died or become critically ill.
Being the architects of lousy research is one thing, but having that on your conscience is quite another.Richard Verdin, Direct Life & Pension Services
Given that the research related to all forms of protection, rather than the space the Pru's new product is playing in, you could argue that this was an exaggerated headline figure. However, rejected claims are an important area of concern for any adviser, and one that threatens the very relationship all clients depend upon their advisers having with providers. If nothing else, Prudential has brought the issue of rejected and paid claims back up to the top of the protection news agenda and, in so doing, has helped to re-focus minds on what is really important. Whatever the number, it is clear that all in the garden is not rosy.
I think Prudential has a valuable contribution to make to a protection industry that needs products that have been designed with the clients' needs in mind and, at the same time, help advisers to demonstrate their value. Against a backdrop of little innovation from providers during recent years, I believe Prudential should be applauded for bucking the trend.
What should Prudential do next? I would like to see it reaffirm its commitment to the adviser market by focusing on the positives and continuing to provide information to help us all make up our own minds about its new product. Its training programme backing the launch is laudable and links in with our own desire to see a better-educated adviser market via our forthcoming protection academy.
Angus Maciver, Prudential
Our press release included independent research by TNS, which surveyed 2,000 people. It is possible that research commissioned by another company through a different research company could come up with another figure. The purpose of our release was to highlight a problem in the industry that needs to be addressed.
We believe the protection market is in need of innovation to reinvigorate it. This would provide a major opportunity for IFAs and providers and, more importantly, a fairer product offering for customers.
While new business sales in the overall life, investment and pensions market increased in 2006, the same cannot be said of protection. According to the Association of British Insurers, regular premiums for individual protection fell in 2006, which, in a booming market, was disappointing.
Too many customers do not believe that products will pay out when they need them to and, consequently, are unwilling to buy no matter how well providers and IFAs explain these issues.
We believe the industry has to work harder to reconnect with customers and to support IFAs. Prudential's response to this has been to create the Flexible Protection Plan - a new product that may pay out a partial amount at an earlier stage of many illnesses compared with other critical illness (CI) plans and is our solution to the industry's malaise.
Mick James, Standard Life
The industry has been crying out for innovation and so I was interested to see a new take on CI being delivered by the Pru. A brave move - looking to change the market and drive sales forward by providing customers with new reasons to buy. With any new product, you put your head above the parapet and invite comment and criticism, but it's been a while since I have seen anyone load their own gun, point it at their own head and pull the trigger.
There is always some way you can make statistics show what you want, but this is a step too far and I'm surprised that any marketing department was happy to use small-scale survey results in this way. The figures are designed to make the point that 'it's okay to come with us because we will pay these claims', however, all it really does is undermine the industry.
I'm not going to get caught up in the numbers game, but I find the whole episode hugely unhelpful to customer confidence and, for the Pru, it seems to have backfired, with adviser reaction being one of surprise and anger, not really the kind of marketing you are taught at school, is it?
