Consolidation stunts innovation

By Phil Jeynes, national accounts manager, LifeQuote 

Bupa is the latest Protection provider to be enveloped by the Resolution acquisition machine, joining Friends Provident and Axa in a stable of thoroughbred Life Insurance brands. 

Speculation had been rife in Protection circles as to the next insurer to either withdraw from the arena or be purchased by a consolidator; earlier this month Royal Liver closed its doors to new business whereas Aegon had confirmed its intention to remain active in the Protection market, following a review of its UK activities.

It seems likely that eventually Bupa will become a part of the single “best of breed” product range, Friends Life, which will see the strongest parts of the Axa and Friends Provident offerings combined and relaunched at some point in 2011.

In the meantime Royal London shows no signs of merging its two Protection brands; Scottish Provident and Bright Grey, whilst whether it picks up the reins of Royal Liver (as was the rumour earlier in the year) remains to be seen.

Critics are split on what all this means for the industry and those of us advising within it.  Some see it as an ominous portent of things to come, with fewer competing insurers and a stifled approach to innovation. Others take the more pragmatic view that, as was the case in a downturn mortgage market, the field was oversupplied and a period of realignment was due.

The bigger picture is that unless Protection gets sold in larger volumes and price becomes less of a fixation, innovation is always going to suffer. Perhaps a smaller number of Insurers with more distinct product sets will help buck the current trend.