What is the Protection Industry wishing for in 2024?
Every December, Protection Guru’s Forum asks it’s attendees to think about what they would like to see in the following year, their New Year Wishes for the Protection industry if you like. In our last December forum we had a range of advisers and providers who were keen to give their views. With subjects such as indexation reform, improvements in consumer trust, tax breaks for protection and better client communication all wished for it was (as ever) a lively discussion.
Indexation
“I thought I’d be very clever and play the system a little bit here. And what I said to the client was, look, let’s just let the indexation go through. You can have one month where you’re going to pay a slightly higher premium, and then what will then do is reduce the monthly benefit accordingly, back down to what it should be. And then that way you can get to keep the indexation. So we did that.”
“I found out that the general rule of thumb is that most insurers have a rule of three. So if you refuse indexation three times in a row, then they’ll just completely remove it. What you can do with that is refuse it twice, let it go through once, refuse it twice, let it go through once.”
“100% indexation needs to get better with the majority of insurers because I think the last 12 months is a prime example of why that needs to change because of the cost-of-living crisis.”
Changing trustees and beneficiaries
“My second wish is being able to change trustees and beneficiaries. I’ve got clients that I’ve been looking after for that whole time and they’ve like gone through break ups and had more children. There’s all these things that would warrant the change for a trustee to be removed or added, beneficiaries to be changed.”
High-net-worth clients
“One of my main wishes is for the industry as a whole. Not insurers specifically. A focus on the high-net-worth client base… What I tend to find is that lots of the clients who are in a high earning position, spend up to what they earn still, and so they’re still going to have the same budget worries that other clients are going to have if they’re the main earner. There’s even more of a pressure on them that if they were to die, they’re leaving behind much more of a bigger loss of income than perhaps somebody on an average salary. I would love for it to be spoken about more in 2024.”
“I find that those clients are especially demanding and have their own expectations of service levels. It’s a minefield as it is, let alone trying to translate that to a client who this is not their day job. If there could just be some kind of common sense approach to some of the things, I know the insurers have their own branding and certain things will want to have under their umbrella, but just some of the features that are kind of black and white, things like guaranteed insurability, some of the immediate covers that being changed and having different names in the industry.”
Continuing positively
“We talked last year about continuing to see more and more positivity being spread around Income protection, with the hope that gradually that would be building blocks towards greater awareness of the product outside of our industry. We’ve definitely seen some really good collaboration this year between insurers, distributors, reinsurers. They’ve looked at some potentially thorny issues around mental health claims.”
“There have been loads of good opportunities to get together and to learn more. I just thought I’d just be the first to say that these forums as well have continued to be a really, really great community of supportive, passionate people that work in the industry. The focus is always on positive customer outcomes. And I think that’s, that’s an area that we, that we all agree we need to be moving towards.”
Improvements in consumer trust for claims
“It should mean a better experience for customers as well as more consistent decisions as well. And that sort of leads me into one of our wishes for next year, which is around improvements in consumer trust for claims. We did some research this year that showed only 58% of people were confident that insurers would pay a claim for health and protection, and that means that over 40% have low confidence that the product they’ve bought will come through to come through for them if they need it. And there’s not many products that you would expect that sort of success from when you when you put your hard earned cash towards them. I think there’s definitely improvements that we can make on the insurer reinsurer side to create more certainty in this area.”
“I’d also like to see a more consistent way of reporting claims paid, and that’s particularly in the income protection space. I don’t think the move towards including claims that are already in payment in the stats is something that builds trust.”
“More improvements in terms of making insurers like ourselves easy to do business with in 2024, and that will be helped by some fairly obvious tech advancements.”
“We insurers need to find the right balance between having a slick service that gets business on the books, but also an experience that the probably the most critical part, which is the claim stage, making sure that the two of those are both working together.”
Indexation
“The next one for me is indexation and how insurance companies increase the premium. So again, reviewing cases of years gone by and indexation, most insurance companies use the multiple of 1.5 with the retail price index, which to me is like it’s just way too much. So it’s a 50% rate in the basically on the premium.”
“I just think companies using 1.5 when you come to review them, the premiums are just ridiculous, especially with how retail price and retail price index has been recently. What I’d love to see is to have an industry standard on how you administrate income protection policies going forward.”
Tax deductible life insurance
“This one’s probably never going to happen again. But I remember when I first started doing protection years and years ago, they used to have tax deductible life insurance. I think that’s something that obviously is not down to the industry, it’s down to governments and so on, that should be brought back for life income protection as well, because if they’ve got a small to medium sized limited company, they can they get tax benefits for having relevant life. They get tax benefits for having life insurance, income protection as well with executive income protection. But if you do it on yourself there’s no tax benefits. And to me again that’s a bit crazy.”
Consumer Duty
“I think from this year we obviously have Consumer Duty which has been a real big focus for us, not just this year but previous years as well. But think that’s driving some really good outcomes in the market, we’re seeing obviously communication product changes and various things from providers. And we’re really thinking quite differently, maybe not that different from what we did before, but thinking a bit differently on how we’re actually bringing these things to market.”
“For example, communication, that’s a key focus of Consumer Duty. We’ve got our customer portal up and running and also an advisor dashboard where really what we’re trying to do is make sure these communication channels are open for customers, that it’s not just a case of if you get a protection policy, it’s one and done, or you go stick in a drawer for a few years. So obviously we’re trying to encourage much more communication, people understanding better, and think a lot of that drive is helped from the work that we’re doing on the consumer duty. So that was one of the big things that we have seen this year.”
Collecting insight in the market
I think one of the wishes I’ve actually got for 24 and beyond is opening up more opportunity for providers to look even further. We are very data led. We’re very focused on collecting insight in the market. But actually all this chat about AI that’s coming on board as well, I think it just opens up the potential for how we can actually take a step back and look at what we’re doing in protection and really try to push ourselves on how we’re collecting evidence? Are there alternatives, other data sources that we can use? Are there alternatives to reports? So we’re not putting added pressure onto doctors so that we can get protection on the books.”
Value to customers
“I mean, one of the things that we have changed quite a bit during Covid and after is actually how much information you can get from a client themselves. And because that claims process is much more 1 to 1 and talking to people, it’s actually been encouraging to see how if you’re having the right conversation, you can actually get information from the customers themselves and therefore circumvent some of the need to go to GP’s to get consultant reports or actually the individual’s got them themselves. So I think there’s loads of things that we can go after. Consumer duty is obviously still top of our mind and I think it is one of the things that providers are asking themselves about the value for customers and how we can work with that and really drive out much more detail of what it is we’re doing, is what value it’s providing to customers.”
