Simple Products in the Protection Market: September Protection Forum Part 4
This is the fourth post in our series bringing you the fantastic discussions from our September Protection Forum. In this section, forum participants discussed simple vs. personalised products, helping new advisers find their footing, and making protection products easier to understand and sell.
Does anyone have any thoughts on where the market is in terms of personalised and simple products; whether they find the products too complicated or whether the more comprehensive route is preferable to meet the customer’s needs?
Alan Knowles:
I don’t know if this is exactly why you were sort of meaning by that. But when you say simplified products, are you meaning sort of the ones where they are slightly undercutting the price of a standard set term policy or a CIC contract, but offering maybe slightly stripped back benefits for a couple of pounds savings? Is that what we mean by simplified?
I would consider simple products to include the stripped-back budget versions as well as products that aren’t designed for a specific demographic.
Simplified products have less questions and are a bit cheaper but they do add a level of complexity for the adviser because it’s another type of product to understand. And often they’re simpler for speed but an adviser’s job shouldn’t be about speed, and often all we’re doing anyways is restricting people rather than covering other people who wouldn’t be covered on normal plans.
,Alan Knowles:
I’ll give my view on the simple plans with it, I probably just alluded to it there slightly. I think for the simplified products that come out, they’ve got slightly less questions. Price is usually a pound or two cheaper. I think we miss a real trick with this. I think, you know, to a certain degree, they add a level of complexity to advisers because there is another product coming in.
So we’ve got a new set of advisers coming in at the moment. And when they look down the list and see this ever-growing list that we saw at one time would have been eight policies is now 50 policies. And, you know, then they’ve got to go, “well, what’s the difference between this and that? What’s this?” And in some ways when you’re enhancing the products, I think that’s brilliant because it gives people choice. It makes the adviser really stand out.
But if we’re looking at some of these simplified products, we’re basically just making them a little bit cheaper for the element of speed. That’s probably, the way I see it. And an adviser’s job shouldn’t be about speed. It’s not about speed, it’s about quality. It’s about doing the right thing. So if it saves us five minutes at an application, I’d say, what’s the point? You know, just to save somebody a pound a month?
And I’d almost say, well, I think I think insurers miss a trick with this because if we are stripping back a contract and we are stripping back the underwriting, for example, on these policies, but we’re making it a pound or two cheaper, all we’re doing is we’re restricting it for people. Often people with a certain disclosure, or health condition.
But actually, we could have looked at that and said, “Well, if we’re only covered X amount of critical illnesses or we’re limited to a mortgage payment or we’re limiting it to a one or two year claim, why not go the opposite and say we can be more inclusive with this? We could cover more people. We could cover people with health conditions.” Because at the moment they’re only covering what we could cover on the normal plans rather than covering extra people. So in my opinion, anyway, I don’t think it does a great deal to grow the market.
lan Knowles:
It’s very rare for us to recommend the budget version. I mean, obviously, probably most people know what we do, so the only reason that we would do it is if it’s a better outcome for the client. So there are some times when actually using a simplified product might result in a better outcome for the client, in which case we will consider it. If not, on the off chance that we get a client with no medical disclosures maybe we might consider it, but obviously for us, that’s pretty rare.
By simplifying the products it’s assuming that the current products are too complex for customers to understand and I don’t think that’s true.
Paul Reed:
The whole simplifying of product is assuming that the existing product offerings are too complex for customers to understand. I don’t think that is the case because product offerings, generally speaking, if you just have a broad stroke across life, CIC, and IP, they are relatively simple to understand.
So the whole simple or simplified product, if you like, it probably is more so aimed at trying to make life easier for the adviser, which conversely probably makes it more complex to some extent as Alan was saying. Where you’ve got instead of 10 products, you’ve now got 20, and there’s probably very little, well, very few areas, really, I guess, where it would really be of prominence, actually that simplified product is definitely better for the customer because for the sake of that extra five minutes, it may well be that they can get a “normal” plan with better benefits for broadly the same price.
I’m not a huge fan of them. It’s not to say it hasn’t got its place because on the odd occasion it will. But will it revolutionise the space? I’d be doubtful. It’s my own view.
The ‘realist’ in me wants to help get people involved in this space, which can be hard to do when there’s so many plans. So in that case the simpler products can be very helpful for them to start off with as they build their confidence in advising and working with customers.
Setul Mehta:
So the protection advocate in me says exactly as everybody has been saying so far. So no challenge there, no disagreement. But that’s the protection advocate in me. The sort of, I’m going to use the word ‘realist,’ or somebody who gets involved in trying to encourage lots of new people into the industry to the point earlier, regardless of whatever age they are. And it can be difficult when you enter this space and to your point earlier where you hear there’s a budget version, there’s a non budget version, there’s Zurich’s version, they’ve got the core and the extra version, you’ve got CIC with child, without child, you’ve got serious illness cover and critical illness cover and accident protection.
And it’s a broader point. If I take a step back to somebody who’s brand new into the industry, who’s getting involved for the first time, sometimes for them to get involved and starting to protect individuals and take that inexperienced route, go opting for the simpler product range or where they don’t have to end up having further conversations. Not because they can’t. It’s just because of a lack of confidence. That’s the bit where I think the simpler products or the products with less bolt-ons or whatever we want to call it whilst being better is more helpful.
And then actually, once you get somebody involved in the protection conversation and they understand that actually, CIC is not as difficult to have a conversation with or IP is not difficult to have a conversation with the client, you then start to see them getting engaged into some of the more to the fuller conversations, the conversation they should be having an outset.
So the part for me that the simpler product ranges play is more for the inexperienced individuals where it’s their first time in the industry where they’re trying to get their head around and how this works. And if they come from a sales background, no issue because they’ll understand the value of a full rate, not everybody does, unfortunately.
Attendee: Should an adviser be signed off as competent to advise if they can’t talk about comprehensive products?
I think if we use talking about comprehensive products as the benchmark for an adviser, then we would end up losing a lot of advisers who could go on to be exceptional later.
Setul Mehta:
And it’s a really good question, and I think the answer from my perspective would be if we consider that to be the benchmark, I think if we look across the industry, we will rightly or wrongly lose a number of advisers who could go on to be exceptional. And the risk that I think is too big bearing in mind the protection gap as it is.
But actually, that’s what training and development coaching is all about. That’s what you want. You want to bring in people who’ve got the skills to be able to do it, and you can overcome low confidence and objection handling sans forth. That’s what that’s what good T&C… That’s what we’re all about. That’s where the providers can help. And that’s where all of the organisations who support in this area can help and bring people onto the road. So, yes, devil’s advocate answer, I suppose that would be my view on the other side.
We see a roughly 50/50 split between the core and enhanced products. I don’t prefer the simplified products but they do have a place in the market but to me they fit more in the non-advised space. Also at insurance companies we are offering training that’s not just about our products but is designed to help and support advisers. But in my view we do need the different types of contracts to meet the different needs.
Amanda Thomas:
So just to give another point of view, so I’m a BDM for an insurance company, so, I’m not speaking on behalf of them. So this is purely my opinion. But it just might be useful to say what, necessarily, people where we’re seeing the claims that are coming in, for example, and where they relate to what conditions and what contracts we’re offering and where they’re sold.
And you see roughly a 50/50 split between the core and the enhanced products. So to me, having the mixture of contracts and the ability to personalise those contracts is a big advantage. My personal view is I don’t really like simplified contracts. I think as they stand, yes, speed is an issue, certainly we’re in a market now, where you know, anybody says, What do you do? Do you go onto Amazon and you get things immediately and you want it delivered tomorrow? So I think there’s all those things that I think, insurers we should be looking into.
From the flip side, you’re looking at access to insurance, which is a massive thing that so many people who think maybe they can’t get insured because of their health conditions and potentially, we could look at them, we could consider cover, but the underwriters need the right information to be able to do that to be able to assess accurately. But, I think they have their place in the market, but I would say to me they fit more in the non-advice space than they do in the advice space.
I think, in terms of training and development, I think all of us from insurance companies, do offer training and it’s not just pure product, product, product. And I think sometimes advisers aren’t aware of what they can get access to. If they wanted to or the things we can do and what things we can discuss market-wise and not just “This is what I’ve got in my in my box to sell today.”
But as I say, it’s an interesting one how things are going to go in future. But my personal view, looking at the claims data, looking at where those cases fit in the client demographics, we do need the different contracts because they meet completely different needs. That’s just my opinion.
I understand insurers wanting to have the different options. It can be hard over the phone having to explain all the products and what they do to clients especially because people don’t want to have long phone conversations and that can sometimes switch people off.
Stephen Pickering:
It was quite interesting there, Amanda, hearing you say that the split between like the more basic products and the more enhanced ones because I totally get from insurers’ point of view, a lot of them now don’t want to put all their eggs in one basket and go, “we’re going for the quality, so the best CIC contract, we’re going for the more basic ones.”
But also, I think you touched on it Setul there, it is, I think for advisers particularly, I don’t know, most of what I’ve always done has been over the phone and trying to get across the concept of why their clients want to take protection, what the policies are– because a lot of clients don’t really know so I have to educate them– then convince them of the need and sort of how much cover for each of the different products you might be looking at when you start to factor in if they want to look at CIC or something to then say, “right, well, the provider we’re looking at, there’s potentially three to four different ways we could structure this with a basic or enhanced policy with or without kids cover.”
I think from an explanation point of view to the client, it does sort of drag on a bit. If you were to then go, “OK, well how about fracture cover, do you want to add that on?” And it’s almost having to sort of explain all the options available. So obviously guide them while you’re doing it, but making sure that they’re comfortable with what they’re looking at without overloading them with options and just getting them to switch off.
Because what the guy from DeadHappy said earlier was most people don’t want, they found, long conversations. They just want to go on, click, and buy it. And I think sometimes the wider range of options we have can I think to some degree, I don’t know, slow things down or hold people back or potentially switch some people off the conversation, maybe.
When we listen back with advisers over their phone conversations you can often hear the client losing interest when the adviser starts explaining all the products. From an insurer’s point of view, we do need to simplify the language that we use. To me the thing to focus on is really what the products do, and how does it meet the client’s need?
Amanda Thomas:
I agree from sort of phone analysis that I’ve certainly done in the past where people have said, “you know, look, I’m struggling to convert on critical illness over the phone, struggling to convert on income protection.” And you say, “OK, let’s listen to it, let’s have a look at your scripts. Let’s have a look at your core recordings.” Obviously anonymize the data. Let’s have a listen in and some of those conversations, you’re quite right. You can hear the customer losing interest as the adviser sort of constantly gone on and go, “and it’s got this, and it’s got that.”
And I think, from my personal view, from an insurer’s point of view, we do need to look at simplifying the language that we use. I know there’s lots of conversations about that and certainly the complexities of some of the products.
But I think to me, the marketing and things are lovely so I probably shouldn’t say this but you know, as a BDM for an insurer, but to me, it’s always about what does the contract do? Does it do what we say it will do? Will it pay out for these different situations? And that’s to me, the areas to focus on. Of, what is your need, what is most important to you? And can these products sit behind it? And then if they want to go into more of the detail, then do it.
But as you say, I don’t envy you for that side of the coin. Because it’s not just, you know, I’m looking at one insurer, obviously, I have to know what the rest of the market’s doing. Obviously, it is difficult and I appreciate that to try and understand what many different insurers are doing and what their take is and why this one’s better.
