Protection industry light years behind others

Yuan Phoon

January 24, 2012

At the launch of The Syndicate, a research initiative setup by Protection Review and Hannover Life Re, Lebeau said the protection industry hadn’t done very well at defining what consumers wanted.

He said: “It is an industry that needs a kick up the bum. It certainly does need a spark of passion and I don’t think that’s in some parts of the industry we’ve seen.”

He said some parts of the industry have interesting propositions but added that “sometimes a sense of apathy exists”.

He called on the industry to address the problem of the protection gap between people who need cover and those who have it.

“We need commitment, putting money and serious brainpower to thinking in a new way,” said Le Beau.

“We need to engage tomorrow’s consumer. It seems as if one third of new business declared in the protection market is actually rebroking.”

Research done by the Syndicate revealed that consumers want protection providers and advisers to communicate more with them.

Nearly 50% of people said they would be less likely to cancel their insurance policy if the provider regularly communicated with them.

Only 28% disagreed with the statement.

Stuart Paton-Evans, marketing director at Hannover Life Re, said a shift was needed in the way providers speak to clients.

He said: “It’s not good talking about product all the time. We need to talk about need and have products to support that.”

Evans added that if the industry could achieve that, then it could do a lot better and be able to provide products that meet the needs of a client at different stages of their life.

He said: “Other industries are talking to their clients daily. We need to be a lot more imaginative in keeping that dialogue open.”

Alan Lakey, principal at Highclere Financial, said currently rebroking resulted in so much protection business because a broker had a responsibility to arrange new products for a client if their policy could be improved.

He said this should not be considered churn for the sake of churn should switching products prove in a client’s best interests.

He said: “We need to clarify what is a churn and what is re-broking. A churn is when you switch a client’s product for no benefit other than your own. I like to think that isn’t particularly common.

“When we talk about re-broking, clearly if a new product or a reduction in cost is available and I can save a client £10 a month then clearly I should do that. If the client is in good health and likely to get the product then why shouldn’t I do that?

“The same applies when there is an upgrade to a general insurance or critical illness plan.”

Le Beau said: “It seems to me that about a third of the new business that is being declared on the market is actually from churn or re-brokered business.

“If there is a better or cheaper product out there and the adviser believes their client is in good health to qualify for the product, is it not incumbent on the adviser to point this out to their client?”

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