The new commands from the FCA on the cost of living
This last week has been an interesting week for the protection market with major news from the regulator, a boisterous conversation about how we might better engage clients in 2023 and a major product update from British Friendly.
Starting with the regulator, on Tuesday, the FCA opened a consultation on 11/1 on Insurance guidance for the support of customers in financial difficulty. In November 2020, they published finalised guidance for insurance and premium finance firms due to the pandemic.
The FCA now propose to replace the insurance aspects of this Covid guidance and extending the scope so that it applies to all insurance customers in financial difficulty.
They confirm that the last few years have been challenging for many households and businesses with the impact of the pandemic and, more recently, increases in the cost of living putting pressure on spending. The rising cost of living disproportionately hits the poorest households, who are more likely to pay for their insurance by monthly instalments and often pay higher premiums. Their strategic plan for the cost of living focuses on key areas, including making their expectations of firms clear and enabling customers to make good decisions.
The consultation period ends on 11/3/2023. And the outcome is that the FCA expect the proposed guidance will improve confidence in the insurance sector.
You can read more here on the subject: CP23/1: Insurance guidance for the support of customers in financial difficulty | FCA
The second half of the Protection Forum on 7th February 2023 will focus on this subject matter and the opportunity to discuss this collectively. The link to register is here
January’s Protection Forum took place on Tuesday with an audience of 100+. The feedback was very positive on the subject matter – How we better engage Consumers? An enticing discussion. We heard from Aviva, L&G and Vitality on their views, and also Setul Metha from Openwork and Lee Thomas from Pangea Life not forgetting a special video guest appearance from Robyn Allen.
In other news, it is positive to see that British Friendly has added fracture cover to its income protection proposition – read more here.
Last week on ProtectionGuru
We started the week by highighting how CI plans support claimaints who have been hospitalised or suffered a serious accident. A serious accident can have a big impact on a client’s life, particularly if they face a long stay in hospital or are permanently disabled due to the injuries they have sustained. This can have significant financial implications in the short and longer term, not only for the client but also their families. If insurers can step in and provide extra support, this can be a big help. In this insight we look at what financial aid critical illness insurers provide following a serious accident.
Flexibility has been everywhere in recent years. It is the modern approach to everything from working patterns to protection products, in contrast to the rigidity of a traditional approach. Post-lockdown, many people value the flexibility of working from home or doing four-day weeks. Taking that a step further, some people earn a flexible – or irregular – income from work that doesn’t fit a traditional profile. On Wednesday, Amanda Newman Smith asked whether fluctuating earnings are as common as we think?.
On Thursday, we highlighted how Protection plans help clients manage their mental wellbeing. Within the UK, mental ill health is still one of the most common reasons for workplace absence and therefore a common cause of claim on income protection policies. Mental ill health can also impact other health conditions, whilst being diagnosed with a critical illness may cause someone to experience related mental ill health. The mental wellbeing therefore of clients is incredibly important in the context of protection insurance. In this insight we examine what support services insurers offer to help clients with their mental health.
With inflation still at high levels and living costs just about to hit individuals and households, index-linked protection insurance is a recurring conversation we’re having with advisers. On the one hand there is an obvious case to be made for why index-linked cover is essential, in shielding the value of a clients policy from being eroded by inflation. On the other hand advisers and their clients are rightly concerned about steep premium increases where policies do include this benefit, which in some cases could be unaffordable and force clients to simply cancel their policy entirely. We therefore ended the week on Protection Guru setting out everything you need to know about index-linked cover.
Have a great week everyone.