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Bitcoin, gold and the cash crash

22 Oct 2018

Where cryptocurrencies may thrive when commodities falter


Cryptocurrency’s investment dilemma

01 Oct 2018

While the headlines about Bitcoin's stratospheric rise have died away for now, the industry around blockchain and cryptocurrency continues to make the news


Crypto critics: Fact or fiction? Busting myths about Bitcoin

04 Apr 2018

Crypto critics: Fact or fiction? Busting myths about Bitcoin

Since Bitcoin hit the mainstream last year all manner of hyperbole, both positive and negative, has been pumped out about cryptocurrency and there is some truth on both sides.

Bitcoin Breakfast

01 Mar 2018

Carr Consulting and Communications is hosting a ‘Bitcoin Breakfast' on 29 March in London.

The event will begin at 9am and will run through to 11am.

The session will be led by Matthew Morris, a cryptocurrency consultant, columnist and investor.

For more information, email

Kevin Carr delivers his verdict on five key developments

12 Feb 2018



Investment Watch: Matt Morris on recent developments

18 Dec 2017

Professional Adviser's investment detective Matt Morris delivers his verdict on developments in the investment and pensions arenas that have caught his eye over the last month


Protection Watch: Kevin Carr on recent developments

11 Dec 2017

Professional Adviser's protection detective Kevin Carr delivers his verdict on five key developments in the protection space from the last month or so


Protection Watch: Kevin Carr on recent developments

23 Oct 2017

Professional Adviser's protection detective Kevin Carr delivers his verdict on five key developments in the protection space from the last month or so


Protection Watch: Selfies & making claims personal

18 Sep 2017

Protection Review chief executive Kevin Carr looks at recent market events. Is new technology from the States a gimmick or ground-breaking? Legal & General America has come up with an innovative new use for the selfie that promises to replace the traditional life insurance application process with a much faster, cost-effective and accurate alternative.


Understanding insurance and the gig economy

12 Sep 2017

The conditions faced by workers in the ‘gig economy’ have been back in the news recently thanks to the publication of findings from the Taylor Review into modern working practices. This exercise has helped to highlight the vulnerability of the self-employed should they become ill or injured and unable to work.


Protection Watch: Kevin Carr’s verdicts on developments

01 Aug 2017

Professional Adviser's protection detective Kevin Carr highlights some key moments and lessons from the annual Protection Review conference, which took place earlier this month


Protection Watch: Election boost, business models of the future

19 Jul 2017

Protection Review chief executive Kevin Carr rounds-up the latest developments in the world of protection


20th anniversary Q&A: Carr on PR’s role in protection market

19 Jun 2017

Fiona Murphy asks Kevin Carr about industry campaigns and the role of promotion in driving the protection market forward


Protection Watch: Kevin Carr’s verdicts on key developments

12 Jun 2017

Kevin Carr delivers his verdict on 5 key developments in the protection space



Investment Watch: Matt Morris’s verdicts on key developments

27 Mar 2017

Matt Morris delivers his verdict on key developments in the investment and pensions arenas


Protection Watch: Kevin Carr’s verdicts on key developments

13 Mar 2017

Kevin Carr delivers his verdict on 5 key developments in the protection space


What income protection can learn from British Airways

14 Feb 2017

Why we need to sustain and build upon recent growth in the IP market. How product and service usage builds trust. 6 ways to improve IP usage.


Protection Watch: Kevin Carr’s verdicts on five recent developments

05 Dec 2016

Kevin Carr delivers his verdict on five key developments in the protection space from the last month or so


How to deal with five big protection controversies

30 Nov 2016

Understanding protection hurdles, government changes and different types of protection


Best Adviser Tools for Business Protection

05 Oct 2016

Kevin Carr discusses the best tools for selling business protection

How can business protection add value to the services you offer?

As the owner of a small company, business protection has been on my mind quite a lot lately... 

How to write better award entries - report available

08 Aug 2016

Having run a number of sessions on how to write better award entries we have converted all the content, questions and feedback into a PDF report, which is now available to buy.

  • Adviser/intermediary firms: £49+vat
  • Insurer/other firms: £99+vat

To order your copy please contact us asap.

The cost of the report will rise to £199+vat after August.

Many thanks,

Kevin, Matt & Linda


Ten tools to aid the protection sales process

25 Jul 2016

Kevin Carr looks at which tools advisers find most useful for protection.

How to assess 10 different types of life cover

29 Jun 2016

Kevin Carr goes through 10 different types of life cover

Small PR consultancy of the year nomination

09 May 2016

Great news! Carr Consulting & Communications has been shortlisted for a PRCA (Public Relations Consultants Association) award for Small Consultancy of the Year.

 It’s a prestigious award so we’re very happy to have been recognised in this way by the PRCA. The winners will be announced in July.

How to write business protection

04 May 2016

Losing a key person to illness or death isn’t something that we like to think about, but it can have disastrous consequences for a business

How valuable are added benefits on protection?

26 Apr 2016

Epoq's Dave Jones explains why added value benefits on protection policies matter.

Protecting small businesses

25 Apr 2016

LifeSearch's Emma Thomson discusses the importance of business protection

Why not meeting the definition is becoming irrelevant

31 Mar 2016

Following recent stories of declined claims in the Mail on Sunday, Kevin Carr uses lessons from Britpop to argue why insurers should pay out rather than say a claim does not 'meet the definition.

The value of real claims stories

03 Mar 2016

British Friendly's Iain Clark discusses why real life claim stories are so valuable.

Protection Watch

01 Mar 2016

Kevin Carr talks about recent protection developments advisers should be aware of.

A workforce with vision

12 Feb 2016

VSP's Jeremy Chadwick talks about the benefits to businesses of looking after employees sight.

What can advisers expect from Solvency II?

27 Jan 2016

Health Shield's Courtney Marsh looks at what Solvency II means for the market.

How can advisers speed up the underwriting process?

14 Jan 2016

Kevin Carr dicsusses how advisers can help speed up the protection underwriting process


Blue Light could be putting workforce eye health at risk.

05 Jan 2016

VSP Vision Care's Jeremy Chadwick talks about an everyday danger facing all kinds of workers.

Protection 2015

23 Dec 2015

Kevin Carr's round-up of 2015 in protection

A warm ray of light

17 Dec 2015

Read why the Seven Families campaign was Mail on Sunday Jeff Prestridge's highlight of 2015

What does IPT mean for Cash Plans?

14 Dec 2015

Health Shield's Jonathan Burton discusses IPT and the Cash Plan market.

Unusual types of protection

22 Oct 2015

Kevin Carr discusses types of protection you may not be aware of.

Six things that will change the protection industry

20 Aug 2015

The annual Protection Review conference took place recently in London, drawing a few hundred people from all corners of the industry to debate the key issues and what can further drive the protection market forward.

This year’s theme was ‘growing the market’, with sessions focusing on improving the customer experience, new distribution models and the opportunity presented by engaging employers.

Here, we look at the biggest talking points of the day, and how they could change the industry and influence the way advisers understand protection insurance.


Double commission – for advised sales only?


Arguably the most controversial point of the day was made by Michael Ward, founder of and previously the owner of Direct Life and Pensions.

During a panel debate about new types of direct to customer distribution models, he commented that the protection market could not grow unless commission is increased, arguing that there is currently no financial incentive to provide advice, as the seller receives the same commission on protection whether the sale has been advised on or not, despite advice taking ten times longer.

Mr Ward said: “We need more regulation because current regulation is not regulating the things that matter. We’ve got too many lead generators saying things that aren’t true to customers.

“If we paid agents twice the commission they get for an advised sale and leave non-advised sales’ commission where it is, you’d get more adviser business and they would go out and sell it.

“I think we need a better regulator and we need one that changes the emphasis. My great idea for a regulator would be one that cares about protection sales rising rather than making sure they’re just compliant.”

To highlight a similar point, Mr Ward commented that of his comparison site businesses, that travel insurance was selling twenty-times as much compared with life insurance, and that travel insurance is currently five times as profitable compared to life cover.

Commission has, of course, become a bit of a dirty word. In a post-RDR world, remembering that protection is (rightly) separated from the RDR, it implies a mis-selling scandal or at least a dodgy salesperson.

But does Mr Ward have a point? Is it right that non-advised sales earn the same amount when there is no advice and no responsibility for advice?


Make it personal?


An overriding theme of the day was that as an industry, we need to make the whole consumer journey more personal, including the products.

People are getting more and more used to services that are tailored specifically to them, and this will only continue to increase. However, insurers historically tend to have one product that is expected to fit a potential audience of 20-30m people.

It was debated that the personalisation of protection should begin with the products sold. Currently, protection products are largely generic, whilst designed to protect people with varying sets of circumstances.

Insurers hold a lot of data about their customers, so could it be possible in the future for insurers to look at someone’s salary, mortgage, debts and family situation and based upon all that information say, here’s a product created just for you?

There may well be a tipping point when big data (whatever that really is), wearable technology, online banking and insurance all meet up in a cloud based e-world where different benefits are put together, priced and sent as a ‘buy now’ pre-underwritten option straight to your phone, tailored specifically for you and your family – because they already know what they need to know.


The dawn of a new revolution for insurance?


As we saw in the latest budget from George Osborne, we are in an era of risk being transferred. We are seeing a continued retreat of the welfare state, and organisations transferring risk to individuals, meaning more than ever a generation will need to move towards insurance.

Gary Shaughnessy, chief executive for UK Life at Zurich, said the industry must be ready for the demands that would be made on it because of the welfare changes.

“It is a reality of an ageing population, and it is a reality of a changing dynamic in terms of the state’s ability to afford the welfare underpin and the taxation advantages that have been given to UK citizens.

“I would argue that it has never been more important that the insurance industry provides solutions to consumers facing a dilemma that they didn’t ask for, in some cases they benefit from, but in many cases didn’t ask for.

“There is an opportunity to make a very objective clear cut financial case to the government for incentivising the benefits of income protection. To do that we need to interact with the welfare rules.

“What we can’t have is a situation in a group environment or in the individual environment where an individual who protects themselves or a corporate that takes action to protect their employees finds they’re worse off because they lose welfare benefits. That’s not the intent of the state, but it is the reality in a minority of cases under the current rules.”

Indeed, the idea has even been floated within government by work and pensions secretary Iain Duncan Smith, that people could be encouraged to pay into ‘sick pay’ accounts to fund their own sick pay or to cover periods of unemployment, saying: “We need to support the kind of products that allow people through their lives to dip in and out when they need the money for sickness or care or unemployment.”

When asked more recently about the idea, David Cameron’s official spokeswoman said: “I think the PM shares the work and pensions secretary’s view that we should be doing more to encourage people to take personal responsibility for how they manage their affairs.”

Clearly it could be the most important time and greatest opportunity yet for the protection industry to create a true tie-up between state benefits and private insurance.


Is D2C friend or foe?


One of the age old protection debates is whether growth of a direct to consumer protection market benefits the advised market. Is the direct-to-consumer market the advised market’s friend or foe?

David Buckingham, new product development manager at SunLife, debated that direct distribution would normalise protection in the eyes of consumers, for the benefit of the industry, and compliments what is available through the advised market.

Mr Buckingham stated that there will always be customers that want to do it themselves, while others need a nudge and won’t go looking.

That the answer should not be to replicate an IFA proposition and offer that directly, but to simplify the proposition to eradicate the confusion that comes from too much complexity and choice in a direct market, and couple this with simplified underwriting and instant decisions.

Overall, the consensus seemed to be that the D2C market is a friend, and helps to give the protection industry a much needed boost in terms of consumer awareness and understanding of the need for protection. And while the adverts we see every day might not be perfect for the advised market, it’s not a bad thing to have families hearing about their protection needs on a regular basis.

In truth most D2C players are targeting different types of clients, often with slightly different products. A bit cheaper and a bit less comprehensive, which allows advisers to add value for those who need it and can afford a little more.

Can technology create a better customer journey?


Guy Williams, Liss Systems sales and marketing director, asked during his presentation whether the protection industry is utilising new technologies to deliver a better experience for the customer?

Electronic signatures were cited as one way of making the process of applying for protection much simpler and more convenient for the consumer, whilst being able to shave two weeks and significant costs from the application process. But so far only a handful of UK insurers are using the technology.

More than 70 per cent of insurers in the US market have implemented e-signatures. By using solutions like DocuSign, people can securely sign documents from tablets, smartphones and computers.

Mr Williams said: “Once the early movers prove the benefits of using e-signatures the rest of the market will follow like dominoes. When I first saw them a couple of years ago I thought using them is an absolute no brainer for our industry and they will become a hygiene factor in a few years’ time. The Americans have been doing so for seven or eight years.”


Opportunity knocks


Not wasting the protection opportunity given by the onset of auto-enrolment was the topic explored by IFA Roy McLoughlin of Master Adviser.

During his presentation, Mr McLoughlin stated that according to the National Employment Savings Trust 90 per cent of companies need advice on auto-enrolment, which provides a huge opportunity for advisers to talk to them about the protection risks they face.

According to research from Zurich, 59 per cent of limited companies have no key person protection and 61 per cent of limited companies have no share protection in place.

As well as the opportunity to advise employers on their business protection needs, Mr McLoughlin also stated his case for greater education being needed around sick pay benefits, to ensure that employees have a true understanding of the provision they are entitled to, leaving them better able to plug any gaps.

In response, the Association of British Insurers stated it is developing a workplace statement that will allow employers to tell employees exactly what sickness benefits they would be entitled to, enabling people to better understand any financial weaknesses they may have.



This article first appeared on

Ten things to add to your website to boost protection sales

20 Aug 2015

As the saying goes, protection is sometimes sold rather than bought, so every effort needs to be made to engage people in its importance.

In today’s world your website is one way of giving clients access to additional information alongside the advice process, to help clients better understand their protection needs.

While tools and calculators can be particularly effective here, it is often costly and time consuming for advisers to build their own bespoke offerings.

Most insurers can give advisers content to imbed in their sites, or advisers can link to external sites or access industry-wide available material to boost their protection content.

Here we look at 10 things advisers could put on their website to help increase protection sales.


1) BMI calculators.

One of the biggest reasons people don’t take up a protection policy is because the premium quoted increases during the application, often due to a health or lifestyle issue.

Weight is one of the most common factors.

Body mass index (BMI) is the measurement used by most insurers to ascertain whether someone has a healthy height to weight ratio. As a guide, an ideal BMI is in the 18 - 25 range.

Typically, insurers start increasing rates at a BMI of around 30, and a BMI of 40 or over is likely to be excluded.

Ratings can also be applied if clients are significantly underweight.

Advisers can request detailed indicative ratings from insurer’s pre-underwriting or pre-sales teams.

Weight can obviously be a sensitive question when discussing protection applications, but by providing clients with a simple BMI calculator you can help set expectations of likely policy ratings.

The NHS offers a simple BMI tool that could be linked to online, and many insurers offer online BMI calculators that can be placed on your website.


2) Show the need for protection.

Another barrier to taking out protection is that people don’t believe it will happen to them. It is hard to imagine that you will become ill long-term, die prematurely or have a serious accident.

When people do take out protection, most take life cover, then critical illness, then income protection. But this is generally the exact reverse order of how likely they are to need each product.

Life cover is widely known about and understood, but products like income protection aren’t, despite them being more relevant for most people’s needs.

Insurer LV recently launched an online tool for advisers to use with clients, to determine the likelihood of needing various forms of protection. After answering five questions it showed that before age 65, a couple in their mid-to-late thirties would have a 62 per cent chance of being too ill to work for two months or longer, a 26 per cent chance of suffering a serious illness, a 13 per cent chance of dying and a 75 per cent chance of one of these previous scenarios happening.


Adding or linking to tools of this kind to your website can give people a reality check, and help make the case when advisers are determining which products are likely to be needed.

The tool can be found at

Vitality also has a similar if more in-depth calculator on its website, which helps to determine your real age based upon a range of health and lifestyle factors.


3) Industry claims data.

The protection industry has been publishing claims paid statistics for over ten years on most products, but people still expect insurers to try to avoid paying claims.

Drewberry Insurance published a 2015 consumer survey that showed on average people believe insurers pay claims just 50 per cent of the time.

Alongside most providers announcing their claims statistics individually, each year the ABI publishes industry-wide figures on what the protection industry has paid out in total.

Advisers can add a snapshot of claims paid to their website, to help prove insurance pays out when it is needed.

The latest figures ABI figures show the protection industry paid £3.1bn during 2013 (or £8.4m every day) in individual protection claims, to 99,000 families, and 97 per cent of protection claims were paid.

Further stats, and breakdowns by product, can be found



4) Shortfall calculators.

Shortfall calculators can give clients a good indication of their protection situation before going through the full advice process.

While often a fairly crude calculation, it can provide a simple starting point for the client in terms of their current situation and an indication of what gaps they have.

Advisory firm London & Country has a life cover shortfall calculator on its website, which after going through outstanding debts, expenses to be covered, number of children, existing cover in place and general income needed month-to-month it calculates the shortfall of life cover in place.

Similarly, most insurers provide tools for advisers to use with clients, to calculate the shortfall in life cover or income protection and the implications of relying on state benefits.


5) Business protection calculators.

Small businesses (SMEs) are collectively the largest employers in the UK, with 24 million people employed by SMEs, but losing a key person to illness or death can have disastrous consequences for a small business.

A report from Legal and General showed that 40 per cent of SMEs would cease trading within a year of losing a key employee or owner, yet 60 per cent do not have any cover in place to protect against this risk. Issues that can arise include loss of profits, loss of business contacts and specialist knowledge, or having to repay a loan made to the business.


Most insurers offer business protection tools that can help to highlight the vulnerability of an SME and whether products like key person cover or shareholder protection should be investigated.

Insurer Vitality also offers a risk calculator for SMEs. Multiple employees can be entered according to age, with the tool calculating the percentage chance of them passing away before retiring, helping to highlight the position the business would be in if the worst happened.

The tool can be found at


6) Protection top tips.

Providing clients with online guides, top tips and the do’s and don’ts of buying protection is a simple way of arming people with information before they take advice, and helping them avoid the pitfalls of making a protection mistake.

Drewberry Insurance includes a number of guides on its website, including the top 10 income protection questions asked by clients, how to reduce the cost of IP, top reasons you don’t have IP and a guide to own occupation policies.

Protection specialist LifeSearch includes a guide to protection on its website and answers commonly asked customer questions, and Beagle Street offers guides to buying protection for people with specific circumstances, lifestyle habits or illnesses such as smokers, pregnancy, hazardous hobbies, cancer and diabetes.


7) Budget planners.

One of the starting points, and most useful exercises for clients when buying protection, is to produce a budget planner of their current expenditure.

Either an online interactive or downloadable form could be added to an adviser site to collate all areas of family expenditure, including mortgage payments, bills, cars, loans, entertainment, shopping, food, etc.

It allows people to see if their finances would stack up if an income was lost, if they could survive on their current protection provision or state benefits, and also to examine how they currently spend their money and if simple savings can be made.

This is also one of the most common sales tips from adviser firms.

If you ask your client to print off their monthly bank statement (easily done these days with online banking) and ask them to begin crossing through the things that would stop if they had no regular income, the process can be quite illuminating.

Most people don’t finish the job of course, because it becomes too difficult, which in itself demonstrates the need for protection.


8) Real life stories.

Including examples of real life protection stories on your website can help bring home the value of a claim being paid.


Might one of your clients agree to being featured on your website, either as somebody who has bought cover or perhaps a claim? Or a local business endorsement?

Currently, the charity-led industry campaign Seven Families, is raising awareness of the need for income protection through the stories of seven families across the UK, who lost an income without financial support in place.

It is providing them with the equivalent of an income protection policy, including financial support and access to support services such as rehabilitation and counselling.

The stories are told through easily accessible films, featured on the campaign Facebook page, which focus on family life and the impact of illness or disability rather than protection products.

The films can be linked to or hosted on adviser’s websites as an engaging and emotive way of showing clients how essential protection can be. See



9) Money saving tools.

While a protection policy shouldn’t be sold on price alone, it is often the main motivator for people to take out or switch cover.

Some advisory firms such as London and Country include cost calculators on its website to show whether people could save money on existing cover, if they switched to a newer style policy or different provider.

While care needs to be taken, particularly around critical illness policies, where the conditions covered change over time in line with medical developments, it can be a good opener to assessing people’s protection needs in more depth.


10) Inheritance tax and trust tools.

Many insurers offer advisers online tools and calculators to easily assess whether clients will face a potential inheritance tax bill in the future, and therefore, whether it is essential that any protection policies are placed in trust, either to cover the IHT liability or remain outside of the estate.

Many insurers also have tools or dedicated sites that could be linked to or hosted on adviser’s websites, allowing people to place new and existing policies in trust, from any provider, making the process as simple and time-efficient as possible.

And if you are short of inspiration – maybe take a look at your competitor’s website, also the banks and large protection distributor firms.

Seeing what ideas they have had could also help your business.




This article first appeared on

Five ways to grow your protection business

11 Jun 2015

You barely see a month in the protection market go by without an announcement on the launch of a new system, tool or initiative to aid advisers when selling protection.

It’s a hugely positive aspect of the market that it continually strives to be easier to interact with, but it’s also a time consuming job to keep up with every new initiative and proposition on offer and weigh up which ones will best fit within your day-to-day sales process.

Streamlining initiatives that save time and cost, and collateral that arms advisers when discussing protection, can make a huge difference to business volumes, client experience and therefore the adviser’s bottom line. Here, we look at five ways advisers can grow their protection business.

1. Intelligent research tools

Tools that combine the advice and application process can improve the recommendations made to clients, save advisers valuable time and increase profits.

The new Solutionbuilder tool on iPipeline’s Assureweb portal describes itself as an intelligent protection quote solution. It enables advisers to review a client’s protection needs and budget to identify product recommendations, then gives the adviser options on how the products could be best packaged together, including both multi-benefit and single product comparisons. Advisers can run many quote comparisons on one screen and view them side by side.

It was originally launched with network Openwork before being available to the whole market. Openwork has said: “It [Solutionbuilder] radically improves the quality and service our advisers can give their clients, as solutions can be sourced considerably more comprehensively and efficiently than ever before.”

Ian Teague, Managing Director for iPipeline UK, commented: “In the first month Openwork saw a significant increase in both average monthly premiums (10.8 per cent) and average benefits per client (17.9 per cent), clearly showing that Solutionbuilder does not only accelerate adviser businesses, enabling them to become more profitable, but also helps to close the protection gap.”

Other research tools have been labelled as invaluable by advisers when selling protection, such as F&TRC and CI Expert. These provide advisers with a detailed breakdown of the values of protection products by comprehensively comparing product features across the market, often providing a level of detail that would be unrealistic or too time consuming to otherwise collate.

2. Improvements to multi-benefit quoting

Iress has recently made improvements to its multi-benefit offering, by launching the Protection Package on its quote system, the Exchange. It allows advisers to request a multi-benefit quote, and then ask for a multi-benefit comparison, to determine whether a single or multiple provider would be most cost effective and apply online without the need to re-key data.

Dave Miller, executive general manager for sourcing at Iress said: “In today’s market advisers will feel any inefficiency in their bottom line, so it’s crucial that technology makes the process of selling protection products as quick and simple as possible. The recent launch of Iress’s multi-policy tool means advisers are able to quickly compare individual cost of policy benefits alongside package products.

“We have also strived to ensure the amendment of information, including adding or removing benefits to maximise or achieve each client’s budget, has been made as simple as possible. All of the above can be done across a number of devices which means advisers are no longer tied to their desks and can provide this service wherever they are.”

LifeQuote was the first portal to offer multi-benefit quotes. It allows a matrix of up to 48 products to be shown, comparing single and multi-products and calculates the difference.

Neil McCarthy, LifeQuote sales and marketing director, said: “It’s all about saving advisers time and increasing their revenue, directly by simplifying the quotes so that they can get better quote research quicker, and indirectly by doing all their low cost admin, allowing them to focus on higher value tasks such as advising and seeing new clients.

“Also, helping with their compliance – by taking the non-disclosure risk (which at a point of a potential sale in the future should add value to their business), and by providing accurate information that aids and simplifies compliance audit.”

3. Get more policies on risk by setting expectations

One of the biggest reasons that protection policies aren’t taken up is that the premium comes back a lot more expensive than people were originally quoted at the start of the process due to an underwriting issue. So by setting realistic expectations from the outset, it helps the adviser with product recommendations and ensures there’s no nasty surprise for the client.

Peter Chadborn at advisory firm Plan Money said they have created their own pre-underwriting form for this reason, which covers brief questions on health, lifestyle and occupation ahead of the research process. “It means we understand very early on if there are any headline medical or occupational factors which may affect the application, thus enabling us to better manage clients’ expectations, and our own.”

Protection portal LifeQuote offers advisers a Decision in Principle pre-underwriting tool. “This is designed to enable advisers to source a medical, lifestyle, and in some cases, financial underwriting decision in principle from the provider or providers the adviser has pre-selected,” said Neil McCarthy, sales and marketing director.

“It allows advisers to create a carefully assembled and proven advice profile that will reassure the client, enhance conversion rates, reduce NTU and decline rates, and reduce the customer’s propensity to ‘multi-prop’, which in turn saves advisers time and wasted effort. It will also, usefully, give advisers additional hard evidence for why they have recommended a particular provider.”

4. Use real life stories

We know another barrier to people buying protection is that while people understand the risk that is being covered, they don’t think it will happen to them. This, combined with an overall lack of trust, can act as a significant disincentive.

The recently launched charity-led Seven Families campaign is supporting families across the UK who have lost an income without having financial support in place. It tells the stories of the families through bite-sized films on social media, which can easily be used by advisers to highlight to clients the difference that both the financial support and physical support makes when people unexpectedly find themselves unable to work. It can help encourage people to really think about whether they could cope financially in a similar situation.

Some networks and adviser firms have now made the videos part of their induction process for new advisers and paraplanners on the basis that many younger people may not have the life experience to understand why protection can be so important. One of the strongest elements of the campaign shows the value of ‘added benefits’.

Most protection policies come with access to a host of support services such as rehabilitation, counselling and medical experts that can often be used without a claim being made. Many policyholders won’t be aware that they have these additional benefits when they can be of huge help to people and avoid them getting to a point where they are unable to work, or help them return to work faster. As many advisers have often said, it is far better to have something and not need it, than to need something and not have it.

Benefits such as access to a virtual GP, or a second medical opinion through services such as Best Doctors can make a huge difference to the way people are able to manage their health and should be shouted from the rooftops when recommending a protection policy.

As well as insurers such as Vitality and Health Shield, Exeter Family Friendly has also recently added a virtual GP service for both its new and existing income protection and private medical insurance policyholders. People will be able to book and carry out face-to-face consultations with private GPs online using a webcam, making it a very convenient way of accessing expert medical advice.

Simon Philip, director of distribution and marketing at Exeter Family Friendly, said: “Access to primary care services in the NHS is a real problem, with many people having to wait days if not weeks to see their GP. This benefit means our policyholders can have a personal consultation with a practicing GP from the comfort of their own home.”

5. Use insurer initiatives as a motivator

While price shouldn’t be the sole reason to recommend a policy, provider initiatives such as premium discounts can give advisers an additional reason to speak to clients, or to go back to those previously considering protection with a further incentive to take cover out now.

VitalityLife is offering a 5 per cent discount on its Optimiser protection policies until the end of June, and LV recently offered a 5 per cent discount on all income protection policies taken out during March and April, which it has done periodically over the last few years.

Across the life of the policy a 5 per cent discount can be a worthwhile saving (taking a 25 year £30 per month premium to £28.50, saving £450 over the term), which could make the premiums more palatable to some clients. At the very least, it’s a conversation opener and a good reason to make contact.

Earlier we referred to a lack of trust and claims statistics are a good way to manage this in a pro-active and positive manner. They are published by providers on an annual basis and canbe used by advisers when talking to clients about protection, to help prove that policies do pay out, and counter some people’s perception of the industry.

According to new research from British Friendly the vast scale of self-employed people who believe less income protection claims are paid out than actually are with just 2 per cent of respondents saying that income protection claims were paid out more than 90 per cent of the time. Some 45 per cent believed that the main reasons claims were declined was insurers deliberately trying not to pay, even though on average the industry pays more than 90 per cent of IP claims.

Kevin Carr is managing director of Carr Consulting & Communications and chief executive of Protection Review



Originally appeared on

10 important things to know about critical illness cover

11 Jun 2015

Around half a million individual critical illness policies are sold each year, making it a cornerstone of financial planning for many families.

Product providers have radically developed their offerings in recent years, including severity based pay-outs and the strengthening of definitions across the most claimed against illnesses. Such changes have been of great benefit to consumers, and strong claims paid statistics published each year all help to maintain confidence in our industry.

Here, we take a look at the ten most important things advisers need to know about CI cover.

1. The basics

Most CI plans cover around 40-50 conditions. The most claimed against illnesses are cancer, heart attack and stroke. Products can also include conditions such as CJD, encephalitis and Crohn’s disease, for example, but these are much rarer in terms of claims.

According to CIExpert founder Alan Lakey, each year around 62 per cent of CI claims are for cancer, 12 per cent heart attack, 8 per cent stroke and 5 per cent multiple sclerosis.

CI cover is typically bought alongside life insurance and therefore can be structured as level, decreasing, index-linked, whole of life, family income benefit, joint or single cover, and so on. In fact, more than 95 per cent of all CI policies sold in the UK include life cover. It makes little difference to the premium but means if someone passes away within the waiting period for a CI claim, it is switched to a death claim rather than being declined.

Children are also often covered under their parent’s plan. Cover can vary between providers in terms of the age of the child, the percentage of the overall sum assured paid, and whether added extras are included, such as hospitalisation benefit.

2. Severity-based payments

CI products are structured to pay out in one lump sum or in staggered partial payments, depending on the severity of the illness. For example, many providers will pay out between 20-25 per cent of the total sum assured for early stage cancers.

Drewberry Insurance Director, Tom Conner says: “This... helps to build consumer trust. If someone is out of work for six months with an illness, they’d be extremely confused and angry if their claim was declined for not meeting a definition, in what they would see as small print.”

Traditionally, early-stage conditions were not covered under CI policies, because the condition is often localised, treatable and is not deemed to be life threatening.

Peter Chadborn, of Advisory firm Plan Money adds: “The increased prevalence of partial payments helps dispel the myth that Insurers try to avoid paying claims. It is also an agreeable concept for clients, who recognise that often it is fair to receive a lesser or earlier payment in certain circumstances.”

VitalityLife Deputy CEO Deepak Jobanputra, continues: “The reality is that covering against surviving a serious illness is more important than covering against just death – and people who survive one illness often go on to have other issues.

“In fact half of all heart attacks in the UK are repeat attacks, which is why cover for multiple conditions is so important. The definitions used is often the best way to determine the quality of the cover and those that pay out upon diagnosis, rather than those requiring treatment are preferable.”

3. Claims are paid

The number of CI claims paid has increased by approximately 10-15 per cent since 2005. Approximately 80 per cent of CI claims were paid then, compared to around 92 per cent today.

Industry developments to prevent innocent and fraudulent non-disclosure have played a huge part in ensuring more claims are paid each year. The transparency involved in issuing claims stats will also have brought greater scrutiny to why claims were being declined.

According to Alan Lakey at CIExpert, just 2 per cent of claims on average are declined today for non-disclosure. “The industry now recognises that declined claims are an issue picked up on by the press and social media. This has helped to focus their thinking,” he notes.

4. Check what it says ‘on the tin’

While severity-based payments have increased viable claims, it is vital that people are aware that not all forms of cancer or every type of stroke are covered, for instance.

Addy Frederick of insurer LV says: “It is essential clients understand whether the conditions covered are meaningful for their situation. For example, a female client may want a CI policy that has great breast cancer or ovarian terms.

“The illnesses covered vary significantly and there are a number of conditions which are not covered, for example if someone has a back injury or breaks their leg and can’t work.”

A spokesperson for Aviva and Friends Life adds: “It’s important that customers understand critical illness insurance only covers those illnesses defined under the policy terms and conditions. The product does not cover every illness that may be medically regarded as critical.

“It’s also important to understand there are specific definitions for those listed conditions and these need to be satisfied in order for a claim to be paid. For example, some early cancers are not covered.”

5. Don’t confuse CI with IP

CI policies cover a list of specified conditions, where income protection pays out if you are unable to work due to illness or injury, regardless of the condition suffered.

Emma Thomson at protection specialist LifeSearch explains: “It is essential to explain that CI isn’t designed to pay out if clients are off work sick. The ‘total permanent disability’ element of CI can often confuse the issue.

“It’s vital that advisers show clients the difference and advise accordingly, which in a large majority of instances will see income protection being the primary need, not CI cover.”

Tom Conner, of Drewberry Insurance adds: “In my opinion the biggest mistake when selling CI cover is not discussing income protection as well. Income protection covers far more eventualities, like being off work for six months with depression or back pain.

“Advisers need to be providing holistic protection advice and this isn’t possible if advisers just look to sell CI cover in isolation.”

6. Quality not quantity

Once upon a time it was thought the more conditions covered by a provider the better. But with the vast majority of claims coming from just three conditions - cancer, heart attacks and strokes - covering a huge number of additional conditions can become secondary if not irrelevant.

Fortunately, the trend has switched to a focus on the quality of the most claimed upon definitions. This can vary greatly between providers and therefore should often be the primary factor when choosing which cover to recommend.

Michael Aldridge, at London & Country says: “Friends Life is a very good example of this; they are now covering 20 fewer advanced cancers under one heading, rather than having 20 separate definitions and playing the numbers game. This adds greater clarity and simplifies definitions for illnesses that matter.”

Alan Lakey, at CIExpert adds: “A move towards quality is a common-sense approach, with similar conditions now being placed under the one claims heading. Many advisers count conditions, ABI+ numbers or focus on premiums. This is far too simplistic and inevitably increases the likelihood of an incorrect recommendation.”

7. Keep premiums within budget

While CI recommendations shouldn’t be driven purely by the lowest premium, cover has to come within the client’s budget. CI cover currently costs about 4.5 times more than the equivalent level of life cover, according to Gina Cowen, at quote portal iPipeline, so affordability is a much bigger issue when recommending CI.

“As a result we will often see advisers select a lower benefit amount. To address this need almost all providers will now allow you to set up a policy with a split sum assured, i.e. one sum assured covering CI and a different sum assured for the life cover amount.”

Emma Thomson at LifeSearch notes: “Running quotes for the whole mortgage amount, and then abandoning CI cover when the price is too high is a common mistake. The sum assured should instead be dropped try to meet the clients’ budget, so at least some cover is in place, for example, the equivalent of a year’s salary.”

Tom Connor, of Drewberry insurance, continues: “It is worth knowing that CI cover can be added to a family income benefit policy. This can work out a lot more affordable for clients on a tight budget looking for family protection.”

8. Ask upfront medical questions

It is important to manage client expectations when applying for CI cover, so that the eventual premium isn’t a shock if they aren’t accepted on standard rates. Health and lifestyle can have a big impact on the cost of CI premiums.

Gina Cowen, of iPipeline says: “Providers will underwrite the life and CI elements of cover separately, so a client might be rated or declined for CI cover but have a different outcome on the life element.

“It’s even more important therefore when recommending CI cover to ask some up-front questions about their state of health so you can have a better view on the likely outcome. There are tools available in the marketplace that enable advisers to better set client expectations.”

A recent iPipeline survey of over 1,000 advisers showed that 43 per cent had lost business as a result of unexpected ratings.

9. Underwriting decisions can be challenged

CI applications aren’t always straightforward and some clients will have more complicated medical circumstances than others. It is essential to not only manage the expectations of the client but also to provide the insurer with enough information to come to a fair underwriting decision. If one underwriter doesn’t come back with favourable terms don’t stop there.

Chris Morgan of advisory firm Unusual Risks says: “Don’t always presume the underwriting decision you have been given is correct. If your client is declined cover there are cases when this should be challenged.

“For instance, I was able to secure standard terms on life and CI cover for a client who was repeatedly declined or offered cover with exclusions. By presenting relevant medical information a case can be made to overturn the decision.”

10. Re-broking policies might not be wise

Definitions covered under a CI policy change over time in line with medical developments. This makes re-broking a complicated task which cannot be solely based on premiums.

Some clients will benefit from newer policies, with partial payments and more generous definitions for the most claimed on conditions. However this is not always the case.

Chris Morgan of advisory firm Unusual Risks says: “Where a client has CI cover taken out before 2005 advisers should be particularly cautious. It is around this time that providers removed coverage for angioplasty procedures, so this would not be included on newer policies for instance.”

Peter Chadborn, at Plan Money adds: “When re-broking a CI policy, to simply focus on premium comparison or the number of definitions is reckless.”

This writer has an older style policy with Aegon (Scottish Equitable), but when I needed new cover I didn’t switch it – I added new severity based cover with Vitality (PruProtect) which is one way of getting the best of both worlds.


Kevin Carr is managing director of Carr Consulting & Communications and chief executive of Protection Review

Originally appeared on

Top tips for buying business protection

11 Jun 2015

Small businesses are collectively the largest employers in the UK, with 24 million people employed by SMEs. As such an important part of the UK workforce it’s essential that SMEs safeguard their future.

Losing a key person to illness or death isn’t something that we like to think about, but it can have disastrous consequences for a business. A recent report from Legal & General showed that 40% of SMEs would cease trading within a year of losing a key employee or owner, yet 60% do not have any cover in place to protect against this risk. Issues that can arise include loss of profits, loss of business contacts and specialist knowledge, or having to repay a loan made to the business.

Businesses can protect against the loss of a key person through specially tailored insurance policies, however, each business will have its own requirements and policies can differ greatly, so it’s worth thoroughly investigating the market before making a decision.

Top five tips for buying business protection:

1.       Consider key person cover and shareholder protection. These are the two main forms of business protection. Key person insurance provides a cash injection if the business loses someone vital to their continued success. The amount a key person should be insured against can depend on the profit they generate, or costs associated with recruitment and training of a new employee.


Shareholder protection allows a company to retain control of shares if a partner passes away or suffers a serious illness, otherwise shares could pass to the deceased’s estate with the family owning the shares. A business could easily find itself with a shareholder who is unable to make a valid contribution or has a detrimental presence. By having share protection the business can ensure it has the right, and the funds available, to purchase shares should the worst happen.


A product called relevant life cover is also a form of business protection. It provides a tax-efficient form of death-in-service benefit for employees and salaried directors.


2.       Look at critical illness cover and income protection as well as life cover. “People are much more likely to suffer a serious illness during their working life than pass away,” according to Tom Conner, of specialist adviser Drewberry Insurance, “so this is arguably the greater risk to a business.” Key person cover can be taken out in various forms, including critical illness, which pays out a lump sum upon diagnosis of a covered illness, or income protection, which pays a monthly income if the insured is unable to work due to ill health or accident.


3.       Ensure the policy is written in trust. A business protection plan must be written in trust to ensure it is paid to the intended beneficiaries, and for life cover, is not included as part of the deceased’s estate for tax purposes. Writing policies in trust is free and should be done when the policy is taken out.


4.       Check the tax implications before you buy. The premiums or benefit could be taxable or eligible for tax relief. Some policies are treated as an allowable business expense, which qualifies for relief on Income Tax, Corporation Tax and National Insurance.



5.       Seek specialist advice. SMEs are nearly three times as likely to ask friends or family for advice, rather than consult a financial adviser, according to Aviva. Tom Baigrie of protection adviser LifeSearch said “A specialist financial adviser can help guide you to the most suitable policy for your company’s needs, and can often access products that may not be available otherwise.”

Originally appeared on

10 things you probably don’t know about claims statistics

01 Apr 2015

It’s the spring, which in the protection calendar means insurers are busy publishing their claims paid stats, something many have done annually for more than a decade.

During that time the level of insurer transparency given to advisers and consumers has increased immensely, which has typically been warmly welcomed by consumers groups and the media. But there is still a lot of debate within the industry as to whether we use claims statistics in the most effective way – and whether or not they should be published at all.


Here, we take an in-depth look at claims statistics, how to use them and why they are still integral to building confidence in protection insurance both for consumers and advisers.


1. Claims being paid continues to rise.

On average the number of protection claims paid has increased by approximately 15 per cent since 2005. Back then, when issuing claims statistics was relatively new for most providers, approximately 80 per cent of critical illness claims were paid. Today the latest collective ABI data shows that this figure now stands at 91.8 per cent.


Industry developments to prevent innocent and fraudulent non-disclosure have played a huge part in ensuring more claims are paid each year. The transparency involved in issuing claims stats will also have brought greater scrutiny to why claims were being declined.


As an industry we pay £8.1m in claims benefit every day, through life, income protection and critical illness policies, totalling £3.1bn annually. I’ve heard people in the industry say that we are not in the market of selling insurance, we are in the market of selling a promise to customers: a promise that if a certain event happens, we will look after them financially.


As an industry we are very good at keeping those promises, but unfortunately this is often contrary to popular belief.


Andrew Jenkinson, director at Drewberry Insurance, says: “The publication of claims statistics is an important part of proving that each firm, and protection as a whole, is open and transparent.

“In our 2015 consumer survey the average response when asked how often insurers pay life claims was 50 per cent, when the actual figure is over 90 per cent. People are still underestimating the effectiveness of insurance.”


2. It’s not just about critical illness cover.

When claims statistics were first published it was usually all about critical illness policies - hence the solo comparison above.


Back then there were stories on the TV and in the consumer press every month, if not every week, about a declined CI claim – and the industry’s reputation took a heck of a beating. It is easy to remember the bad stories of course but in truth most media coverage of protection insurance is very balanced and generally positive.


Today, figures for life cover and income protection products are also regularly published. Alongside the 91.8 per cent in critical illness claims, 91.1 per cent of income protection and 98.4 per cent of life claims are paid on average.


And those declined claim stories? Well, they haven’t quite disappeared, but there’s a lot less of them.


3. Claims statistics in one place.

Most insurers publish their stats on a yearly basis, usually via a press release to the trade publications. But insurers publish their numbers in different ways and at different times, so it can be hard to keep track.


As each insurer issues its claims statistics for numerous products independently it can be time consuming for advisers to look at the data collectively for use with clients, therefore, many simply won’t include it in their conversations.


However, specialist firms such as F&TRC and CI Expert allow advisers to see all the data and compare the latest numbers across the industry.


F&TRC managing director Ian McKenna says: “The protection industry is very transparent when it comes to claims statistics. But that’s only useful if people can use the information simply and efficiently.


“To help advisers get the most out of valuable protection claims data we provide a regularly updated one-stop-shop of information in a simple and consistent format, that will help clients understand the need for protection.”


The tool has recently been updated with new insurer claims figures, and is free for advisers to access at


4. It’s not just about the money.

Some of the most valued services when someone claims on a protection policy, but ones that can be very much undervalued in the sales process are the ancillary benefits that providers offer.

Whether a family member needs bereavement counselling, or someone has had an accident and needs rehabilitation support, these services can be provided by the insurer or partners working alongside them. It also often means that people can access vital support services much faster than they may otherwise.


Independent consultant Karin Lloyd says: “What’s important about rehabilitation in the insurance context is that it can encompass anything that helps to move people towards getting them back to a productive life, which is what most people want to do. It gives them dignity and purpose.”

Examples of these initiatives include Friends Life recently becoming the latest provider to partner with Best Doctors to provide global medical treatment to its policyholders. It will give customers access to the leading medical experts and treatments around the world for themselves and their children, covering a range of serious illnesses including all cancers.


On a different note, Vitality Life recently announced it paid a record amount in claims during 2014 with an increase of 66 per cent compared to 2013 on the amount paid out. But the firm also encourages healthier behaviours through reduced rates and its members had 21,000 health checks carried out in 2014.


5. Bringing examples of claims to life.

Using real life case studies is a useful way of enabling clients to see the real benefit of protection policies. The recently launched Seven Families campaign shows the difference that protection policies can make to people’s lives, through both financial support and rehabilitation services.

The campaign, funded by major UK insurance companies and led by charity Disability Rights UK, is supporting seven families across the UK who have lost an income due to a sudden illness or disability, with no financial support in place.


It includes a brain stem stroke sufferer who has been left paralysed, a policewoman left disabled after a motorcycle accident and someone losing their sight. It uses films to tell each family’s story, highlighting the difference the support of the campaign has made to their situation and recovery, and help raise awareness of the importance of protection.


It’s an emotive and simple way to help get the message across to clients. You can follow the stories of the families at


6. Why do people claim?

One of the most useful elements of the protection claims statistics issued by insurers are the most common reasons people made claims, which enables advisers to help clients understand what can be claimed for.


While this differs slightly between providers, traditionally, cancer makes up the highest percentage of critical illness claims, followed by heart attacks and strokes. For income protection, back-related conditions and mental health claims are most prominent, which highlights the point that CI and IP are often complementary products.


7. Long-term claims statistics.

This year, British Friendly became the first protection insurer to release long-term claims statistics. The income protection specialist paid a total of 96 per cent of claims over the last five years, and challenged other insurers to publish their claims stats in a more timely fashion.


Mark Myers, British Friendly CEO, says: “We were the very first insurer to publish claims statistics for the whole of 2014 and we are also able to share the number of paid claims for the last five years to prove that we deliver on our promises - to pay all genuine claims consistently.

“I believe all insurers should publish their statistics by the end of January. The information is available to all insurers almost immediately so there is no reason why they shouldn’t all be published in the first 30 days of each year.


“It is imperative that as an industry we demonstrate an absolute commitment to delivering excellent outcomes for our customers.”


8. How to use the statistics.

There are few better ways to answer the ‘does it pay out?’ question than by proving independent information showing that more than 90 per cent of all claims are paid. This can be followed up with a brief explanation of the other 10 per cent and why some claims are declined for valid reasons, which itself is a good practice to ensure any future claims are paid.


There are two reasons why claims are declined: not meeting the definition, which means that the cause is not covered such as claiming for stress on a critical illness policy; or non-disclosure of a material fact, such as not telling the insurer something that would’ve changed the terms of the policy.


9. Financial Advisers buy cover too.

One of the best stats I ever remember seeing on an insurer’s paid claims press release was that four in five financial advisers had their own income protection policy. Alas I can’t quote the source of the research nor the sample size as it was a long time ago, but I always thought that if an adviser sold something to themselves it must be worth having.


10. Some insurers don’t want to tell.

It may or may not be surprising to learn that some insurers still don’t want to publish their statistics. Despite the many positive reactions from advisers and the media some insurers don’t see the benefit while some others think that the job is done – and that trust has been rebuilt.


I beg to differ and would strongly suggest that as an industry we not only continue to publish claim statistics, but move forward to make much more information available and promote it so that advisers and consumers really get to know about it.

Right now we are currently running a poll on the Protection Review website asking: “What should the protection insurance industry do about claim statistics?” to cast your vote.


Kevin Carr is managing director of Carr Consulting & Communications and chief executive of Protection Review



First appeared on

Health Shield - What does Solvency 2 mean for advisers?

12 Mar 2015

Solvency 2 will soon be upon us. It will come into effect from January 1, 2016 and has serious implications for product providers and financial advisers.

The EU has been considering this new piece of financial regulation since the turn of the millennium. There was some initial uncertainty as to how it would apply in the health cash plan market. However, Health Shield, working with its actuarial advisers, realised very early on that there would be significant change that affects both providers and advisers. Below is a summary of the key points.


Solvency 2 is an EU Directive that is designed to harmonise EU insurance regulation across member states, in particular the amount of capital that EU insurance companies must hold to reduce their risk of insolvency. There are three main pillars:


·         Pillar 1 consists of the quantitative requirements (such as the amount of capital an insurer should hold).

·         Pillar 2 sets out requirements for the governance and risk management of insurers, in particular the Own Risk and Solvency Assessment (ORSA) process.

·         Pillar 3 focuses on the requirements for disclosure and transparency.


So what does this mean for advisers? One of the key benefits is that products must be designed with consumer focus in mind. This means more stable pricing as insurers better understand the underlying risks and look to create a more stable inflow of income.


Demonstrating good conduct means that insurers need to be able to justify why new products are being brought to market or why changes are being made to existing products. In simple terms changes should be made with the consumer in mind and not simply linked to financials. 


In addition, much of the reasoning behind harmonising regulation through Solvency 2 is to promote confidence in the financial stability of the insurance sector and provide early warning to supervisors so that they can intervene promptly if capital falls below the required level. It also offers greater protection for consumers and should reduce the risk of an insurer not being able to meet claims.


A company that is compliant will have put in place a robust framework that analyses their risks and will have increased their in-house expertise of risk analysis to help them do so.


At Health Shield we very much welcome this regulation. It forces insurers to imbed actuarial expertise, long term planning and greater transparency into their product design and financial planning process. Companies will need to explain where they are holding their capital, why they have made their decisions and the associated risks behind those decisions. For example, if a firm’s Board increased the risk exposure within its investment strategy it would need to justify the reasons, explain the additional capital requirements to stakeholders and perform thorough sensitivity and scenario testing to ensure the risk taken is not beyond the insurer’s risk appetite.



Health Shield has been planning for Solvency 2 for a long time, investing heavily in its product development, risk management and actuarial capabilities. In November 2014 it produced its first ORSA report and since 2012 all business and capital planning has used five year Solvency 2 projections combined with a variety of stress and scenario tests to see what would happen in different, turbulent times. We believe it is right that financial firms have to submit themselves to this type of rigorous testing.  Consumers must be made to feel reassured that the companies they buy products from are strong enough to deliver on their promises and that the products they buy are designed with their needs in mind.

This article first appeared on

The things to know about Income Protection

25 Feb 2015

Here we give advisers ten things to think about when recommending income protection to clients.

We’ve recently seen the launch of a much needed industry charity-led campaign to raise awareness of income protection among consumers. It supports seven families (where it takes its name from) across the UK who have lost their main income without any financial support in place. Having seen the stories of the families who through accident or sudden disability have had their lives changed forever, it highlights more than ever importance of advising on protection, particularly income protection, as the part of financial planning that underpins everything else. Here we give advisers ten things to think about when recommending income protection to clients.




When talking to a client about the need for income protection it’s a rare occurrence that they know what they are already entitled to. Recent research from income protection specialist Drewberry found that 26% of people don’t have income protection because they believe their sick pay would be sufficient to look after them, yet in reality only 14% would receive sick pay for more than six months while 24% would receive no sick pay at all. It is impossible to make recommendations on income protection without first knowing a client’s sick pay benefits and whether there is a group income protection policy in place. Peter Chadborn, Director of advisory firm Plan Money agrees “most clients overestimate the benevolence of their employer and rarely have exact details of their benefits to hand. In all cases, prior to any recommendations being made the employer handbook should be inspected by the adviser.”




Claims statistics have been a useful tool for many years to help combat negative perceptions that claims aren’t paid. While more traditionally figures have been released for critical illness cover, most income protection providers now publish their stats. In the first move to release long-term claim statistics, the insurer British Friendly recently revealed that over the past five years it has paid 96% of income protection claims on average. British Friendly CEO Mark Myers, said: “It is about the bigger picture of consumer confidence. If claims are at the heart of our culture, you are proud about them and want to shout about them. The industry should be publishing its claims numbers much quicker and much louder to get the best outcomes for our joint customers.”


Tom Conner, Director at Drewberry Insurance, said “It is important as an adviser to know when an insurer receives protection business it will follow through on its promises. Long-term paid claim statistics are a useful tool to demonstrate that income protection policies consistently pay out, and that insurers are not trying to decline every claim, which is how the public often perceives them.”





One of the most crucial aspects of income protection, and a point that can never be made too often, is making sure your client understands which occupation class they are being covered under. Own occupation income protection policies are by far the most comprehensive and easy to claim on. They effectively cover you for being unable to do your own job. Often people can mistake inferior cover offering a cheaper premium as like-for-like cover with an own occupation policy. Other types of occupation classes include any occupation (where you have to be unable to do any job to claim) and activities of daily work/living (where you have to be unable to perform a number of tasks from a set list). This point is so important that intermediary LifeSearch has announced it is committed to never recommending an income protection policy to its customers that doesn’t offer own occupation cover. Friendly Societies in particular often only sell policies on an own occupation basis, and many insurers are moving to this position.




Cancer is arguably the disease people worry about the most. The financial risk associated with having cancer is most often addressed through the recommendation of critical Illness cover.  However, while critical illness cover offers a lump sum payment to help ease the financial burden of such illnesses, people can be left unable to work for many years. Macmillan Cancer Support figures show that four in five people are on average £570 a month worse off than before they were diagnosed with cancer. This shows there is real benefit in weighing up whether an income protection policy could be more appropriate for some clients in addressing the financial impact of cancer.




Young people often feel that being seriously ill is something that either won’t happen to them or is something to worry about later in life. But we know that long-term illness can strike at any age, and making sure an income is protected can be as important at age 20 as it is at 60. Figures from protection intermediary LifeSearch show that in 2014 there was a 48 year age gap between its youngest (23) and oldest (71) income protection claimant. The average age when a claim is made was at 43-years-old, a time when people often have the highest financial responsibility in terms of property and dependent family. These figures show that it’s rarely too early to consider protecting an adult’s income. And of course, the younger people take out income protection the cheaper it is over the course of the policy, even compared with someone older having cover over fewer years.




One of the biggest reasons that clients may not go through with an income protection application is when an insurer needs to raise the quoted premium due to a health or lifestyle factor, and the client wasn’t expecting it. Income protection premiums are heavily influenced by medical history, risky pastimes and occupational activities, e.g. working at heights, so it makes sense to obtain top-line information on all of these factors ahead of your research. If this information is factored into the initial dialogue with insurers’ underwriting teams it ensures your recommendations are as close as possible to the post-underwriting outcome. Director of Plan Money, Peter Chadborn said in his experience “this ensures a greater take-up of income protection policies, because it reduces the likelihood of the client being turned off by counter-terms they were not expecting.”




Whilst income protection policies offer relatively cheap premiums, particularly for those who are young and in good health, a comprehensive long-term income protection product isn’t going to be within every client’s budget, when you factor in their occupation, health or lifestyle. So what’s the next best thing? There are some great short-term income protection products on the market, the best being those that resemble long-term IP exactly, with the only difference being the number of years it will pay out for. Short-term policies typically pay out for one or two years, and can be insured on an own occupation basis. An option worth exploring if clients would otherwise be left without any financial protection if they were unable to work. Having short-term cover is better than having no income protection at all.




Adding indexation to an income protection policy is something that can often be overlooked. Unless prompted to by an adviser, protection insurance isn’t something that people regularly revisit, like they have to annually with car or home insurance. So an income protection policy is likely to remain the same for the term of the policy. During this time the cost of living will increase, and unless indexed, any pay out won’t keep pace. People can find if they need to make a claim that they don’t have quite the safety net that they thought they did. Income protection policies can be set up to track RPI (retail price index) or increase by a set percentage each year, to ensure they will always be as valuable to the client as on the day they were taken out.




The length of time that a client can wait before an income protection payment kicks in can make a big difference to the cost of the premium. So it’s worth investigating thoroughly how long people could survive financially on employee benefits and any savings they would be happy to use, before any income protection payment is needed and to ensure they are not over insured. The cost difference for a non-smoking 40 year old, on £1000 per month benefit with an income protection policy deferred for one month and twelve months is over £20 a month. The average deferment period is around three to six months.





Traditionally, protection sales have been focussed on those that own their own home, but industry figures show that a fifth of the 22 million households in England live in rental properties. Renting is also no longer the preserve of university students and fresh-faced graduates, with a rise in the number of professionals with families living in rented accommodation.  Research from insurer LV= shows that, on average, renters pay 58% more than homeowners to keep a roof over their head, which could leave them at greater financial risk if they were to lose their income. One could also argue that landlords would be less likely to offer a stay of execution than a bank if someone falls into arrears, therefore making renters a group with a very urgent need for income protection. 

This article first appeared on

British Friendly - Lies, Damned Lies and Claim Statistics

19 Feb 2015

In our industry, performance is often measured by our ability to pay claims. Claims are at the heart of our culture because there’s no point in having insurance if it doesn't pay out. So we focus on what’s important. And rightly so.

In the eyes of a mutual insurer, everyone deserves cover because we’re all in it together as equal paying members. All occupations are priced the same and risk is managed through reviewable premiums, which allows the flexibility and fairness needed to keep paying as many claims as possible.

It is all about consumer confidence and if paying claims really is at the heart of our culture, if you are proud about it then you want to shout about it and the protection industry should be publishing its claims numbers much quicker and much louder to get the best outcomes for all parties.

As an industry though we assume that guaranteed rates are the best option for every customer who buys cover often without considering the wider picture of continuing to pay those claims.

What does a guaranteed premium actually offer the customer? It guarantees the price they will pay over the term of the policy. And if all else was equal that might well be a good thing. But is all else always equal?

What happens to insurers when faced with an increasing book of claims who cannot change their premiums accordingly? Insurers who may have secured that business for little other reason than being the cheapest on the list at the time?

They can opt to absorb their losses, increase new business prices, tighten underwriting, take a tougher stance on claims, or all of the above. Ultimately, these factors will tend to drive down the quality of service both to the customer and the intermediary. Indeed some advisers believe we have already seen this happen already in the market.

Put simply, insurers with guaranteed rates can either pay the claims and cut costs, or decline claims. Whereas an insurer with reviewable premiums has more flexibility to pay claims and maintain service.

Although if you get the sums right at the outset you can pay claims without putting rates up. At British Friendly we’ve never yet put our rates up and have paid over 96% of all IP claims over the last five years.

So what really is most important to the customer? Certainly of premium or certainty of claim?

Well, both, I hear you cry.

The priority for a mutual insurer is to pay the highest amount of claims possible. Not to be the cheapest insurer. From this viewpoint, the flexibility offered by reviewable premiums is a sensible and beneficial approach, especially when combined with strong customer service, underwriting and claims history.

And let us not forget, reviewable premiums can go down as well as up.

So let’s not argue about the small print, let’s not challenge the obvious customer value of publishing claim stats. Instead let’s work together to get our good news singing louder than ever before and get people the cover they really need.

British Friendly

This content originally appeared on

Kevin Carr - Could health scans help to sell more protection?

01 Feb 2015

A range of leading protection advisers have called for comprehensive medical scans to be offered as an ancillary benefit for clients who buy protection policies.

Mark Dennison, of Essex-based LightBlue Financial Management, said: “Bearing in mind how technology can detect problems at an early stage and diagnose the root cause of chronic conditions, I would have thought it would be a no-brainer for insurers as it will help identify illnesses before they become critical and enable those with ongoing conditions to find a remedy and return to work.”

The technology exists to take detailed CT and MRI scans of pretty much any area of the body within a matter of minutes, and to older, high net worth clients, such a scan might be of significant interest with services offered either by an insurer or directly through an adviser.

The technology is available to detect illness in its very early stages and to diagnose the root cause of chronic conditions that can prevent sufferers from returning to work and living a normal life. Is it time for the thought leaders within the insurance industry to look more closely at these options and how to incorporate them into health insurance packages for the benefit of their business and for the wellbeing of clients?

The Harley Street-based European Scanning Centre showed that 93 per cent of adviser respondents said policyholders would benefit from a comprehensive health assessment to help them recover from certain conditions and aid their return to work, with more than 70 per cent suggesting the introduction of scans as a product enhancement for high net-worth clients would help advisers with protection sales and persistency rates.

Whether or not any scans would form part of the underwriting process is debatable. The service could be offered after policies had begun so to not disrupt the current process – or if  a client wanted to eliminate any potential for non-disclosure before a policy started it could be carried out beforehand along with a report from their GP.

The research surveyed 15 adviser firms, including LifeSearch, London & Country, Sesame Bankhall Group, Risk Assured, Plan Money and Highclere, which together represent more than 13,000 advisers.


Seven Families campaign contributes to increase in protection sales

London & Country has reported a 3% increase in income protection sales – which the company partly attributes to greater awareness and adviser conversations following the Seven Families campaign. Michael Aldridge, sales director for the firm said: "Our advisers are fully aware of the campaign and are pro-actively using it in conversations with clients to highlight the benefits and positive impact on life and lifestyle protection in general can have and specifically IP can have. When the campaign officially kicked off in the last quarter of 2014, we pulled up the stats from the IP team here to find out the penetration in that quarter compared to the first three months of the year. We found a 3% increase in the penetration of IP.”

Royal London recently became the latest insurer to join the Seven Families campaign, a charity-led initiative, which aims to raise awareness of the financial impact of long-term illness and disability. The project, which has the support of 20 different insurer firms, announced the first three families last year, and will be announcing further families to benefit from the project in the coming weeks.

This content first appeared in Mortgage Introducer

Protection News

01 Nov 2014

Protection for the Autumn (Winter!) Statement

With the budget deficit taking longer to reduce than the Government forecasted, the Treasury has now extended the proposed austerity period until at least 2018. Crucially, the austerity period has been characterised by falling wages and job insecurity, piling the pressure on people to work – and stay working. The Autumn Statement is announced on Weds December 3rd, which I’m sure falls under the heading of winter, rather than autumn, but either way further cuts to the welfare system are pretty much a foregone conclusion, with promises from both the Labour party and the coalition to make savings in this area. The Chancellor has said that £12bn needs to be cut from the welfare bill, meaning that many will have no safety net should they find themselves unable to work through ill health or injury. It is therefore fair to surmise that the number of people vulnerable to this will increase regardless of who wins the election; with cuts of this scale being made to the welfare system, people, especially homeowners, must now consider their Plan B should they find themselves unable to work. Add into the mix British workers suffering a sixth straight year of falling real pay, taking earnings back to levels last seen at the turn of the century, and the grim reality of the situation starts to set in. Ultimately, weak wage growth coupled with inflation has resulted in British workers being no better off, so borrowing remains high. We know that house prices, when compared to wages, are high across the country and most people borrow to afford a deposit on a new home, but first time buyers tend to be the most vulnerable; often they are early into their careers and their risk of redundancy may be higher. They also tend to be less likely to be signed up to protection products, meaning that they have less in the way of contingency plans, as well as less in the way of savings. While repossessions have continued to fall this quarter, the effect of an inevitable interest rate rise may well slow or reverse this trend in the coming months and years. Those not saving for this inevitable shift must either rely either on their creditors to support them, or make other contingency arrangements for a time in the all too foreseeable future, when the cost of servicing their debt rises. The fact is, people can no longer rely upon the Government to support them if and when they fall on hard times. There is therefore a very real need for workers and homeowners to safeguard themselves and their families from the financial impact of unexpected illness, accident, unemployment and death. Protection insurance and, in particular, income protection, is all too often viewed as a needless expense, but could in fact be the very lifeline needed should a homeowner fall ill and find themselves unable to work and, thus, keep up with the mortgage repayments.

The Seven Families campaign has offered real insight into the benefits of protection insurance since it was launched earlier this month. The campaign provides a year’s financial assistance to seven families who have suffered as a result of ill health and effectively demonstrates the kind of differences a financial safety net can make to a struggling family. Not only is this the first campaign of its kind, it is also probably the first time so many major companies have worked together for a common purpose – and got widespread support for doing so. The press coverage and social media buzz arising can be used to help demonstrate the true value of protection to new and existing clients. There's a website, facebook page, twitter account, you tube page and lots of consumer press coverage – all of which act as a powerful message for protection insurance.

News in brief • Scottish Widows has revealed it is planning to offer protection policies via wrap accounts as the firm makes strides on its return to the adviser market next year. • VitalityLife, formerly known as PruProtect, has launched a range of new products including LifeStyle Care Cover, Mortgage Plus and Short term income protection. • Seven Families has announced that the Pickfords, whose main breadwinner Paul Pickford was unable to work after suffering a stroke, is the third family for its campaign to raise awareness of the benefits of income protection • Aviva and Friends Life are set to merge in a deal worth £5.6bn – but what will this mean for legacy policyholders? • CIExpert has announced enhancements including the addition of four past providers to the database, meaning advisers can analyse 40 providers with over 250 policies when re-broking an critical illness existing policy. • As part of changes to its income protection, Friends Life has announced a family carer benefit. • LV= has said the recent Office for National Statistics (ONS) data which showed people will be living longer and in better health highlights the need for financial planning. • Family income benefit has been added to the Finance & Technology Research Centre’s (F&TRC) Quality Analyser research tool. 

This article first appeared in Mortgage Introducer magazine

Protection Watch with Kevin Carr

08 May 2014

Verdict: Down, but not out

Protection Watch with Kevin Carr

1. Falling down

As many experts predicted protection sales fell sharply in 2013. According to Swiss Re Income Protection sales declined by 24% and fell below 100,000 new policies for the first time in a decade. Critical illness sales declined by 21% while sales of term assurance fell by 17%. The reasons for the drop in sales are largely attributed to price rises which occurred at the end of 2012, primarily caused by the Gender directive, which reduced much of the switching and re-broking of protection policies to save money as rates for many people have since become more expensive.

VERDICT: Down, but not out

2. e-Smoke gets in your eyes

The use of electronic cigarettes among adults in Britain has tripled over the past two years from an estimated 700,000 users in 2012 to 2.1 million in 2014. Nearly two-thirds of users are smokers and one third are ex-smokers, the research from the charity Action on Smoking and Health (ASH) found. From a protection underwriting perspective, anything that contains nicotine is classed as smoking.

VERDICT: Promising lead

3. Moving on up

The Group Risk market was up almost 6% (5.9%) last year in terms of premium income, according to Swiss Re’s Group Watch 2014. Premium income was again up across all three benefit types—life cover, income protection and critical illness cover—with death benefit premiums up 8.9% and in-force sums insured up 6.0%, GIP benefits up 15.1% and GCI ben-efits up 13%.

VERDICT: Promising lead

4. Big mistake

According to Aviva half of UK adults are classified as either overweight (31%) or obese (19%) yet many believe they are in very good or excellent health. The report also found the effect unhealthy levels of BMI were having on happiness and self-esteem, with mental health issues such as depression more prevalent among overweight individuals. Almost two in 10 (17%) obese adults sought help for a mental health condition from their GP in the last year, compared with an average of 13%, while just a few of those that were obese (12%) sought help for managing their weight.

VERDICT: Back to the lab

5. Cancer survival periods increase

Half of people diagnosed with cancer today will survive their disease for at least 10 years, according to figures published by Cancer Research UK. The analysis of over 7m cancer patients diagnosed in England and Wales since the 1970s found that 40 years ago just a quarter of people diagnosed with cancer survived 10 years. Women with breast cancer now have a 78% chance of surviving at least a decade, compared to only 40% in the early 1970s.

VERDICT: Promising lead

This article first appeared in Professional Adviser magazine

Protection News - March 2014

01 Apr 2014

Goodbye annuities, hello protection

The Chancellor's decision to scrap the requirement to take an annuity and enable pensioners to decide how they fund their retirement is sure to be a vote winner. Few of us find the concept of handing over the bulk of our hard-earned pension savings in exchange for an annuity very attractive, especially when report after report shows they can represent poor value for money. But, while the proposed flexibility is a boon for many people approaching retirement, removing the requirement to take an annuity has plenty of unintended consequences. As well as the potential for pensioners to blow the lot in the first few years of retirement or, worse, fall foul of con artists targeting them with investment scams, there are also implications for inheritance tax (IHT) planning. IHT at 40% is paid on anything in an estate over the nil rate band, currently £325,000. A sudden injection of cash from a pension pot could potentially see even the most prudent of pensioners with an IHT planning problem. For example, take a couple living in a property worth £400,000 with savings and investments of £100,000. They don't have to worry about leaving their children an IHT bill until they take their pensions as cash, adding a further £500,000 to their estate. On this £1m estate this would equate to an IHT liability of £140,000 on second death. Some may argue that it is better to leave loved ones 60% of the pension pot than to hand it all over to an annuity company and see it die with them. But, with IHT regarded as a voluntary tax, it's a great opportunity for advisers. Investments into AIM portfolios and Enterprise Investment Schemes can be IHT-free after just two years. But, as these are investments into very small start-ups, there's considerable risk that someone could lose the lot. A more conservative - although some would say palatable - approach is to insure the future liability with a whole of life plan. These are a form of life assurance that, providing premiums are maintained, pays out a guaranteed amount on death. Written in trust, the cash is paid outside the estate and is available within a matter of days to settle any IHT bill. The pensions revolution may remove concerns about rip-off annuities but the proposed flexibility introduces a whole new set of financial planning requirements in retirement. Whole of life plans will be one way to help pensioners pass on their pensions.

Protection for tomorrow's first time buyers

With the budget introducing an extension of the Help to Buy scheme and an increase in the ISA allowance to encourage more tax-efficient savings, mortgage advisers are set to see an increase in the number of first time buyers over the next few years. But, while these savers rarely register on the advice radar until they've made an offer on a property, they have important protection needs that shouldn't be overlooked. The average first time buyer deposit was £30,943 in 2013 according to the Halifax but this pot of cash can soon disappear if they are unable to work due to illness or injury. Income protection and critical illness insurance can ensure someone doesn't have to empty out the deposit fund to survive. Although these savers probably won't want to divert any further funds from their savings, income protection and critical illness insurance are both relatively low cost at younger ages. Additionally, cover can be tailored to fit their budgets to ensure that, whatever happens, they can hang on to their savings as well as their dream of home ownership.

News in brief:

• Protection Review has partnered with the Association of Professional Financial Advisers (APFA) to provide independent specialist protection training for advisers. The half-day sessions, which are free to APFA members, cover all aspects of the UK protection market. • A newborn baby boy can expect to live to 78.7 years and a girl to 82.6 years according to the government's latest National Life Tables. This is an increase of 2.5 years per decade for boys and two years per decade for girls since 1980/82. • Engage Mutual has enhanced its over 50s life cover, adding an option to claim a cash lump sum on diagnosis of a serious or terminal illness. Policyholders can claim the full sum assured on diagnosis of a terminal illness and 20% of the sum assured if they have a serious illness. • Aegon UK has published its income protection claims statistics showing that the number of claims paid had increased by more than 10% 2013 - 93% up from 83%. • VSP Vision Care, the largest vision care company in the US, is expanding access to eyecare benefits in the UK and Ireland. • Ageas Protect has entered the relevant life assurance market. The new policy allows businesses to provide life assurance for its employees outside of a group scheme but still benefit from tax relief. • Fraud is costing the NHS up to £5bn a year according to a report by Jim Gee, the former head of the NHS's anti-fraud section. This would pay for nearly 250,000 new nurses. • Employers will get tax relief worth up to £500 per employee on health-related interventions that help tackle sickness absence. This is expected to be introduced in October alongside the Health and Work Service.

This article first appeared in Mortgage Introducer

Advisers need to make protection relevant

12 Feb 2014

According to statistics...

Advisers need to make protection ‘relevant’

According to statistics, decision making is 10% reason based and 90% emotional. This behaviour is clear when people purchase homes, often saying they need to get a certain ‘feeling’ about a place rather than a property just being perfect on paper. So when it comes to life and illness insurance you would think the emotional reasons behind the need for cover would be an effective way to engage people. In reality, this proves difficult when you are trying to get people to buy into something that they hope they never need to use.

A new report from The Syndicate, a research partnership between The Protection Review and Hannover Re UK Life, found that consumers find it hard to see the value in purchasing and retaining protection products. The research showed there is confusion around protection products, and that a lack of engagement from our industry makes it easy for people to prioritise their spending on other more immediately tangible products.

The report also showed that many people are lapsing policies, due to their perceived value and benefit diminishing after the sale. The benefits of a protection policy are not tangible enough for those who have not made a claim. Over 70% of people who have protection products said they could not recall any contact about their cover in the last two years, making it easy for people to cancel policies and view protection as a transactional purchase, rather than a relationship.

So it is clear that providers and advisers must continue to emphasise the value of protection long after a sale has been made. Whether the client can be continually engaged by having a policy that gives them discounts and rewards for healthy living, affords them membership to a mutual offering benefits and discounts on other more tangible services, or if they are sent a yearly statement reminding them of the value of the cover they have in place, it can all help to ensure protection continues to feels like a relevant and important purchase.
Is the cost of cover wildly overestimated?

People’s general perception of the cost of protection is unrealistic, according to research from The Syndicate. On average, people believe that life cover costs £66 per month, critical illness cover costs £60 a month and income protection £49 a month. When you compare this to the average premium paid by customers of protection intermediary LifeSearch, which stands at £28 a month, you can see that people have a distorted view of the cost, and therefore the value of protection.

This becomes even more apparent among a younger age group, with 18-24 years olds believing life cover costs £105 per month on average, critical illness cover £110 and income protection £87 per month. For someone in this age group, taking out £150,000 of life cover over 25 years can cost less than £10 per month.

It is interesting that people in general believe life cover is more expensive than income protection. This shows a lack of understanding in the cover each product provides, and the likelihood of making a claim on each policy. People are much more likely to be unable to work through ill health than they are to die within their working life, yet deem income protection to be less expensive and relevant than life cover.

News in brief:
• CI Expert, a critical illness (CI) comparison site for advisers, has upgraded its functionality to make it easier to compare CI products. New features include additional providers whose policies can now be compared historically, and now featuring while label CI policies such as Tesco.
• PruProtect will be launching a consumer protection campaign to increase awareness of the need for protection insurance and its proposition.
• Cancer is generally the most claimed for condition under critical illness cover. Aviva statistics released show 66% of its critical illness claims are for cancer.
• FCA chief Martin Wheatley has struggled to answer Treasury Select Committee concerns about how the FCA is drawing a distinction between advised and non-advised internet sales. While he failed to give a clear answer, Wheatley admitted the FCA had reason to revise its current guidance as consumers are at risk of being mislead.
• Just Retirement has launched an immediate needs annuity to cover the cost of long-term care. The Care Funding Plan provides a regular income - usually paid directly to a care provider such as a residential home, rendering it tax-free.
• Lloyds banking group has increased its provision for PPI mis-selling complaints by another £1.8bn, bringing the total to almost £10bn. The bank said the increased provision reflected a greater number of successful complaints.
• LV= announced a slight decrease in protection sales in 2013, compared to the previous year. Sales totalled £29 million in 2013, compared to £32 million in the previous year.
• Protection intermediary LifeSearch has announced the short list for its annual protection awards, with Aviva, LV= and PruProtect leading the nominations.
• Zurich has announced its 2013 critical illness claims statistics, paying out on 94% of claims, up from 90% in 2012.

Kevin Carr is Chief Executive of Protection Review and MD of Carr Consulting & Communications.

This article first appeared in Mortgage Introducer

Protection Watch - November 2013

27 Dec 2013

Aviva recently announced it will underwrite all...

1. Make it your own
Aviva recently announced it will underwrite all individual income protection policies on an ‘own occupation‘ basis, which is generally to be welcomed. Insurers use different definitions of being unable to work including own and suited occupation. Issues come with other definitions in use, which can be summarised as ‘List-based’ definitions, including Work Tasks. These definitions, which should be avoided wherever possible, rely on a list of tasks the policyholder needs to be unable to do. Advisers should take a look at an insurer’s declined list as well – the list of occupations which are automatically declined cover as this will no doubt increase as a consequence. Likewise a further consequence could be price – it is possible, although certainly not definite, that we may see prices increase in future as a result of more people having better cover, although this is arguably a fair price to pay.
VERDICT: Promising lead

2. Falling down
Several insurers have reported a fall in their protection sales so far this year. While this seems disappointing at first glance, the market was expecting sales to fall – probably by more than they actually have. The pricing changes introduced at the beginning of the year, which followed various changes in legislation, meant that protection premiums stopped getting cheaper, at least for the time being, which in turn makes it harder to re-broke (or churn) existing business to save the client money. You can only switch around on price if prices are falling of course, not when they are rising.
VERDICT: Back to the drawing board

3. IFA takes on claims management firm – and wins
Highclere Financial Services has been awarded £340 through the small claims court after contesting a payment protection insurance misselling claim from a claims management firm. Aims Reclaim was forced to pay Highclere partner Alan Lakey £100 for wasting his time and a further £240.20 in legal costs after writing to the adviser alleging his firm had missold a client PPI. Yet Lakey says he has never arranged PPI and that the client in question says they did not make a claim against him to Aims Reclaim. He invoiced the firm for £100 for wasting his time and when the firm refused, commenced legal action.
VERDICT: A good day for advisers

4. Men at work
9 in ten people believe that employers should play a more active role in wider benefit provision but over three-quarters of employers provide no life, income protection or critical illness cover at all, a new report by Swiss Re has revealed. With auto-enrolment and the growth of policies such as relevant life, these areas could represent a very good opportunity for the protection industry.
VERDICT: Promising lead

5. Sick, sober and sorry
According to LV = the average Brit spends almost a year off sick throughout their working life. The survey of full-time workers, revealed stress and depression are two of the most common long-illnesses. Workers said they took an average of two and a half months (81 days) off to recover from these conditions.
VERDICT: Back to work


This article first appeared in Professional Adviser magazine

Award entries: the good, the bad and the ugly

15 Oct 2013

A a few pet hates that I share with several other judges, and some tips on writing a winning entry.

Award entries: the good, the bad and the ugly


Someone told me they saw my twitter breakdown the other week and asked if I was now ok?


While the comment was somewhat tongue in cheek, the question referred to half a dozen tweets I posted while reading a hundred or so award entries, which is enough to send anyone into meltdown.


I dread to think how many award entries I’ve read over the last ten years, but its well into the thousands. Unfortunately many of them, in fact most of them, have been and continue to be pretty awful. I should caveat briefly that I’ve also written dozens of award entries in various categories (many that won and many that didn’t) and have judged awards entered by advisers, insurers and journalists, as well as judging marketing and advertising awards.


So here are a few pet hates that I know I share with several other judges, and tips on writing a winning entry:


  • Take it seriously. If you’re going to enter an award read the criteria carefully and write a relevant entry.
  • Don’t send a sales aid as your entry, and don’t send in an old entry that was written for a different set of awards.
  • Don’t ignore the word count. Those who blatantly go over by hundreds, if not thousands of words are likely to have their entries dismissed.
  • Make your best points first and back up your claims with evidence. It’s amazing how many entries talk about a firm’s good intentions (some call it marketing waffle) without actually including any facts. Not every firm can be a ‘leader in social media’ and every company ‘puts the customer at the heart of its proposition’. Saying it doesn’t mean anything, the trick is to prove it.
  • Be aware that your entries do get read (well, most of them do – some are frankly embarrassing and quickly binned) and that judges may check out your claims. I’ve often sat in judging sessions where we’ve looked up a company’s website or social media account to see if their claims are genuine.
  • Personally, I like stats. “98.7% of customers rated our service as excellent according to XYZ independent research”. But it is disappointing how many entries for areas such as customer service don’t include any information on service standards or how their service is measured. More facts. Less waffle.
  • “Ah, but others have got big marketing departments and I’m too busy.” Everyone is busy. You either want to win the award or you don’t. Regardless of whether you have two staff or 2000, take it seriously if you want to win.  Big marketing departments don’t always help. Sometimes entries can be way too slick – a case of too much style over substance. Judges can often spot this and may favour the underdog.
  • When sitting there thinking ‘I don’t have time to do this’ remember how you felt on the night last year when XYZ firm won all the awards. Think about how winning could help with marketing and sales (it might even be one of your targets from that last appraisal).
  • Think about who is best placed to write and approve your entries. Managers and directors always want to win (and collect the trophies) but often leave the task of writing the entry to someone who probably won’t be invited to the ceremony. Hmmm.


Not all entries are rubbish of course. Some are excellent, which is what makes judging fun. You see a company doing really well, you learn from it yourself, and you want to reward their effort and encourage others. 


Most of all – if you don’t win (or even if you do) why not ask the judges for feedback so you know where to improve (or what to do again next year).


It’s not about getting knocked down; it’s about how quickly you get back up.


So keep entering until you win.

Protection News - August 2013

01 Sep 2013

Don’t say it too loud but the protection industry pays a lot of claims.

In 2011 insurers paid out £6.7million on life, critical illness and income protection insurance policies every day.


On average 97% of life insurance claims were paid, 92% for critical illness cover and 85.6% for income protection, all of which are rising year on year.


Yet, research recently carried out by Protection Review found that on average the public believes just 38% of protection claims are paid, compared to the real figure, which is in excess of 90%.


A wide range of consumers were interviewed to gage their understanding of the protection market and while some responses were as high as 95%, the lowest was just 5%, with the average across all respondents levelling out at 38%.


Let’s not be too hasty to blame the media as most newspapers are very positive and balanced towards the protection industry. At the end of the day a policy paying out as it should do isn’t really a news story in the same way that ‘plane lands safely’ isn’t going to sell any papers.


While many life offices publish their statistics on an annual basis it is clear that the positive messages are not getting through, which means we all need to do more.


The good news is that the stats are here now so there’s no point waiting for others to do something. Positive claims figures are do not just help build trust when clients are looking to buy cover, they can also help to attract new clients who were previously doubtful.


Think about how to use the statistics in your marketing, websites, adverts, conversations and more because while the industry may not ever quite reach 100%, anything in excess of 90% is likely to be received very positively.


Income Protection: The long and short of it


There has been debate in the national media about short-term income protection (STIP), and whether this is merely PPI being sold under another name.

The range of products available under the STIP umbrella is incredibly diverse and the PPI scandal has understandably made people more wary about the type of cover they are taking.

Whether or not STIP is short term Income Protection or the new name for PPI seems to depend on opinion. A few pointers to help tell the difference include whether or not the short-term plan is as comprehensive as the version. Companies such as LV=, Exeter Family Friendly, PruProtect and British Friendly all offer good quality short-term products more akin to full income protection in all but the length of payout.

Likewise having ‘own occupation’ cover is vital, meaning that the client can make a claim if they are unable to do their own job. And look at the exclusions too - good quality STIP won’t have any standard exclusions and may not have any financial underwriting requirements.


Round up


  • The Financial Ombudsman Service is receiving 2,000 PPI complaints a day and upheld 78 per cent of cases over the last three months.
  • Income protection provider British Friendly has launched a new simplified income protection product to be sold through advisers, which has no financial underwriting either at application or claim stage.
  • Former Ageas Protect managing director Martin Werth announced the launch of new firm UnderwriteMe, which will provide software allowing advisers to compare fully underwritten protection quotes. A joint venture with reinsurer Pacific Life Re, it is expected to launch in early 2014.
  • Aviva has improved its critical illness policy, adding three new conditions and two new partial payments for bladder removal and non-malignant Pituitary Adenoma, as well as improving its heart attack and children’s cover definitions.
  • PruProtect is offering an extra £10,000 in children’s serious illness cover, free for three years to customers who take out one of its protection plans before the end of August. After three years, the customer can give up the free cover or add it to the policy.
  • Advisers will increasingly hear about regulation issues over social media such as Twitter, according to a Financial Conduct Authority report.
  • According to Defaqto the number of critical illness policies offering severity-based cover has jumped from 14 per cent at the end of 2009 to 62 per cent.
  • The average NHS worker takes an estimated 9.5 working days off sick each year – and the lowest paid staff take the most sick days, according to official figures released today by the Health and Social Care Information Centre (HSCIC)
  • The Longevity Centre -UK, (ILC-UK) has revealed that only just short of a third of the UK population will reach age 65 "healthy".
  • PruProtect and PruHealth have signed up former England international rugby player Johnny Wilkinson as their new Vitality ambassador.



Kevin Carr is Chief Executive of Protection Review and MD of Carr Consulting & Communications.

This article first appeared in Mortgage Introducer

All change at KCC

01 Jul 2013

Three and a bit years since launching Kevin Carr Consulting...

Three and a bit years since launching Kevin Carr Consulting I'm really excited to tell you about some forthcoming changes.

First of all, the name KCC will soon be no more. In the coming months it will be replaced by 'Carr Consulting & Communications'.

More importantly, this is to reflect that the business is expanding. In the summer I will welcome Linda Winder to CCC. Having previously worked for LifeSearch, Lansons Communications and more recently LV=, Linda's significant PR experience will make our proposition stronger than ever.

There will be a new brand, a new website, new email addresses and most importantly, two expert brains instead of one.

But nothing is changing just yet.

If you have any questions please do let me know, and if not I'll be in touch with more details soon.

All the best,

Protection Watch with Kevin Carr

01 May 2013

It might be surprising but sales of protection products fared well in 2012...

1. Movin’ on up
It might be surprising but sales of protection products fared well in 2012 according to new data from the ABI. Non-mortgage term assurance sales rose significantly compared to the previous year while Income Protection sales increased by 20%. Critical illness sales also enjoyed growth as did Whole of Life. The only core protection product not to see an increase was stand alone CI, which is mostly ignored in favour of cover which includes life cover, which is typically better value for money.

2. Simple Simon says life’s ok (but not IP, yet)
Last month HM Treasury announced final recommendations from Carol Sergeant’s steering group looking at simple products. Among its recommendations simple products should undergo a robust accreditation process and be BSI (British Standards Institution) kite marked. It recommended developing three new savings accounts and a fixed term life insurance product initially. The group also recommended that a simple whole of life product should be the next product added to the suite and announced that the ABI would lead further work on a simple income replacement product and report back in six months.

3. The future of commission
Rightly or wrongly there’s a lot being said lately about the future of commission. A new regulator might look around for a few quick wins and might see what looks like an open goal. But things are never quite what they seem of course, especially when it comes to regulation and unintended consequences. We could write a report on why commission should remain; however, the main point to make is that as an industry we must focus on the consumer issues, not those of the seller. Some suggest we shouldn’t talk about commission for fear of increasing the likelihood of action being taken. But when the consumer argument is so strong, and any detriment small, let’s defend the role of commission, but do so based upon the impact on those buying the products, rather than those selling them.

4. Private Most Important
Health insurance (PMI) is the third most valued employee benefit, behind financial bonuses and pensions, according to Aviva’s Working Lives report. 36% of firms provided health insurance and 36% life cover, with the top benefit being a bonus (52% of firms). The report also found that while 55% of large businesses reviewed employee benefits every year, that fell to 49% for medium and 36% for small businesses. 26% of small firms, 7% of medium and 3% of large firms never did.

5. A spring in the step
It might not feel like spring just yet but it’s the time of year when insurers look to publish their claims rates for the previous year. A range of protection insurers including Aegon, L&G, Zurich, British Friendly, Cirencester Friendly, PG Mutual and Bright Grey have recently published CI and/or IP paid claims statistics all in excess of 90%.

Kevin Carr is Chief Executive of Protection Review and Managing Director of Kevin Carr Consulting.

This article first appeared in Professional Adviser magazine

Protection News (April 2013)

08 Apr 2013

Don’t forget the added value benefits

Mortgage Introducer – Protection News 

One of several trends in the protection market over the last decade or so has been the ongoing addition of added value product benefits, which look to reduce the focus on price.

While some advisers might see these as ‘bells & whistles’ others are strong supporters and have experienced the benefits first hand with their own clients.

Red Arc is a care advisory service providing information, advice and emotional support to people when they need it most. They provide counselling to people diagnosed with a serious illness, as well as their families and according to Red Arc 85% of those who have the service made available to them go on to use the service.

Best Doctors provides access to a second opinion database of 50,000 leading medical specialists. The numbers suggest 15% of users experience a change in diagnosis while almost 45% result in a change of treatment. However, often the second opinion isn’t about changing the diagnosis; it is also about the peace of mind in knowing that the original diagnosis was right.

According to the World Cancer Research Fund up to 40% of cancers can be prevented through exercise and healthy living. The Vitality programme is a simple premise which aims to reward those who look after their health by reducing their monthly insurance premiums as well as offering a range of discounts including gym membership, holidays and cinema tickets.

Road to Health provides an online health assessment system which scores your progress and compares it with people of the same age and gender. The system calculates how healthy you are on a regular basis and suggests simple steps to help achieve personal goals. Those who engage can earn points which can be redeemed against a range of products.

Those insurers who have offered Children’s Critical Illness Cover for a number of years know that the number of claims is unfortunately high. Most CI insurers automatically include cover for the policyholder’s children, although the details will vary from insurer to the next. Research suggests that around two thirds of people do not have any financial support in place should their children suffer a serious illness, and that a third of people who hold CI cover aren’t aware that their children are automatically covered.

When most insurers in the market offer a certain condition on a CI policy, the ABI will agree a minimum baseline definition so that insurers can’t make up their own definitions of what is and what isn’t a claim. When a provider improves on this minimum standard by making their own definition better for the client (because it makes a claim more likely) this has become known as an ABI+ definition. While it is difficult to tell just how much more likely a claim might be the more favourable the definitions are the better the chances are of a claim being paid.

For policies such as Income Protection some insurers will try to encourage people back to work by paying for Rehabilitation services, counselling or in some cases even continuing to pay the claim for a short period after the client has returned to work. The reality of course is that most people really do want to get back to work and as with Red Arc and Best Doctors, helping to improve a policyholder’s health is often just as important and helpful as the money itself.

Protection sellers’ trade body moves a step closer

A new steering group for those involved in the distribution of protection has held its first meeting.

Based on an initial code of conduct created by the co-founder of LifeSearch, which received support from more than 50 major firms, the group now represents all forms of protection distribution, including advised as well as non-advised.

The code includes points such as sellers must state clearly to customers at outset whether they provide regulated advice or not, and called on sellers to demonstrate that they have provided properly for the repayment of indemnity commissions on lapsing policies.

The committee includes Mike Ward of, Luke Ashworth of, LifeSearch, Roy McLoughlin at Master Adviser, Claire Limon of Countrywide.

Round up

• Legal & General paid 97.6% of life claims, 93.1% of critical illness claims in 2012 and 91% of income protection claims. The provider paid a total of £483m combined death and critical illness claims, up from £441m in 2011.
• First Complete has introduced a notification system to warn advisers when a client misses a regular protection policy payment putting the adviser at risk of commission clawback.
• Aegon paid 83 per cent of the IP claims it received in 2012.
• PruProtect saw its new protection sales jump 40 per cent year-on-year in the second half of 2012. The insurer has not released sales numbers broken down by product type but its combined protection sales reached £25.4m in the last six months of 2012, up from £18.1m over the same period in 2011.
• Zurich has published claims data for its income protection business for the first time which shows the insurer paid out on 90 per cent of IP claims. Of the 765 Zurich customers currently receiving an IP payment, 121 submitted new claims in 2012 with 90 per cent of claims accepted. It paid out a total of nearly £14m in IP claims last year.

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting 

This article first appeared in Mortgage Introducer

Protection Watch with Kevin Carr - March 2013

13 Mar 2013

1. Up, down, turnaround, please don’t let me hit the ground...

Protection Watch with Kevin Carr

1. Up, down, turnaround, please don’t let me hit the ground
The protection market has been all over the place in Q1. Following the much talked about G-day and taxation changes some premiums have gone up, while some have gone down, likewise the volume of protection business being written, and who is writing it, seems equally volatile. I’m told that the expected migration of non-protection advisers into protection is gathering pace, which is no bad thing, and that some of the models who primarily existed to switch business around on price are already struggling, which is perhaps no bad thing either. The market will settle down, but it may take some time.
VERDICT: Promising lead

2. The IT Crowd

Those working in Information Technology have the highest volumes of searches for Accident, Sickness and Unemployment cover according to new research by MoneySupermarket. Analysis of the data shows the top ten sectors whose employees have been looking for cover to protect themselves should they need to cover loss of income. Topping the list were those in the IT sector who recorded the most searches for short term income protection in the last 12 months. Taking second place were those in the banking sector and third in the list were those working in the retail sector.
VERDICT: Promising lead

3. Don’t know, don’t care

Consumers are increasingly confused about protection insurance and instead many adopt a casino mentality, according to The Syndicate’s second annual report, published in January. The report, based on an omnibus survey of over 3,000 adults, found that half of those polled said life insurance was the most important type of protection, although 80% could not accurately identify how basic life cover worked. The economy also had a significant affect on people’s planning, with 58% saying they had abandoned plans to save in the current economic environment to focus on monthly outgoings. Other findings included:
• 62% of respondents said they were more likely to buy a protection policy if it was rated by Which? magazine
• Up to three quarters (75%) said they were less likely to cancel an insurance policy if their loyalty was rewarded
• The vast majority (80%) said it would be useful to receive an annual statement detailing their existing cover
• 75% could not identify how a basic critical illness insurance policy worked
VERDICT: Back to the lab

4. I bet you don’t look good on the dance floor

Sixty five per cent of men are now classed as obese – and only one in three is now a ‘normal’ weight, according to new figures from the NHS. The report shows a ‘marked increase’ in obesity over the last 20 years, with 58% of women now classed as overweight or obese. Just 37% of people are a 'normal weight', which is defined as having a body mass index (BMI) of 18.5 to 25.
VERDICT: Back to the gym

5. We are the Champions

Ageas, Aviva and LV= lead the shortlists for this year’s 10th LifeSearch Protection Awards, which take place in London on 7 March 2013. The annual awards, which are voted by the firm’s advisers, include a range of categories including best service, best product and best leader. Herschel Mayers of PruProtect, Louise Colley of Aviva and Richard Verdin, also Aviva, are nominated for the coveted Best Protection Leader Award.
VERDICT: Promising lead

Kevin Carr is Chief Executive of Protection Review and Managing Director of Kevin Carr Consulting.

This article first appeared in Professional Adviser

Mortgage Strategy Protection Column - Jan 2013

01 Feb 2013

In the UK CI has become a staple of financial planning for many families with around half a million people each year buying some form of cover...

Mortgage Strategy Protection Column

Critical Illness Cover – Market review

In the UK CI has become a staple of financial planning for many families with around half a million people each year buying some form of cover. In 2011, Lloyds Banking Group sold more CI than any other firm in the UK with providers such as Legal & General, Friends Life and Aviva not too far behind.

Most CI plans typically cover around 30-40 conditions, including heart attack, stroke and cancer, but can also include CJD, Encephalitis and Crohn’s disease, for example, which are perhaps less common.

Cover is typically bought alongside life insurance and therefore can be structured in pretty much the same way – level, decreasing, indexed, whole of life, family income benefit, joint or single life and so on. In fact, more than 95% of all CI policies sold in the UK include life cover.

The stand alone CI market has quite rightly been very small for a number of years, however, the newly enforced gender neutrality rules means that stand alone CI could become more competitively priced, meaning that adding life cover could see a greater price differential than before.

CI does not cover every illness and it never has. In fact, it doesn’t even cover every type of cancer. Policies cover serious and life threatening conditions as set out in the policy terms. Not every policy is the same and some providers will cover illnesses differently to others.

The industry has seen what some refer to as ‘the illness race’ over the last twenty years or so where one provider adds new conditions to out-do their competitors. More recently we have seen two other trends develop.

1. The first is severity based conditions, also known as partial payments, where the insurer pays a proportion of the overall sum assured upon diagnosis of a less serious illness.

Early forms of cancer, such as stage one breast cancer, are not covered by traditional CI policies. This is because the condition is localised, treatable and is not deemed to be life threatening. However, the public may well not always realise that cancer comes in different forms and different stages, it is still the word ‘cancer’ and that is why many people buy CI plans in the first place. More companies are now paying smaller amounts; perhaps 20-25% of the overall sum assured, where the monies can be used for replacement income, surgery or breast replacement.

Critics say partial payments add complexity and will result in complaints at claim stage if the customer doesn’t remember why they are not being paid the full amount. Whereas others point out that if the window screen cracks the insurer doesn’t pay for a new car. Likewise if your washing machine floods the kitchen the insurance won’t pay for a new house.

2. The other trend could perhaps be referred to as The Illness Race - Part II. While insurers continue to add new conditions we are also seeing the ‘ABI+’ race where providers seek to compete on the actual definitions used for a condition as well as the number of conditions covered.

The term ABI+ which refers to the number of conditions offered by a company which have a better definition for the customer than the minimum ABI baseline i.e. definitions (which in theory at least) are more likely to pay out.

Overall this is probably a good thing – but without being medical experts it can be quite tricky to determine just how much more likely a claim will be.

News round-up

• Aviva has begun airing its latest national TV ad campaign which focuses on the key life stages when consumers can benefit from protection and retirement planning. The 60 second “Cradle Talk” adverts were first broadcast on Boxing Day and will continue to run throughout the year again featuring Paul Whitehouse.
• IFA firm Plan Money is launching a non-advised proposition, Plan Direct, which will refer clients to comparison website for protection products. The Colchester based adviser rebranded last year from CBK to Plan Money.
• Insurers paid out 83% of income protection claims in 2011, according to new figures from the Association of British Insurers. While many insurers are publishing rates above 95% it is likely that some insurers are notably lower.
• iPipeline’s intermediary quote portal Assureweb has reported a significant increase in adviser quote volumes in the build up to G-day with a 68% increase in annuity activity, 72% for whole of life and 17% for term assurance. The firm also received more new applications on the day before G-day than any other single day.

Tip of the month – Use ‘so-called’ complexity to your advantage

Over the years many advisers I meet ask why protection products have to be so complicated. ‘Why can’t they all the same so it’s easier to understand and easier to sell?’ The general response to this is to point out that if all products were ‘simple’ and exactly the same, that there isn’t much use for an adviser in the first place – and if there were the adviser’s role would be little more than that of a comparison site. Instead, take a bit of time to understand how products and providers vary and use this to your advantage because this is how advisers add value, improve their advice and persistency and most important this is how to differentiate from any non-advising, price sensitive competitors. And if you don’t have time – perhaps work alongside someone who does.

Kevin Carr is Chief Executive of Protection Review and Managing Director of Kevin Carr Consulting.


This article first appeared in Mortgage Strategy

Protection News OCT 2012

14 Nov 2012

Is it time to terminate Terminal Illness Benefit?

Protection News OCT 2012

Is it time to terminate Terminal Illness Benefit?

The protection insurance industry does a lot of very good things. Over the decades it has come up with many excellent ideas (and a few not so great ones) that at the time – and for the foreseeable future – seemed like exactly the right thing to do.

One such development was Terminal Illness Benefit, which is included within the price on most modern life insurance policies.

The idea is that if the policyholder is terminally ill and isn’t expected to survive for much longer the plan pays out (in full) earlier than expected. Sometimes when families are faced with such a difficult situation the finances can become very hard to manage for a range of reasons, and so the industry did the right thing and said ‘we’ll pay early’ before any clogs are actually popped.

However, as with all insurance there needs to be terms & conditions, without which cover cannot be priced. The typically TIB definition requires life expectancy to be less than 12 months in order for a claim to be paid. But there’s a problem, perhaps several.

The speed of modern science is making it ever more difficult to predict life expectancy. It is also impossible to predict an individual’s ability to fight, or otherwise, life threatening illnesses. As such, it is very difficult for the medical profession to make predictions perhaps as accurately as they once did. And besides, is it always in the patient’s best interests to be given a specified timeframe?

Some sellers even go as far as to say that TIB is a bit like critical illness cover, which is misleading to say the least. One comes for free, the other costs about 6 times as much, which should suggest they are not the same.

Then there is the common final year exclusion, where TIB claims are refused in the final 12 or 18 months of a policy. Why does this rule apply? In one word: cost. A 5 year policy in effect becomes a 6 year policy (or a 25 year policy a 26 year one and so on) which means it should be more expensive. But the benefit is not valued at the time of buying cover – only in the event of a claim

A number of TIB complaints have featured in the media recently, including the Rip-Off Britain TV program, where a claim was made on a five year policy, which had two months left to run. The fact that a five year policy was quite possibly unsuitable was ignored, while the insurer was slammed for not paying out, even though most people would assume that life cover only pays out on death, not illness.

Should the industry be criticised? It tried to do the right thing, but times – they are a changing, and a new angle on TIB might not be the worst new idea.

One love, one life, one application form?

At a recent industry forum the idea of a common protection application form was suggested by some advisers. Speaking generally the suggestion isn’t a new one, and neither are the reasons why the idea is typically knocked back: ‘Insurers wouldn’t want it’ is usually the stock response.

However, the technology exists and most advisers would probably want it, so could it happen?

To clarify, a common application form for protection would mean that all insurers would have the same application form, a bit like they already do with annuities. Why might insurers not want this? Well, there is a link between the questions asked and the price charged – the more questions asked the lower the premium tends to be because in theory you know more about the person and can price accordingly. It is not a co-incidence that the falling cost of life insurance over the years happened while application forms became ever longer.
So for insurers it is a key part of their competitive strategy.

For advisers, one has to wonder what would happen if we already had a standard form. Let’s assume that a common application form had been the norm for the last twenty years. If an insurer came along and said we’ll knock 5% of the premium if you ask your client these extra 5 questions what would advisers say?

Round up

Aegon, PruProtect, Scottish Provident, Bright Grey and Zurich have confirmed their adviser plans for G-day

AXA PPP healthcare has launched a new national press and TV advertising campaign – highlighting the support and reassurance they offer to members undergoing treatment for cancer

PruProtect has extended its Cover Booster option until February next year

A ruling which forced British Airways to pay death in service benefits to a representative of an employee it had earlier dismissed has “shaken” employment lawyers

More than 350 million people in the world have depression, according to estimates released by the World Health Organisation

Gender-targeted products will emerge once gender-neutral and I-E tax price changes have settled down, an industry panel debate said

Friends Life has appointed Dave Matthews as interim head of marketing and intermediary proposition development

Sun Life Direct has appointed former Aviva distribution development director Dean Lamble as its managing director

Britons pay the second-highest private medical insurance premiums in Europe, making it beyond the reach of most people, according to Passport2Health

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting



This article first appeared in Mortgage Introducer magazine

Always look on the bright side of life (insurance)

27 Sep 2012

Quite a lot of people don’t have any protection insurance. Quite a few more probably don’t have anywhere near enough...

Always look on the bright side of life (insurance)

Quite a lot of people don’t have any protection insurance. Quite a few more probably don’t have anywhere near enough. Our industry talks about these people all of the time through various surveys, statistics, sales aids, press releases and of course the infamous UK Protection Gap.

The report for 2012 showed the gap had increased by 20% in the last 10 years; and the income protection gap had risen by 46% in the same period. Sales of new term assurance and income protection policies fell last year by 3.4% and 0.2% respectively.

But does talking about the cover people ‘haven’t’ got really do us any favours? Might we be better off taking a more positive stance and talking about all the cover people ‘have’ got instead?
Aviva certainly thinks so. In fact, they think the protection gap has become such a frequently quoted stat about the market that it has become a cliché that has perhaps become meaningless to its target audience.
The number, currently a whopping £2.4trn is arguably way too big to mean anything to individual families, and is probably so big that it becomes counter-productive. ‘What does that mean to me?’. ‘Just how many zeros is that anyway?’

Could we benefit across the industry if we changed the approach and talked about the group of people of have cover instead? Could we then focus on some different numbers? What is the total sum assured covered across the UK, for example. How many policies are in force right now in the UK? Might such reverse marketing work? ‘Crikey, all those people have got cover and I haven’t, maybe I should get some.’
Each to their own of course; different advisers appreciate different approaches, often depending on the type of client. Aviva aren’t the first to make this point of course, but with their marketing clout they can perhaps say it louder than most, which could make the difference.

After all, life is quite absurd, and death's the final word.

Two-thirds concerned about use of ‘STIP’ product names

The protection industry has said it is concerned that short term income protection is simply a new style of accident, sickness and unemployment cover, according to a poll from Protection Review.
The online poll asked a range of advisers, life offices and reinsurers if they were concerned about the ‘STIP’ name being used for general insurance style cover and 62% said yes.

As this column as commented before, there has been a gradual blurring of the lines when it comes to short term and long term IP products in recent years and several firms have recently launched short term IP products, which aren't much different from typical ASU.

Those who know the income protection market might suggest that STIP is a short term version of a proper IP plan -whereas those in the ASU/MPPI camp might say otherwise. Where exactly is the line drawn? When is ASU not short term IP and vice versa?

In the wake of PPI mis-selling should the industry take a step back and ask itself whether or not we are helping consumers here? I’m really not sure. Could we go back to the drawing board and come up with names that clearly define what the customer is buying? Or is it still all about flogging as much as possible?

‘Oh, but the regulators say its fine.’ Yes they do. But they also said PPI was fine.

Round up

• Zurich has increased the medical and financial underwriting limits on its protection proposition to help people get cover more quickly
• A new protection provider entered the market last month; Beagle Street Life Insurance, part of the BGL group, provides instant cover with no further underwriting that can be bought directly through comparison sites
• The Income Protection Task Force has declared its support for the recognition of the need for simple income replacement products in the recent steering group report on simple products
• LV= has launched a website for advisers on the forthcoming gender directive and I-E tax changes. The adviser site, which is called ‘No more guess work’ summarises the changes, the key-dates and provides tool-kits for advisers to use. This follows guarantees from Ageas Protect, which vows to help customers who cannot be placed on risk immediately before the introduction of gender neutral pricing
• According to L&G almost half of their group income protection claims for cardiovascular conditions, such as heart disease, come from the manufacturing sector. An analysis of all the company’s group IP claims since 2000 show the manufacturing sector accounted for the greatest proportion of cardiovascular claims at 43%
• British Friendly has been added to Sesame’s approved list of protection providers
• Aviva has improved its critical-illness cover by covering three new partial payment conditions and upgrading five of its illness definitions. Each new condition will be eligible for a payment of up to £20,000, which is separate to the main policy, meaning the cover is still in place should the customer need to claim in the future
• Legal & General has made a number of significant changes to its critical illness plans, which now includes additional cover for low grade prostate cancer and has 14 ABI+ definitions including heart attack, cancer, stroke and multiple sclerosis
• Ageas Protect has claimed an 8.2% share of the intermediary market for the first half of this year, up by almost 1% on the previous year

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting

This blog first appeared in Mortgage Introducer magazine

Protection Watch August 2012

07 Aug 2012

“If it takes five months to process your application, the deadline was last week.”

Protection Watch with Kevin Carr

1. “If it takes five months to process your application, the deadline was last week.”
December may feel like ages away but an adviser I know made a very good point recently. When speaking to a client who he knew would need a fair amount of underwriting, he said: “If, all things considered, it takes five months to process your application, the deadline was last month.“ That’s a very fair way of introducing clients to the potential importance of G-day, especially as we get closer to the day when gender neutral pricing (and other pricing issues) hit the protection market. Some life offices have already begun to issue sales aids and guidance information, which must be applauded, although many advisers are already questioning whether there is enough detail.
VERDICT: Promising lead

2. Easy Street?
A new protection provider entered the market last month. Beagle Street Life Insurance, part of the BGL group, provides instant cover with no further underwriting that can be bought directly through comparison sites. The majority of customers will buy online, although there is team of telephone advisers as well. I guess the only surprise about this sort of development is that it didn’t happen sooner.
VERDICT: Promising lead

3. Gender and I-E broker comms continue
LV= has launched a website for advisers on the forthcoming gender directive and I-E tax changes. The adviser site, which is called ‘No more guess work’ summarises the changes, the key-dates and provides tool-kits for advisers to use. This follows a guarantee from Ageas Protect, which vows to help customers who cannot be placed on risk immediately before the introduction of gender neutral pricing. It will be interesting to see what else insurers come up with before the year ends.
VERDICT: Promising lead

4. Time (Clock of the heart)
According to L&G almost half of their group income protection claims for cardiovascular conditions, such as heart disease, come from the manufacturing sector. An analysis of all the company’s group IP claims since 2000 show the manufacturing sector accounted for the greatest proportion of cardiovascular claims at 43%. I’ve always felt that linking facts and statistics that are personally relevant to individual clients was a great way to highlight the need for protection. As such the more stats like this we have the better.
VERDICT: Promising lead

5. ABI+ and severity-based CI cover trend continues
Aviva has improved its critical-illness cover by covering three new partial payment conditions and upgrading five of its illness definitions. Each new condition will be eligible for a payment of up to £20,000, which is separate to the main policy, meaning the cover is still in place should the customer need to claim in the future. Aviva has also improved five of its core definitions beyond ABI standards continuing the so-called ‘ABI+ race’ amongst CI providers. But at the end of the day, better cover is better cover, which should be welcomed.
VERDICT: Promising lead

Kevin Carr is Chief Executive of Protection Review and Managing Director of Kevin Carr Consulting.

The article first appeared on IFAonline

Protection Watch July 2012

07 Aug 2012

Would you bet on your own life expectancy?

Protection Watch with Kevin Carr

1. Would you bet on your own life expectancy?
Drewberry insurance has launched a new life expectancy calculator which predicts the chances of popping your clogs before your mortgage is paid off. The clever feature estimates that 1 in 10 male and 1 in 15 female first-time buyers would die during their mortgage term. The calculator is available on the firm’s website and should help advisers to have an interesting conversation about a client’s protection needs.
VERDICT: Promising lead

2. Does your IP plan change the terms if you lose your job?
I recently learned of an adviser’s client who lost his job and soon fell ill before finding a new one. Unfortunately the illness was quite serious and he claimed on his Income Protection policy only to find out that the ‘own occupation’ definition he had been paying for was automatically switched to ‘work tasks’ the day he lost his job. I can understand the need to change the definition for someone who doesn’t work, such as a house person, but surely in such circumstances a period of grace would more fair?
VERDICT: Back to the lab

3. MoneySupermarket joins the STIP revolution has launched a new short term income protection (STIP) channel for consumers looking to buy short term cover. Looking at the site, it clearly explains the options and key differences between both short-term and long-term IP, as well as ASU and MPPI, which is to be welcomed. Perhaps surprisingly, the website also encourages shoppers to check what cover they already have in place, such as any cover provided by the employer, and also briefly addresses the difference between ‘own occupation’ cover and work tasks. Since 6 April, it is no longer possible to sell PPI or MPPI at the same time as a loan, so it makes sense to cover wider expenditure, not just monthly loan costs, and this is one reason why more firms are adopting the STIP approach over MPPI.
VERDICT: Promising lead

4. FOS complaints top 250,000
Over a quarter of a million formal complaints to the Financial Ombudsman Service (FOS) were made in 2011/12, the service reported in its latest Annual Review. In total FOS also handled over 1.2m frontline enquiries and complaints—more than 5,000 every working day. The vast majority (60%) of complaints were about payment protection insurance, which has now become the most complained about financial product ever, making up 25% of all complaints received by the FOS since it was set up (mortgage endowments are second, on 21%). Complaints about Income Protection and Critical Illness Cover also increased, perhaps linked to events in the PPI market where third party firms are trying their luck with other product types. Complaints are likely to go up in tough economic times, but the rises in IP and CI complaints are both disappointing and surprising when overall the industry is perceived to be making many improvements.
VERDICT: Back to the lab

5. Aviva gets healthy
Aviva has launched a healthy living Facebook app as well as a stress management mobile app, which rates users’ health and allows them to compare scores with friends and family, before providing them with advice and goals on how to become fitter and healthier.
VERDICT: Promising lead

Kevin Carr is Chief Executive of Protection Review and Managing Director of Kevin Carr Consulting.

This article first appeared on IFAonline

Protection Watch with Kevin Carr - March 2012

09 May 2012

Protection Watch with Kevin Carr

Protection Watch with Kevin Carr

5. Oh, what a night! Late December 2012…
Confusion still reigns across the protection industry about just what exactly will happen regarding the ECJ gender ruling (and other legislative changes) which take place at the end of the year. December may seem like an age away, but advisers should already be thinking about how the changes will impact their business – both before and after. In the run-up to December things may get very busy as people try to rush business through before the expected price increases take effect, especially for cases which need underwriting. Afterwards, when prices have gone up, re-broking old business to save money could be a thing of the past, which could impact significantly on a number of business models. As of right now, the industry doesn’t yet know how changes to existing business will be treated and whether or not policies need to have started (or a future start date agreed) but what we do know is that Q4 2012 is likely to be much busier in the protection market than Q1 2013

4. Hello! This is the protection industry calling. How you doin?
It has been suggested that the industry needs a ‘Protection awareness day’ to raise interest for both families and advisers – and generally speaking it’s a very good idea. One of the aspects would be an annual protection statement, which isn’t a new idea, however, the proposal that each one should be sent on the same day every year is probably impractical. There are millions of policies in force and as such these should be staggered by either birthday or policy anniversary.

3. Code Red – think twice before selling that protection policy
Protection intermediary LifeSearch has warned against the poor industry selling practices of some distributors and the “laissez faire approach to the quality of distribution” by some providers. In a bid to rectify the situation the firm is seeking feedback on a new code of conduct for protection sellers. It is a very well intentioned piece of work that given further dialogue across the industry should raise standards. It is somewhat ironic, however, that despite 25yrs of regulation the proper protection industry, not PPI - that's a GI product (general insurance), should feel the need to effectively regulate itself to ensure better outcomes for consumers.

2. Fitter, happier, more productive?
More than a third of people going through Incapacity Benefit reassessment have been found to be fit for work, according to the first set of official statistics. This either means that a bunch of people have suddenly got better, or that the previous tests may have been too easy. Either way, people are realising more than ever before that they can no longer rely on the state as they once did.

1. Time for Income Protection to move on
Advisers who know their protection from their rejection know that when it comes to IP ‘own occupation’ policies are the ones to have. The validity of other definitions, such as ‘work tasks’ and ‘activities of daily living’ have been questioned for many years. But the demand for change is gradually becoming stronger with growing calls from intermediaries, industry surveys and declined claim in the media. Offering an own occupation product for everyone could price some people out of the market. However, as somebody once said: I'd rather pay more for something I need, than less for something I don't – and if the policy isn’t going to do the job, it frankly doesn’t matter how cheap it is.

This article first appeared in Professional Adviser magazine

Protection News - February 2012

30 Mar 2012

Aviva and Ageas helping advisers to talk about protection

Aviva and Ageas helping advisers to talk about protection

Aviva has launched an adviser awareness campaign to help IFAs engage with clients and their families when discussing their protection needs.

Timed in conjunction with the re-launch of the firm’s life cover adverts featuring Paul Whitehouse, the project is aimed at helping advisers overcome barriers when discussing family protection with their clients.

The activity focuses on the positive aspects of family life and encourages advisers to open up conversations around ‘What makes your family special?’ and by switching the emphasis away from protection products towards individual family life Aviva believes advisers will be able to change the way people talk and think about protection insurance.

Louise Colley, head of protection sales and marketing for Aviva said: “Family life is such a compelling topic, it really helps to get consumers engaged - so we’re helping advisers to shift the focus of conversation away from finances and on to families.”

The insurer has also agreed a partnership with childhood bereavement charity Grief Encounter to provide support to all claimants with children.

Meanwhile, new research from Ageas Protect has highlighted that a third of parents don’t know if their existing critical illness policy includes children’s cover.

The provider is now calling for advisers and policyholders to check their existing policies to see if it extends to covering their children, which is an important element of CI cover.

Most advisers will be aware that modern critical illness policies available from the majority of UK protection providers include children’s critical illness cover, while raising the issue provides advisers with the opportunity to inform customers about the value of their existing cover, especially parents.

Both pieces of work are to be welcomed as they give advisers good reasons to talk to their clients about protection – beyond that of merely switching to save money.

How advisers choose to introduce the subject of protection with the clients varies from one to the next, however, with TV advertising, family related questions, positive claims statistics, a falling reliance on state benefits and last but not least rising protection rates on the horizon, there has perhaps never a better time to talk about protection.

Still not writing life policies in trust? Another reason to think again…

I recently heard a story about a single life policy, which was taken out to protect a mortgage, which had paid out when the policyholder sadly passed away.

As the policy was called ‘Mortgage Protection’, which is typical for mortgage related life insurance, his new family expected the money to pay off the mortgage in the house where they were living.

However, as the policy was not written in trust (nor on a ‘life of another’ basis), in the absence of a will, and as he was not yet fully divorced from his ex-wife, the monies went to the ex-wife, in-full, leaving his new partner (and their children) struggling to afford to live in the house.

Many people presume that the main benefit of writing life policies in trust is to avoid potential inheritance tax, but it is also to make sure the monies are paid swiftly, and to the right person, as decided by the life assured.


• Bright Grey has added to its simplified products offering with the launch of its Lifestyle Plus plan
• LV= paid 91% of income protection and 88% of critical illness claims in 2011
• Ageas UK has written 89% more protection business in 2011 than it did the year before
• Lloyds Bank is to strip five current and former senior bankers bonuses over their role in the mis-selling of payment protection insurance, according to the Telegraph
• PruProtect has criticised insurers’ use of subject access requests to bypass GP reports when obtaining customers’ medical information
• The government could force people judged too sick or disabled to be employed to do unlimited unpaid work or risk losing their benefits
• Legal & General has made a series of amendments to its group critical illness product including coverage for more illnesses
• Bright Grey has revealed that it has paid out 91% of critical illness claims in the last six months of 2011
• Two more cancer drugs have been provisionally banned for NHS after it was decided they were too expensive for the potential results
• The Protection Review and Income Protection Task Force have produced a list of the top ten things consumers should be aware of when purchasing income protection
• Holloway Friendly Society paid 96.2% of its income protection claims in 2011, up from the previous twelve months 95.5%
• Openwork is launching a mobile app that enables advisers to obtain protection quotes via Apple devices
• Stonebridge Group has added Legal & General to its limited life and protection panel


This column first appeared in Mortgage Introducer magazine

Protection Watch - February 2012

16 Mar 2012

Simple products? Nice idea, but cancer isn’t simple

5. Simple products? Nice idea, but cancer isn’t simple
Life insurance is a pretty simple product: You die, it pays out. The illnesses we suffer along the way, however, are not. Over half of all heart attacks in the UK are repeat attacks and diseases such as cancer are far from simple. Many range vastly in terms severity, aggressiveness and in the likely outcomes for the sufferer. As such, simple protection products may never be able to be quite that simple.
VERDICT: Back to the lab

4. Ageas latest to promote children’s CI cover
New research from Ageas Protect shows that a third of parents don’t know if their existing critical illness policy includes children’s cover. The provider is now calling for advisers and policyholders to check their existing policies. Most advisers will be aware that most modern CI policies include children’s critical illness cover, which provides advisers with the opportunity to inform customers about the value of their existing cover, especially parents.

3. Will your life cover pay-out go to the right person?
I recently heard about a single life policy, taken out to protect a mortgage, which had paid out when the policyholder passed away. The policy was called ‘Mortgage Protection’ and so his new family expected the money to pay off the mortgage in the house where they were living. However, as the policy was not written in trust (nor on a ‘life of another’ basis), in the absence of a will, and as he was not yet fully divorced from his ex-wife, the monies went to the ex-wife, leaving his new partner (and their children) struggling to live in the house. Many people presume that the main benefit of writing life policies in trust is to avoid potential inheritance tax, but it is also to make sure the monies are paid to the right person.
VERDICT: Back to the lab

2. Ghosts have a habit of returning
Aviva has launched an adviser awareness campaign to help IFAs engage with clients and their families when discussing their protection needs. Timed in conjunction with the re-launch of the firm’s life cover adverts featuring Paul Whitehouse (who plays a ghost) the project is aimed at helping advisers to focus on the positive aspects of family life by asking ‘What makes your family special?’ and by switching the emphasis away from protection products towards family life Aviva believes advisers will be able to change the way people think about protection.

1. Why December might arrive sooner than we think
In December we can expect to see the impact of a range of tax and legislation changes to hit protection prices. However, with so many changes coming at the same time, it wouldn’t surprise me if the industry thought about moving the goalposts a little. While this may be no bad thing for advisers, awareness of what is to come will be crucial. However advisers choose to introduce the subject of protection with their clients (TV advertising, family related questions, positive claims statistics, a falling reliance on state benefits or the threat of rising protection costs) there has probably never a better time to talk about protection.

Kevin Carr is Chief Executive of the Protection Review and Managing Director of Kevin Carr Consulting.

This column first appeared in Professional Adviser magazine

Protection News - November 2011

12 Dec 2011

Mortgage protection: Still a hufe opportunity?

Protection News - NOV 2011

Mortgage protection: Still a huge opportunity

According to Sainsbury’s Finance four in every ten mortgage holders do not have life cover to protect their mortgage.

The research findings suggest that there are nearly seven million people with a collective outstanding mortgage balance of £245 billion who have no life insurance to cover their mortgage and provide support to their dependents in event of their death.

It can safely be assumed that even fewer people will have some form of critical illness cover or income protection, which for many could be more important than life cover.

While this is nothing new, it does act as a timely reminder. The cost of protection insurance has, generally speaking, been falling for the last twenty years, however, this could change. Factors such as the EU gender ruling, Solvency II and other changes in taxation for life offices could mean that prices start to rise in 2012/13, which could change the protection landscape as we know it.

On the one hand, churning and switching existing business becomes much less likely if rates are going up, which improves persistency (and reduces lapses). Secondly, if rates are going to increase, which is the general expectation, now is a very good time to recommend protection.

But it’s not all about price. It’s about value. My favourite opening question to potential clients was always ‘Would you like the cheapest or the best value?’ and the reason I liked this approach was that the response was typically ‘What’s the difference?’ which is a great way to begin the conversation.

Not all CI policies cover early stage cancers, for example, but I’m willing to bet that most, if not all people, would want this covered. Although it doesn’t stop there, even those who cover early stage cancers will vary. Some require medical treatment where as other may pay out on diagnosis alone.

The way to move away from price is to understand the products, understand the client and match the two together. It is this technical expertise that sets good protection advisers apart and if all products were the same advisers would be little more than a quote engine, which to be frank, is not advice.

The rise and rise of social media

Being an IFA is very much about client relationships – and social media is all about relationships.

Social media sites such as Twitter and Facebook are not replacing face to face, phone or email communication, at least not yet; they are simply a new way of communicating in addition to what already exists.

If Facebook were a country, it would be the World’s third largest. A new member joins Linked-In every second, and more than 140m tweets are being sent around the world every day.

Whilst much of this is non-business related, a growing element, including financial services and the protection industry are using social media successfully because there are many uses for both personal and business use. It's a great way to keep in touch with contacts, media, competitors and quickly broadcast information and opinions across the industry – from the budget or RDR to last night’s TV or football.

Let’s be realistic though. It isn’t going to win new business overnight. It will take a little time and effort and whilst I have little doubt it will positively influence both business and brand the results won’t be instant.

Like most things in life – it isn’t for everyone, and you’ll probably get as much out of it as you put in. But the question isn’t if we embrace social media, it is how well can we do it.

In brief:

• Ageas Protect has launched a new Critical Illness product, which includes 15 ABI+ definitions
• Defaqto has launched a free business protection guide and says provider support is the key to unlocking business protection opportunities for advisers
• PruProtect and PruHealth has launched a range of new Vitality benefits including Thomas Cook, Adidas and Vodaphone
• Aviva UK life and pension sales are up 6% to £8.1 billion
• Friends Life has signed a new long-term agreement with Best Doctors to include its service in the company's new individual protection policies
• says 28% of people say they could not afford the funeral if their partner or spouse died
• Royal London life and pensions sales have grown by 12%
• Axa PPP has taken over all underwriting of Permanent Health Company’s private medical insurance (PMI) and dental products
• The National Institute for Health and Clinical Excellence (Nice) has banned another breast cancer drug from routine NHS use
• The Association of Mortgage Intermediaries is asking brokers to send it fictitious payment protection insurance claims they receive from claims firms so it can give them to the Financial Ombudsman Service
• Research by Devon-based Unusual Risks shows that 50 per cent of insurers are now offering some form of HIV life assurance
• Barclays has signed a new deal to distribute Aviva and L&G protection products

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting

This article originally appeared in Mortgage Introducer magazine

Protection News - August 2011

29 Sep 2011

Nationwide launches alternative PPI product, but how different is it?

Protection News August 2011

Nationwide launches alternative PPI product, but how different is it?

Nationwide building society recently launched its new Lifestyle Protector product which allows customers to set the level of cover they require for accident, sickness and unemployment cover.
The product is underwritten by Pinnacle Insurance and can be used to cover monthly outgoings. Customers can choose a waiting period of 14, 30, 60, 90 or 180 days although cover is only available for six or 12 months with a maximum benefit of £2,500 a month.

While the product includes £30,000 of life cover as standard and offers greater flexibility than some other similar products, it is essentially an ASU product, or a LASU product, if you like, which perhaps sits between traditional PPI products and proper Income Protection plans.

On the plus side, premiums are priced individually and cover is based upon the inability to carry out your own occupation, expressed here as ‘your normal occupation, or any job which you are reasonably able to do given your experience, education or training’. Likewise day one cover is available and while pre-existing conditions and self-inflicted injuries are excluded, which is to be expected, there are no automatic exclusions for muscular problems or mental illnesses, which combined represent around two thirds of all IP claims.  However, as with most general insurance style protection policies the terms and conditions, including the premiums, are reviewable, and cover can be cancelled outright by the insurer, which is not the case with Income Protection.

IP policies, traditionally known as Permanent Health Insurance, can provide cover for a much longer period, typically up until retirement age, with fixed terms and conditions as well as guaranteed premiums, plus added benefits such as rehabilitation and counseling services.

The Lifestyle Protector will be offered on an advised basis in Nationwide branches and on the telephone on a non-advised basis, although as with most bank products it is not available through IFAs.

Is it time for a protection hierarchy of needs?

One of the most debated topics amongst protection practitioners in recent weeks has been whether or not we could all benefit from an agreed high level hierarchy of protection needs, and if so what might it look like.
Needless to say there has been a range of views on what the ideal order might be and whether it should be needs or product based, but pretty much everyone so far seems to agree that overall it could be a good idea.
Term life cover outsells Income Protection by around 10 to 1 – largely because it is much cheaper and much easier to sell – and most would agree there has been too much focus on selling cheap life cover. Not just by the industry but consumers as well – they shop around for life cover, but few look for what they really need.

So could an agreed hierarchy of needs for protection make a difference? Might it get the message across to a few more people that buying (or selling) £9 pounds per month of life cover on its own probably hasn’t protected the family very well?

What might it look like? Here’s one for starters:

1. Income Protection (specifically own occupation)
2. Critical Illness Cover (including life cover and cover for early stage cancers)
3. Life Cover (Term and Whole of Life, depending on the circumstances)
4. PMI (Private Medical Insurance)
5. All others (including other versions of the above)

We would need to get the message across via consumer groups, websites and the media. It would need to be very simple while making some basic assumptions, such as no existing cover, good health and a realistic level of budget.

But what do you think?


• A new online protection distributor ‘The Life Dept’ has launched in a multi-tie with Ageas Protect, PruProtect and L&G
• Friends Life has split the business to differentiate between open and closed business
• Ageas Protect has launched a guaranteed life cover product through supermarket chain ASDA
• LV= paid out 93% of CI and IP claims for the 12 months to June 2011 with a total of nearly £9 million paid out in CI claims, and over £12 million in IP claims
• Direct Line has pulled out of the life insurance market
• Iain Clark has been appointed Managing Director for Protection at LV=
• The first two Protection Review and PFS independent protection training dates were fully booked with a week
• The Financial Ombudsman Service are receiving 900 PPI complaints a day
• The total number of unemployed people increased by 38,000 in the three months to June to reach 2.49 million
• Bright Grey has paid 90% of all critical illness claims in the first six months of the year

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting

This article first appeared in Mortgage Introducer magazine

Protection News - June 2011

22 Jul 2011

Should advisers charge for helping with protection claims?

Protection News
JUNE 2011

Should advisers charge for helping with protection claims?

An interesting debate has been taking place in recent weeks about whether or not advisers in a post-RDR world would, or even should, charge for time spent in dealing with their client’s protection claims.

As intermediary Peter Chadborn of Plan Money recently pointed out, many of us in the protection industry feel that the RDR adviser charging debate probably doesn’t apply because commission will remain, yet anyone selling protection products alongside other regulated products could be affected differently.

Most protection advisers who operate quite fairly on a commission basis wouldn’t think twice about helping their client through the claims process, without even considering any additional charging. However, those who seek to operate a ‘fee-only’ service may find themselves with an interesting dilemma:

Client: ‘Hello Mr Adviser, my wife has just been diagnosed with cancer. I seem to remember you convinced me to take some critical illness cover, what do we do next?’

Adviser: ‘That will be £200 an hour please.’

Is that really the world we would welcome, or should claims be left purely in the hands of the life office?

We all know life office administration can be poor – I once saw a claim acknowledged 6 weeks later on a handwritten compliment slip – and poor service reflects badly on the adviser too.

Peter Chadborn agrees: “Unless you have experienced the traumatic phone call from a client with the heart-sinking news that they or their partner have been diagnosed with something horrendous then I won’t begin to try and explain how it feels because I will not do the sentiments justice. How can we put a price on the assistance we provide at times like this?”

Then there is the issue of declined claims. I know several advisers who make it part of their service not only to manage claims, but to fight decisions as well.

No doubt some advisers would be happy to leave the claim in the hands of the life office, and yet jump back in when it comes to investing the lump sum, which might just be considered to be double standards.

Personally, I doubt if any serious protection adviser would ever leave their client purely at the hands of the life office during such a traumatic time. If and how they charge for their time is another matter, but it is yet another valid reason to maintain commission within the protection industry.

Should we embrace the new Money Advice Service?

Now that the adverts are running a number of leading figures within the protection industry have called for advisers to engage with the Money Advice Service (MAS) rather than fear it.

The ABI, reinsurer RGA and leading intermediaries such as LifeSearch have urged the market to take a proactive approach by contacting the service to raise any queries and to build on information offered by it to increase sales.

The service promotes independent, unbiased advice, which has caused concern amongst some advisers, with a few challenging the use of the word ‘advice’. However, it should be understood that MAS exists to provide very generic and unpersonalised guidance, such as ‘You should think about what to do about your income in retirement’ or similarly ‘You should think about how your family would cope if you were too ill to work’, as opposed to recommending any specific products, which is where advisers can add value.

Speaking at RGA's Write the future conference, Nick Kirwan, assistant director of health and protection at the ABI, suggested advisers could ‘capture’ customers after they had been through the information process:

"As an industry we should make sure we're ready to catch people coming out of that process as they're left being told ‘You should be considering some life insurance' but not being told how much and what to do next.

His comments were echoed by David Gulland, managing director of global reinsurer RGA, who advised the market to respond to the initiative and recommend any corrections.

News in brief

• The Association of British Insurers has published guidance terms for insurers in order to reduce the time taken to pay life insurance claims
• Ageas Protect is calling on protection providers to label their products according to the percentage of life cover, critical-illness and income protection elements included
• Brits are twice more likely to insure their pets or mobile phones than their income, according to research from Scottish Widows
• Lloyds Banking Group is preparing to axe 15,000 jobs as part of a £1bn cost saving plan, according to The Sunday Times
• Barclays has promised to repay all PPI complaints in full
• The average sum assured taken out by the gay community has increased by over £10,000 since last year according to research from Compass Mortgage & Insurance Services
• The number of dads holding income protection has fallen by 5% in two years, according to results from Legal & General
• More than half of those with life cover fail to upgrade after significant changes in their circumstances, according to Sainsbury’s Life Insurance

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting

This article was first published in Mortgage Introducer magazine

Protection News May 2011

03 Jun 2011

The latest protection news

Protection News
MAY 2011

Could Income Protection replace PPI?

Speaking at a conference in London market analyst Defaqto has said it believes short term income protection (STIP) products could become the replacement for payment protection insurance (PPI).

At the Protect trade body meeting, Ben Heffer, market analyst at Defaqto, revealed that insurers and distributors had jumped ship from most PPI products, with a growth in short term IP taking place.

"The point of sale prohibition for PPI could be an impetus to create a standalone market for these short term IP products, to cover not only payments but people's life expenses too."

In 2009 there were around 20 short term IP products available, and according to Defaqto, that number has already doubled, while at the same time the number of PPI products has reduced significantly.

Heffer also feels the ‘PPI’ brand is now so damaged that change is necessary.

"PPI is a toxic name, a toxic brand and we definitely need a new name for this. Short term IP appears to be where is this going, but unfortunately that probably confuses and blurs the lines between short term IP and long term IP.”

There has been a lack of innovation in the PPI market over the last year or so, which has probably been driven by growing concerns from distributors about the future of the product based on the Competition Commission ruling. Many distributors and probably providers alike have taken a ‘wait and see’ stance until legislation is finalised.

Compared to proper Income Protection PPI is often a very poor value for money product for most consumers. Guaranteed rates, fixed terms and conditions, own occupation cover, no automatic exclusions, claim payments until retirement and so on were, and still are, very strong arguments in the defence of IP over PPI.

So the opportunity for something that sits in the middle between PPI and long term IP is clearly the future.

Heffer also added a warning that the continued price cutting trend could harm the industry and its reputation with consumers.

"The down pressure on price should be a concern to all of us. If cheaper products mean poorer products, that's bad for the consumer."

More protection providers to develop online trust forms?

Protection intermediary LifeSearch has called for more protection providers to follow the example set by Friends Life and Ageas Protect in allowing life policies to be written in trust electronically.

Matt Morris, senior policy adviser at the firm, says it is vital that intermediaries discuss the benefits of writing a policy in trust with customers whenever it is relevant and argues that more providers should facilitate the process online to make it easier and quicker.

“The industry recognises that not enough consumers put their policies into trust, yet the process is cumbersome for the adviser,” he said. “At LifeSearch we’ve gone to the lengths of setting up a specialist team but most IFAs won’t be able to do this. We want to see all providers making the process easier with a quick and simple online system. Friends Life and Ageas do it so there’s no reason why the rest can’t.”

Online trust options can save both time and money for intermediaries as well as ensuring more policies are written under trust, which has various benefits for the consumer including speeding up the payment in the event of a claim and potentially avoiding unnecessary inheritance tax. More importantly, it’s often the right thing to do for many clients, including mortgage related protection.

Ageas recently saw a 60% increase in the number of policies written in trust through the new online facility after feedback from IFAs confirmed that many of them, as well as customers, are put off writing policies in trust because of the laborious and complex paperwork that is typically required.

Round up

• Aviva has developed a new short-term Income Protection policy aimed at competing in the PPI market
• A new specialist protection intermediary Life Cover for All has launched to help people with pre-existing medical conditions find cover
• Dame Carol Black has been confirmed as the after dinner speaker at this year’s Protection Review conference
• Friends Life total new business rose 52% in Q1 compared to a year earlier
• Cirencester friendly has increased both premium income and membership in the last year with the friendly society growing net earned premiums by 6.6% to £12.1m in 2010 with membership growing by 5%
• More than half a million people are claiming incapacity benefit (IB) or employment support allowance (ESA) for depression, according to figures released by the Government
• Royal London's members have approved the acquisition of Royal Liver's closed book of protection business

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting


This column first appeared in Mortgage Introducer

Protection Watch with Kevin Carr

01 Apr 2011

New product launches? VERDICT: UP

Protection Watch with Kevin Carr

5. New product launches

This month has seen new protection product launches from British Friendly and PruProtect. British Friendly launched a new intermediated Income Protection plan offering both short term and long term protection, while the new products from Pru included Family Income Cover, Whole of Life and forward thinking Education Cover, which is designed to cover all potential costs associated with a child’s future education. In a time of mergers and closures, it’s encouraging to see something new.

4. Property remains the top protection trigger

According to new research from Scottish Provident purchasing a property remains the main reason why clients take out protection, with over nine in ten IFAs considering it a major reason. Given mortgages remain the key protection driver it is no surprise that sales of individual protection products are roughly half what they were around 5-10 years ago, before the mortgage market and wider economy suffered. However, despite this fall in sales, around 1m people a year still buy basic life insurance in the UK, and the rates available for most people continue to fall.

3. Supporting non-advised business

For many years like minded colleagues and I have challenged the role that non-advisers play in the protection market. I think the debate has moved on from the somewhat oversimplified ‘right or wrong’ approach and many would agree there is room for both. However, whichever model a distributor chooses must be sustainable and robust – as should the processes for supporting such models from the provider side. If something looks too good to be true, it probably is.

2. LifeSearch Awards

Congrats once again to my old muckers on City Road. This year’s awards lunch was a thoroughly splendid event featuring well deserved award winners and a smattering of the great and the good from across the protection profession. The big winners on the day included Ageas and PruProtect, who both walked off with three gongs each, while Axa took two. It was also lovely to see Liverpool Victoria’s Linda Winder collect the marketing and comms award after beginning her PR career with the firm in the noughties.

1. Can we be positive about the recent gender ruling on insurance?

The European Court of Justice has ruled that policies written on the basis of gender constitute discrimination and that we until the end of 2012 to adapt. Most of the initial reaction has been negative with television news reports and the national press queuing up to ridicule this latest example of European interference in our affairs. However, some positive views are already emerging and the removal of gender could drive innovative and forward thinking underwriting changes with potentially greater use of occupation, lifestyle, post code and more in the years to come.

That said, while the industry could turn the gender ruling to its advantage, the question of where the line will be drawn remains a threat as there is another directive in the pipeline relating to age and disability. If a similar outcome is reached we will see much greater chaos across the financial services industry, chaos that could change the industry as we know it forever.

Kevin Carr is Chief Executive of the Protection Review and Managing Director of Kevin Carr Consulting.


This article was first published by Professional Adviser magazine.

Protection News

14 Mar 2011

Two in five families significantly affected by illness

Protection News
FEB 2011

Two in five families significantly affected by illness

More than two in five (42%) UK families have been significantly affected by illness, with 25% of those having had one of the main breadwinners unable to work due to illness, according to new research from Aviva.

A further 15% had experienced a family member being off work due to stress, depression or mental health issues, while 7% had a family member who had to give up work to care for a close relative.

Yet, when it came to financial protection against such events, just 7% felt their families were fully protected, while just 11% had any income protection.

The full results can be found in The Aviva Family Finances Report, which was published in January and coincides with the firm’s national TV advertising campaign mentioned here last month.

We’ve all similar statistics over the years, but these days we also know that paid claim rates across the board are averaging in excess of 90%. So what is the barrier? There is a clear need for protection insurance, the state is providing less and less, products are generally less expensive than before, and a higher proportion of claims are being paid than ever before.

When the mortgage market picks up protection sales must follow suit.

Is ‘low-start’ the new future of protection?

Ageas Protect has launched a life and critical illness product which provides cover at a lower initial cost that rises over time.

The protection provider, formerly known as Fortis Life, rebranded earlier this year and is keen to make a mark on the mortgage protection market with this new product, especially with first time buyers.

Low Start customers can buy the level of cover they need at a lower premium, which gradually increases at a guaranteed rate for the period of the cover. For a 35 year old male non-smoker taking out £150,000 of cover over a 15 year term, Low Start Term Assurance would cost an initial premium of £6.83 per month compared to the YourLife Plan premium of £10.17. Low Start Critical Illness with Term Assurance would cost £22.50 per month initially in comparison to the YourLife Plan premium of £35.11.

Anything that helps drive customers towards buying the cover they need should be welcomed, and I wouldn’t be surprised if we see more protection products of this kind in the future.

News in brief

• Financial Secretary to the Treasury, Mark Hoban, says Income Protection should be one of the first Simple Financial Products (SFPs) made available to consumers
• Zurich UK Life reported that 91% of all critical illness claims received in 2010 were paid
• Aviva is building on the success of the IPTF Income Protection roadshows by announcing a number of their own events in the coming months
• LifeSearch has announced the shortlists for its annual Protection Awards with Ageas, Axa and PruProtect leading the way
• Scottish Provident’s critical illness plan has been awarded a 5-star rating by Defaqto for the seventh year running
• Reinsurer RGA has added Mark Johnson as business development manager to its marketing team
• According to Legal & General the UK business protection gap remains at £1.1 trillion
• LV= has appointed Iain Clark, formerly of Legal & General and PruProtect, as Director of Protection
• Andy Briggs is to replace Trevor Matthews as Friends Provident Chief Executive

Kevin Carr is Chief Executive of Protection Review and MD of Kevin Carr Consulting

This article first appeared in Mortgage Introducer magazine

Protection Watch with Kevin Carr

02 Feb 2011

5. Total Premium Disclosure... VERDICT: DOWN

Protection Watch with Kevin Carr

5. Total Premium Disclosure
Intermediaries may have noticed a subtle change to protection quotes recently, where the total premium over the term has been added to the quote, as well as the monthly premium. It is here to stay so trying to be positive we could quote the total premium first, before breaking it down: Should you keep this for the full 25yrs Mr Client the total premium would be £7,500, which works out at just £25 per month. And, as monthly premiums across providers are often similar it can be difficult to show a justifiable saving, but if we compared quotes by the total premium, where relevant, advisers could demonstrate the value: £25pm is £7,500 over a 25yr term – but £28pm is an extra £900 which sounds like much more than £3.

4. IFAs say protection products are essential part of financial planning

According to research from Scottish Provident 19 in every 20 IFAs believe protection is important for their customers. The survey, which questioned IFAs on their views of protection products and how they are perceived by consumers, found life assurance (48%) was listed as the most essential cover if consumers could only take out one product. This was followed by income protection (36%), critical illness cover (16%) and finally unemployment benefit. However, given that death is the least likely of these events, which is why life insurance is cheaper; shouldn’t these priorities be in a different order?

3. PFS & Protection Review training initiative taking shape
The structure, content and format of the training is taking shape and pilot dates should be announced soon. We have been working with several potential IFA co-presenters and independent underwriting presenters as well as an outsourced professional trainer. The format will be in half day sessions in three parts: 1. Products, providers, market overview and trends. 2. Technical product details and 3. Advice, sales and overcoming objections. Areas such as ICOBS regulation and TPD updates will also be included.

2. IFA to launch in-depth new website for critical illness cover

Highclere Financial Services partner Alan Lakey is to launch a new critical illness cover website which compares the cover available from different providers. The award winning intermediary has been working on the site for more than two years and says the driving factor is to move the market away from selling cover on price alone: “Most advisers sell CI on cost and that simply is not good enough. Either advisers are lacking in competence or, far more likely, they are lacking in knowledge.”

1. Aviva launches new life insurance TV campaign

Aviva has launched a national TV advertising campaign to highlight the importance of taking out life insurance, which will be on our screens from January. The thought provoking advert, part of the series featuring former Fast Show comedian Paul Whitehouse, highlights how he has peace of mind, knowing his family has financial security without him around. Whether or not we believe life insurance is bought or sold, the protection industry needs promoting and along with others who have done so in recent years Aviva should be applauded for their efforts.

Kevin Carr is Chief Executive of the Protection Review and Managing Director of Kevin Carr Consulting.


This article was first published by IFAonline.

Protection News

02 Feb 2011

Protection News - Aviva promotes life insurance in major TV campaign

Protection News - Aviva promotes life insurance in major TV campaign
JAN 2011

Aviva has launched a national TV advertising campaign to highlight the importance of taking out life insurance, which will be on our screens from January.
The thought provoking advert, part of the series featuring former Fast Show comedian Paul Whitehouse, highlights how he has peace of mind, knowing his family has financial security without him around.
Whether or not we believe life insurance is bought or sold, the protection industry needs promoting and along with others who have done so in recent years Aviva should be applauded for their efforts.
According to their research 39% of UK adults have no form of protection, while a further 17% of UK adults only have enough protection to cover their mortgage. They also state that every half hour a child in the UK is bereaved of a parent, with around 480,000 children under the age of 18 in Britain having experienced the death of a parent or sibling.
Aviva says it has made the decision to drive awareness amongst consumers and to help advisers with a powerful reason to talk about protection to both existing and new customers. Hopefully some people will pro-actively get in touch with their adviser too as Aviva’s research also shows that consumers value IFAs as a source of advice, more than friends or family.
Aviva also says it is committed to raising awareness of the need to adequately protect the family and aims to be the leading provider in this market.
Many of us within the industry feel that a generic advertising campaign to remind people about protection is exactly what the market needs. The adverts, which could run again later in the year, will also promote the use of a financial adviser, all of which is to be commended.

IFA to launch in-depth new website for critical illness cover

Highclere Financial Services partner Alan Lakey is to launch a new critical illness cover website which compares the cover available from different providers.

The award winning intermediary has been working on the site for more than two years and says the driving factor is to move the market away from selling cover on price alone: “Most advisers sell CI on cost and that simply is not good enough. Either advisers are lacking in competence or, far more likely, they are lacking in knowledge.”

The site will be in two parts, with one part for consumers and one for advisers. The consumer section will explain CI and why it is important and will promote the need for independent advice.
The adviser section will feature comparative product tables from all CI providers. The tables will be based upon Lakey’s own in-depth analysis of the market where individual providers are ranked on the likelihood of cover paying out for each condition.

Adviser subscription will be £20 a month, which will include access to the site and updates when changes to cover are made.

News in brief

· Legal & General has improved its critical illness cover product including extending cover to age 70
· Fortis Life has now rebranded to Ageas Protect
· Phil Jeynes has joined PruProtect as Head of Account Development
· Assurant launches ASU underwritten at point of sale
· This year’s Protection Review conference and dinner will be held on June 23rd in London
· Legal & General has improved its medical underwriting limits for Income Protection

This article was first published by Mortgage Introducer.

Kevin Carr is Chief Executive of the Protection Review and MD of Kevin Carr Consulting


Kevin Carr is Chief Executive of the Protection Review and MD of Kevin Carr Consulting

Protection News

29 Nov 2010

So the powers that be who rule us from afar are back once again with the Equality act...

Mortgage Introducer – Protection News
October 2010

When good intentions backfire

So the powers that be who rule us from afar are back once again with the Equality act, perhaps a generally sensible piece of legislation, but one which carries far-reaching and quite possibly rather anti-consumer outcomes.

Where to start? Reportedly employers will no longer be able to ask questions about a potential employee’s health, which means they won’t know how many days off sick you may have had, whether or not you suffer from a bad back or if you’ve spent 6 months in counselling or even rehab for that matter.

Whilst this arguably makes the workplace a fairer place to be, the impact on group insurance, where employees of a company are covered under the same scheme, could be quite negative. The company’s workforce, by default, will overtime include people who are more likely to claim on benefits such as Income Protection, which can only force prices up. But in the present economic climate employers are struggling to afford the current benefits, let alone pay more, so the likely outcome is that benefits will be reduced across the board, including the existing healthy workforce.

Moving closer to home with the individual market, sexual discrimination has been the buzz word in recent weeks. The likes of Sheila’s Wheels could soon be a thing of the past when insurers are forced to charge the same insurance rates for both men and women. While again this is arguably the fair and right thing to do, the implications in the world of insurance are unlikely to benefit anybody. Taking life cover as an example, female rates are generally cheaper (the girls on average live longer than the boys) so the cost of life cover for females would increase to match that of men.
The big question is whether or not the price would fall for males? If it did, it would likely only be by a small amount, if all at. This is mainly because of the cost to the industry of re-pricing millions of variables as a result of the new legislation.

Good intentions perhaps, but very possibly with unintended consequences.

In trusts we must trust

Fortis Life recently revealed a significant increase in the number of protection policies being written in trust through its online process.

While they weren’t specific about the numbers, they said the amount had ‘more than doubled’ over the last four months in comparison with the previous four months.

When it comes to the use of trusts, it’s a pretty open and shut case: There is a strong argument that almost every life insurance policy should be written in trust (if not ‘life of another’ of course).

Without getting too technical, a trust is just an A4 piece of paper that requires a few signatures. Ok, it’s a little bit more complicated than that, or at least it used to be, but even mortgage business should be considered, especially if there is likely to be any monies left over after paying off the mortgage (even if the policy has been assigned).

Using trusts speeds up the payment of a claim, makes sure the monies are paid to the right person, and sometimes, most importantly of all, can avoid unnecessary inheritance tax. After all, there’s not much point in saving 50p a month on your life cover if 40% of the payout goes to The Treasury.

The online trust process has been developed to make life easier for advisers and responds to feedback that writing covers in trust was beneficial to customers, but often made too confusing and difficult. Other providers offer online trust services and policies tend to stay on the books longer when written in trust.

News in brief

• LV= is offering a 5% income protection discount for the rest of 2010
• According to Scottish Provident Almost four million Britons have less than six months worth of emergency financial provisions
• Bupa Health Assurance is to be bought by Resolution subsidiary Friends Provident Holdings
• The FSA is set to challenge the British Bankers' Association's judicial review of its new PPI complaints handling measures
• Royal Liver has closed its IFA protection arm to new business with immediate effect
• Canada Life has launched a new group critical illness policy
• Friends Provident has enhanced its critical illness cover with the addition of mastectomy cover and five ABI+ conditions

Kevin Carr is Chief Executive of the Protection Review and MD of Kevin Carr Consulting

This article first appeared in Mortgage Introducer magazine.

Protection News

25 Oct 2010

Is it right to load protection premiums in return for more commission?

Mortgage Introducer – Protection News
September 2010

Is it right to load protection premiums in return for more commission?

This has been perhaps the hottest topic in protection circles in recent weeks. The debate, which has divided opinion across the industry, is that some distributors may charge a higher ‘loaded’ premium and receive more commission as a result. Such premium ‘loadings’ are not those linked to the customer in any way, such as their health, but simply a higher rate set than the standard proposition, which is reflected in higher commission terms being paid.

It isn’t new. Many companies will look to negotiate higher commission rates based upon factors such as the quality and quantity of business being written. On the one hand there has been dual pricing in the mortgage market and further afield supermarkets and other retailers can charge different prices for the same goods so why shouldn’t IFAs? On the other hand, is it fair and if not where do we draw the line?

Whatever price is charged to the consumer, and no matter how it is charged, it must be justified, but arguing for more commission when it doesn’t increase the premium the customer pays is one thing – deliberately trying to sell the same product at a higher premium in return for extra commission is another.

Alan Lakey, partner at Highclere Financial Services said: “Current commission rates on protection are quite adequate. I have no problem negotiating on the basis of volume business, which I am sure lots of big networks do on a regular basis, but what I object to is when this is extended to asking for so much money that the only recourse left to the company is to increase premiums to clients. I cannot see any justification for that.”

Some advisers may feel their overall advice and service warrants a higher fee – not all intermediaries charge the same hourly rate, for example. In fact, in the case of the supermarkets, they may or may not offer cheaper premiums, but the chances are they will receive more commission than the average IFA, despite selling on a non-advised basis.

Whatever the outcome it wouldn’t surprise the industry if having confirmed that commission will stay in the protection world, FSA reviewed the rules around protection remuneration and put a few boundaries in place for the future.

Are more intermediaries turning to protection?

A recent survey by the PFS and Protection Review found that 5.9% of PFS member’s current business now relates purely to long-term protection. On first glance this may seem quite low, however, it compares to just 0.4% and 0.8% in previous years, which represents quite an astonishing increase in a relatively short space of time.

Many within the industry hold the view that protection is a valuable business area in its own right and is more than just an ‘add-on’ to other sales such as mortgages and savings with firms such as LifeSearch employing around 80 independent pure-protection advisers.

The increase may of course also be linked to commission as well falling prices, but at the end of the day, and most importantly, we still have a hugely underinsured population – especially when it comes to those with families and significant debts.

News in brief

• Defaqto says that one third of new debts do not have life cover
• Scottish Widows has paid out £240m in the last ten years on critical illness cover claims
• Just 4% of employees would approach their boss with a health concern according to Aviva
• Zurich has enhanced its underwriting for mortgage and family protection business by scrapping doctor’s reports for under 35s applying for under £1m of cover
• Bright Grey paid 95% of critical illness claims in the first six months of the year with an average pay out of £90,000
• Bupa is offering a free health check with new Income Protection sales
• Royal London reports £2m loss and says new protection business continues to be hard hit by the downturn in the property market
• Blu Debt Management has teamed up with Paymentshield to staget 18 joint seminars for mortgage advisers and IFAs across the country

Kevin Carr is Chief Executive of the Protection Review and MD of Kevin Carr Consulting

This article first appeared in Mortgage Introducer magazine.

Protection News

28 Sep 2010

News from the annual Protection Review conference

Mortgage Introducer – Protection News
August 2010


Protection premiums could rise by 10% in 2012

Protection premiums could rise by up to 10 per cent if HM Revenue & Customs proceeds with its proposed changes to the way protection products are taxed.

Speaking at the recent Protection Review conference in London, Grant Thornton senior actuarial consultant Nigel Cooke predicted the tax implications could force insurers to raise their premiums.

Cooke said: “If HMRC quite logically decides that pure protection should not be within the basic life insurance tax regime, it probably means that for a large number of insurance writers those premiums will rise by 5 to 10 per cent, before anybody adds insurance premium tax to that.”

“The Government would be making it more difficult and unattractive for people to protect themselves, which I do not think is what they want.”

The move would impact on life policies, including those which combine critical illness cover with life insurance, but not stand alone CI or income protection products.

As a result some experts now predict a fire sale in the protection market, while others have begun to question the non-advised sales model, which relies heavily on falling prices. If prices are pushed up by 5-10% the market could see a reduction in new sales as fewer people would be able to switch their cover to save money.

RDR only just survived

The FSA considered scrapping the retail distribution review at a board meeting in March this year but decided to continue with plans for fear of “losing face”, according to a key-note speaker at the recent Protection Review conference.

Lansons director of regulatory consulting Richard Hobbs, said the FSA came close to scrapping the RDR as recently as four months ago and claimed the regulator is “not particularly proud” of it.

Hobbs told delegates that he expected the RDR to continue, despite rumours to the contrary, after it was announced the FSA would be replaced by a prudential regulatory body at the Bank of England and a new Consumer Protection and Markets Authority.

He said: “As for the RDR, I guess that will continue to completion. There are a great many rumours around the market that the RDR is to be pulled - I think that is completely untrue. I might have to eat my words but my view is it will carry on.

“I have to say, it only just survived an executive committee meeting in March at the FSA. The FSA are not particularly proud of the RDR but it is a question of losing face, so I think they will carry on.”

An FSA board meeting was held on March 25 - one day before it published its RDR policy statement.

2010 Consumer research highlights, in association with Hannover Life Re (UK):

• 26% of people fear the NHS will decline post-election
• People overestimate the amount of cover they hold – just 37% feel their protection cover is insufficient
• Lower socio-economic groups still have the greatest interest in protecting their family and lifestyle
• 31% of people with mortgages hadn’t thought about buying life cover
• Younger generations are worried about funding parents’ long term care (27%)
• Overall levels of trust are not diminishing (76% expressed a level of trust, 3% higher than last year)
• 34% feel they could not survive financially for longer than four months

2010 Industry research highlights, in association with the Personal Finance Society and Fineos:

• 52% said RDR will result in more advisers specialising in protection
• Significant increase in respondents focused totally on protection (up from 0.8% in 2009 to 5.9%)
• 37.5% of those surveyed expected to write more protection in the next 12 months
• Advisers are divided on the impact of technology but around a third have significant expectations of it
• Better and faster service (82%) matters more than marketing support (60%) and technical training (52%)
• Price (46%) narrowly beats good adviser communication (39%) and innovation in design (32%) as the key element in a new product

2010 Award Winners

• Innovation Award in association with Gen Re
WINNER: Exeter Friendly

• Online user experience effectiveness award in association with Space01

• Individual Protection Adviser of the Year in association with PruProtect
WINNER: Roy McLoughlin, Master Adviser

• Organisation of the Year in association with RGA
WINNER: GRiD (Katharine Moxham)

• Protection Journalist of the Year in association with Fortis Life
WINNER: Madeleine Davies, Health Insurance

• Underwriter of the Year in association with Risk Assured
WINNER: Zurich

• Protection Intermediary of the Year in association with PruProtect
WINNER: Direct Life & Pensions Services

• Personality of the Year in association with Exeter Friendly
WINNER: Neil McCarthy, Direct Life & Pension Services

• Outstanding Contribution to Protection Journalism in association with Friends Provident
WINNER: Jeff Prestridge, Mail on Sunday

• Lifetime Achievement Award in association with Swiss Re
WINNER: John Joseph

Kevin Carr is Chief Executive of the Protection Review and MD of Kevin Carr Consulting

This article first appeared in Mortgage Introducer magazine.

Protection Watch 5

24 Sep 2010

More more more CI claims being paid, plus Battle Royale: ABI+ Definitions

Protection Watch with Kevin Carr

5. More More More CI claims being paid

It was roughly six years ago when LifeSearch began the campaign calling for insurers to publish their paid and declined CI claim stats. Despite some hostile criticism at the time (against a backdrop of overwhelming support from consumer groups and the media) I’m very pleased to see companies not only still publishing the stats but reporting ever improving pay out rates as well. I don’t think we’ll ever quite get to 100% (and arguably shouldn’t ) but there’s no reason why the industry cannot and will not rise to 95% in the coming years. The next step – if there is one – is to include information on partial payouts as well. There won’t have been too many yet, but there will be many more in the future.

4. Battle Royale: ABI+ Definitions

Defaqto says the Critical Illness Cover ‘illness race’ has moved on from companies merely adding new conditions and is now about companies offering improved definitions i.e. definitions which are better than the ABI minimum standard, known as ‘ABI+’. I’ve always said that if all else was the same (which in truth it rarely is) that the longer the list of conditions the better – or perhaps it is better put this way: I’d rather have it on the list than not on the list, even if I’ve never heard of it. And the ABI+ race is no different. When it comes to my own cover, I’d rather have better definitions. Who wouldn’t? I’d also rather have claims paid earlier. Who wouldn’t.

3. Dr No?

Zurich has scrapped Doctor’s reports when underwriting applicants aged under 35 applying for less than £1m of life cover. Doctor’s reports add delays and cost money. Tele-underwriting is a great improvement for some, but it isn’t the only one. The more the industry can do to simplify the buying process the better. Well, probably. The easier something is to buy the more people will switch around.

2. We’re gonna get loaded

This has been perhaps the hottest topic in protection circles in recent weeks. The debate is that some distributors charge a higher ‘loaded’ premium and receive more commission as a result. It’s not new but it has divided opinion in the industry. On the one hand supermarkets and other retailers can charge different prices for the same goods so why can’t IFAs. On the other hand is it TCF? The only point worth adding to the debate is that whatever price is charged, and no matter how it is charged, it must be justified. And it wouldn’t surprise me if having confirmed that commission will stay in the protection world, FSA reviewed the rules and set up some boundaries going forward.

1. Moving on up: More intermediaries selling protection

A recent survey by the PFS and Protection Review found that 5.9% of PFS member’s current business now relates purely to long-term protection compared to just 0.4% and 0.8% in previous years. This is a significant increase, which perhaps reflects the view that protection is a valuable business area in its own right and more than just an ‘add-on’ to other sales. The increase may also be linked to commission and falling prices but most importantly we have a hugely underinsured population.

Kevin Carr is Chief Executive of the Protection Review and Managing Director of Kevin Carr Consulting.


© Article reproduced by kind permission of IFAonline

Cool for cats

08 Jul 2010

Protection Review chief executive Kevin Carr asks whether our love of animals could help the protection market?


Those of you, who know me well, may well know that we recently acquired a cat.  I say acquired as it wasn’t something we planned on.

In fact I had no desire to own a pet at all. The last time I had one was when I lived in a pub in Ipswich as a child. We had a crossbreed Labrador called Lee who kept my feet warm at night and inebriated customers at bay at all other times. This was circa 1981. I was six, the Orwell Bridge was being built just up the road and Bobby Robson’s team won the UEFA cup with talented greats such as Brazil, Butcher and Mariner. The builders were partial to a pint or nine so keeping them all in check was no mean feat, although we soon moved to Essex and took the dog to a home. He just couldn’t cope with the smaller house compared to the huge grounds of a pub with three bars.

Then this year I saw a young cat sitting on our window ledge, looking rather cool in the snow. I’d never seen it before so I took a picture. About a week later a neighbour asked if we realised it kept going in and out of our outdoor cupboard.  We searched around online, drove through local streets looking for posters and checked with the local vet if it had been micro-chipped. Only then did we realise the cat had been dumped after Christmas and was ‘living’ with us, albeit without us knowing.

Once it became clear that no one would take her in the cat was well and truly acquired. The little nine month old tortoiseshell cat mixed with streaks of ginger and patches of white became known as ‘mixie’ (on the basis that she has lots of mixed colours and patterns) and being responsible new parents we thought we better buy some pet insurance. Well, the nice vet recommended it of course.

Good people those pet insurance advisers we call vets, actually. I’m sure they’ve never heard of ICOBS and they certainly didn’t issue a statement of demands and needs, but they quickly pointed out a few pitfalls about pet insurance that we found very handy – because buying pet insurance is not simple. A bit like protection. I didn’t know, for example, that you can buy short term insurance, which has those nasty PPI-like PECs (pre-existing condition) exclusions or long term insurance where any new problems are covered for much longer. A bit like income protection.

The Which? website in particular was very helpful and a few hours later our cat was insured.  Was the cheapest the best? No, of course not. Far from it. A bit like protection, it took a few hours to try and decode all of the options and terminology.

All of which got me thinking. Might some people be more likely to buy protection if it covered their pets as well? I’m sure this has been said before but could there be (is there one already?) an umbrella policy that covers humans and pets living under the same roof with one overall sum assured?

I reckon this might just work and a quick straw poll of people over the recent Easter weekend, mostly younger than I, came in at seven yes’s and one maybe.  No doubt there will be good reasons to dismiss the idea – there always are – the policy documents might be a bit long, IFAs might not want to talk about pet insurance, the quote might be a little confusing... But, if it drove demand for more protection these issues can be overcome.

They always can.

So if you’ve got this far without falling asleep that’s cool because talking of falling, some of you may have heard a rumour that I recently damaged my foot whilst iceskating.  The truth is that I fell off our garden fence while saving our little lost cat from the nasty car park next door where she seemed to be stuck. Not very cool at all really.

No doubt she wasn’t lost at all. But then why let the facts get in the way of a good story.


Kevin Carr is chief executive of Protection Review

This article first appeared in the Protection Review’s monthly e-PR publication (May 2010)

Is the UK protection market imploding?

23 Jun 2010

Just last week I wrote in these very pages that the UK protection industry might, just might...


Just last week I wrote in these very pages that the UK protection industry might, just might, soon end up with just a handful of serious product providers in the market.

With the news Aegon is considering pulling out of the market we could face a situation where seven becomes two - and that may not be the end of it.

With Friends Provident and Axa (and Aegon?) falling under Resolution's wing, and Scottish Provident, Bright Grey, Royal Liver (and Liverpool Victoria?) thought to be in talks with each other, we could quickly see what once was seven providers become just two, no doubt with further changes on the horizon.

But why now? Why all this activity when the economy is stuffed? It's not as if intermediaries and the wider industry aren't already tied up with RDR, Solvency II and budgets of varying kinds, including yesterday's.

Could it perhaps be the failings of the protection market itself? Are we finally seeing the real cost of the so-called protection price war? Could it be that the margins on writing ever-cheaper life cover are just too small, while sales of better products with better margins, such as critical illness and income protection, continue to struggle?

Everyone - well, almost everyone - has been going for the lowest hanging fruit in this market for too long. In true chicken and egg fashion, everyone blames somebody else ("You started the price war",  "No we didn't, you did") and, at the end of the day, you have to swim with the tide, don't you?

For too long, and at too many levels, the focus has been on selling cheap life cover, even though this isn't the protection that most people need most.

As an industry we aren't selling enough of what our customers need most. Tell this to a retailer from another industry and they'd be perplexed to say the least.

One day we might be left with just five providers in the market offering poorer service and vanilla products, with new entrants put off by the scale of the competition and small margins.

How might this new market shape impact strategically on other parties such as reinsurers and protection distributors? There could soon be as many reinsurers as there are insurers, and does the mass market consumer still need a protection IFA if there are only five similar products in the market?

Someone once said that if you make your own bed you lie in it. Maybe, just maybe, if we'd worked together to sell more of what people really need we would all be in a better place.

Kevin Carr is chief executive of the Protection Review and managing director of Kevin Carr Consulting.


© Article reproduced by kind permission of IFAonline

What Resolution’s AXA deal means…

14 Jun 2010

Kevin Carr, chief executive of the Protection Review, says forecasts of just five major players in the UK life space may prove accurate after all...

What Resolution's AXA deal means for the UK protection market


Kevin Carr, chief executive of the Protection Review, says forecasts of just five major players in the UK life space may prove accurate after all...

With the dust still settling on Prudential's AIA venture, news breaks that Clive Cowdery's Resolution is in talks with AXA about buying most its UK life business, including its UK IFA protection arm, for £2.8bn.

Should this deal go through, which, speaking to a few insiders, already seems more than likely, it is thought AXA's book will be merged with Friends Provident, the life office Resolution bought last year for £2bn.

The initial market reaction seems positive. The protection industry needs focused life offices delivering quality, competitive products backed by strength and service. Both companies are strong in the protection market, without yet seriously challenging those at the very top.

Traditionally, Friends Provident has been a strong player in the income protection market and has driven some of the industry's leading technology developments, while AXA is typically thought to be stronger in the life and critical illness space.

In a statement, Resolution said the transaction would create one of the UK's largest providers of protection: "Resolution intends to consolidate the AXA businesses with its Friends Provident operations, consistent with its view that value for shareholders can be created from consolidation in the UK life and pensions market, particularly in the areas of risk and group pensions."

The group were thought to be looking at a number of transactions and Prudential's UK business was seen as a likely target. One can only wonder to what extent the recent Prudential situation impacted on this deal. Was AXA always ‘plan B', or was it in the pipeline anyway?

From AXA's perspective, the deal appears to make sense as it could remove the legacy book while raising funds at the same time.

AXA said: "This potential transaction does not call into question, in any way, the AXA Group's continuing long-term commitment to the UK market going forward. The group remains fully committed to AXA's UK direct protection and wealth management operations."

In recent decades, many financial journals have predicted the UK life industry will end up with just five major players, however, to date, this has been proved false due to a fairly regular number of new market entrants, including the likes of Fortis, Bright Grey, PruProtect, Royal Liver and AXA themselves.

With Royal Liver and Liverpool Victoria thought to be in talks with the Royal London Group, who already have Scottish Provident and Bright Grey in the stable, maybe, just maybe, they were right after all.


© Article reproduced by kind permission of IFAonline


Protection watch 4

27 May 2010

The chief executive of the Protection Review rates this month’s developments in the protection market...

The chief executive of the Protection Review rates this month’s developments in the protection market...

5. World Cup marketing

Everyone loves the World Cup. Well, some don't. But they should do. Right now it feels like every TV advert has got a bit of footie in there somewhere and, while I'm sure I'll be sick of it in a few weeks' time, right now it feels great.

I get a warm, tingly feeling inside when I see a great teaser ad for the World Cup - and one in particular stands out. I don't drink lager, but I may have to neck a pint of a certain brand beginning with ‘C' in a few weeks time!

I'm pleased our industry is playing the game too. Pacific Life Re and PruProtect, to name but a few, are running fantasy football competitions while Aviva has pictures of children holding, what looks like, the 1966 World Cup trophy. Bring it on! VERDICT: UP

4. The Future of commission

In a recent Protection Review survey, more than 80% of respondents, including intermediaries, life offices and reinsurers, believe commission will still exist in the protection market in 10 years' time.

It may well look different, and could have a different name but, if the majority view is correct, commission in protection might just outlast the FSA itself. VERDICT: UP

3. Fortis ‘Real Life Cover' commission up 10%

The Fortis Real Life Cover product is excellent. Ok, as one of the three main designers I'm a tad bias, but in short, if you know someone who needs to cover all the protection bases but for whatever reason cannot afford the perfect portfolio and/or is not interested enough to go through a complex menu-plan, this could be the product. And I know plenty of people like that.

Increasing the commission will draw attention to the product, which will hopefully make a few distributors take a closer look, which is no bad thing, but raising the commission probably won't impact directly on sales.

What advisers really need is better training, from an independent source, which typically means not from life offices, who can be patronising and counter-productive as this column has flagged before. VERDICT: UP

2. Critical Illness claims stats

The Telegraph recently ran a ‘league table' of declined CI stats in alphabetical order, showing the percentage of declined claims by each provider in 2009.

It showed that providers such as Legal & General, Axa, Bright Grey and Friends Provident refused 7% or less of all claims, while other providers were slightly higher.

This ongoing development of LifeSearch's original campaign is very positive for the CI industry. There was a line in this article which read: 'Aviva, Britain's biggest insurer paid out a total of £118m to 1,499 claimants on CI policies last year' which, along with falling decline rates, is exactly the kind or reassuring consumer message we need.

However, to repeat a point this column made many years ago, let us be careful not to fall in to the ‘league table' trap by using these stats to base individual decisions.

Paying more claims and publishing the statistics is gradually improving the overall CI brand, but we do not know when claims will arise and therefore we do not know whether the companies recommended will still be around when the time comes. Past performance is no guarantee for the future, which I'm sure I've read somewhere before. VERDICT: UP

1. Protection intermediaries need a trade body

Do protection intermediaries need a trade body to represent their interests? Are any of the existing bodies capable of doing so? Without mentioning any names, there is talk of such a thing behind the scenes, but it may still be talk in years to come.

What do you think? Do we need a few like-minded intermediaries round the table, who are willing to pay a little bit of money, and then ask those who depend on the business to match it - namely life offices and reinsurers?

Then we would just need someone to run it. Are there any volunteers out there? VERDICT: DOWN

Kevin Carr is chief executive of the Protection Review and managing director of Kevin Carr Consulting


© Article reproduced by kind permission of IFAonline

Protection watch 3

15 Apr 2010

The chief executive of the Protection Review rates this month’s developments in the protection market...

Mortgage intermediaries investigated over protection sales

Fears of an increase in commission-led protection sales have caused the FSA to review the sales standards of pure protection products sold by mortgage intermediaries.

In its recent RDR consultation paper, FSA says it is concerned by the movement of intermediaries into product areas where they have little or no experience and will be reviewing the sales standards of pure protection products by mortgage intermediaries, which is fair comment.

However, while some advisers have criticised the regulator for targeting smaller practices when it should concentrate on bigger players (banks), the most important issue is that many people have taken on more debt than ever before, which needs protecting against ill health and redundancy.

I’ve said before it is quite difficult to mis-sell or even over-sell proper protection products (few claimants complain about having too much cover) and, while the debt probably should have been protected at the time, it will be a case of ‘Better late than never’ for many. Verdict: TBC

IPTF roadshows

The Income Protection Task Force (IPTF) is going on the road with a series of adviser seminars across the UK to educate advisers on the need for IP and its importance as part of the financial planning process.

Many advisers say IP should be customers’ first protection priority. But sales lag far behind that of life cover and critical illness. Let’s hope these roadshows really help to raise the profile of IP. Verdict: Up

New ABI director general Kerrie

The new ABI director general, Kerrie Kelly, will be the keynote speaker at this year’s Protection Review dinner on 15 July. Kerrie will join a list of outstanding speakers at the event, including the CEOs of Friends Provident and Aegon UK. Verdict: Up

One-question protection

Aviva is piloting a system that lets advisers sell customers ‘top-up’ protection after asking them just a single question.

Much of the success in the over-50s protection market has been down to a simplified repeat sales process where people who bought once, usually quite recently, are given the chance to top up their cover without all the hassle of starting again.

Many of us have said over the years that this process could benefit the mainstream protection industry greatly and so I hope Aviva’s trial is more than successful. Verdict: Up

Total premium disclosure

If, when about to buy your last car, the salesperson pointed out exactly how much you would spend on petrol and car insurance over the lifetime of owning said vehicle, what might you think?

If you think this sounds rather wise, then you will be in favour of this particular FSA requirement. It not then you, like many within the protection industry, might feel it’s a bit over the top. You may also think it could put some people off buying the cover they need in the first place.

Last month, the Association of British Insurers (ABI) issued guidance on how insurance providers should disclose the ‘total premium’ for individual long-term pure protection contracts.

In a nutshell, anyone selling protection will need to tell the customer the total premium over the term of the contract at the start. But there seems to be no evidence suggesting consumers would benefit from this change. This really is a pointless exercise that could easily be ignored if it wasn’t for the potential negative effect that such information can produce. Verdict: Down

© Article reproduced by kind permission of IFAonline

Protection watch 2

08 Mar 2010

From pet cover to soap storylines, Kevin Carr dissects the latest protection industry developments in his exclusive monthly blog.

5. New life office(s)

If the number of media calls on this one are anything to go by, a new life office is set to enter the IFA protection space very soon. Competition is good, new ideas are good, raising the profile of protection is good. So it's hard to see a downside to any new market entrants.

Who might it be? Met Life and HSBC have been rumoured for many years, or perhaps it is the return of Simon Burgess. Or probably none of the above!


4. Soap story-lines

It's still there in the soaps. Last week's Hollyoaks (don't ask, please don't ask) featured several debates around state benefits and how difficult it is to get by when illness strikes. Alas there was no mention of Income Protection, but we can't have it all.

What a shame there isn't a generic protection advertising campaign on TV to make the most of these story-lines. What a shame indeed.


3. Family Income Benefit

Scottish Provident reported a four-fold increase in FIB sales recently, which is great.

FIB has always been a good little product that has so often been ignored and undersold. A quick recap: FIB is a life and/or critical illness cover plan, just like normal ones, except claims are paid as an annual income instead of a lump sum. While a lump sum is usually more attractive on the eye, there are times when an income is much more suitable - and cost effective.

Could we do more as an industry to increase awareness of FIB and make it easier to sell? Oh yes. Why oh why oh why is FIB a separate product with separate literature and thus separate and unnecessary costs? Why isn't it just a tick box on the main application form following the sum assured box which simply says ‘Lump sum or annual income?'

As for the name - whoever came up with ‘Family Income Benefit' should be forced on a date with John Terry until they both say sorry.


2. Pets and humans

"It's staggering to think that so many people insure their pets against illness, yet they do not have the same urgency with their own health." David Thompson, CEO of DG Mutual.

Having recently acquired a pet of our own, I can confirm the insurance buying process for pets isn't that far apart from life insurance. There are all sorts of options, a long list of questions and plenty of potential pitfalls at claim stage if you don't read or understand the small print. Just like life and health insurance.

We can all defend the reasons why the process has become so complicated all day long, but if we don't get smart soon and make it much, much easier we might not have an audience to defend it to.


1. Commission disclosure

Protection Review of course agrees commission should be disclosed, it's the fair and ethical thing to do.

However, many high street retailers and websites sell life cover, and they receive commission just like an adviser might (and in some cases potentially more commission than some advisers). Some, however, do not disclose it.

There should be a level playing field. If an adviser discloses commission then shouldn't everyone who receives a commission be required to act in the same way?

Also, there are commissions included with many general insurance products such as car and home insurance. Should these be disclosed as well? Where do we draw the line? Do we need to know how much profit the landlord makes from each gin and tonic we order?

Likewise, at what point should commission be disclosed - at the very outset, at the quote stage, at application stage, at policy document stage?

As with all regulation and good intentions, the potential unintended consequences should be thoroughly thought through.


Kevin Carr is chief executive of the Protection Review and managing director of Kevin Carr Consulting.

© Article reproduced by kind permission of IFAonline

Protection watch 1

08 Feb 2010

In the first of his exclusive new series, Kevin Carr looks at the ups and the downs this month in the protection industry.


Payment Protection Insurance (PPI) wasn't always a great product to say the least. Some people were mis-sold policies that often had very little chance of being claimed upon successfully. They should get their money back accordingly.

However, having looked at various PPI claims sites, I'm yet to find one that mentions proper Income Protection (IP), let alone one that attempts to explain the differences between IP and PPI.

I wondered if the claims people on the phone knew... so I called a few. I found they didn't really have a clue. There is a script to follow and follow it they do. Some said we only deal with ‘single premium PPI' policies, which thankfully rules out IP, but most just said give us your details and we'll send you a claim form.

I wonder how many IP policies end up at their door?



An obvious winner with Protection Watch (PW) this one. Publishing claims statistics - once there is enough detail to make it meaningful - is the fair, right and transparent thing for our industry to do. Those who are publishing their stats are in excess of 90% for both critical illness (CI) and IP, and rising, which is great, although there are still some well-established companies yet to publish them.

What's keeping them?


3). FSA CP 09/31

The saviour of the protection industry or, as one leading commentator recently put it, "A sting in the tail from the industry's favourite whipping boy"?

This is, of course, the December 2009 Delivering the RDR paper that wisely, and thankfully, allowed commission to continue in the ICOBS-regulated protection industry.

So what's the problem? Good question that. Some feel the devil in the detail spells a potential minefield for IFAs who wish to sell across both COBS and ICOBS regimes.

FSA seems to be suggesting that, if an adviser wants to receive commission on protection business, he or she must transact this business only under ICOBS, while any other recommendations, such as investments or pensions, fall under COBS.

Is this a potential administrative nightmare, that could lead to confused customers not taking the advice they would otherwise have done? Or is it nothing much to worry about? After all, two regimes already exist in tandem, such as in the mortgage market.

Or maybe, just maybe, could FSA be trying to make it harder for COB advisers to migrate into ICOB protection sales just for the commission? I hope not, because, as is so often the case with regulation, the unintended consequence could cause far greater damage.



My protection chums and I have noticed several protection-related storylines in the soaps recently. While the detail isn't always accurate, scriptwriters don't tend to include things that won't attract the audience's attention, which means protection - be it redundancy, illness or death - must be higher on the consumer's agenda now than it was before.



New things are always likely to be a good thing, because PW likes innovation. January saw a new IP product from Legal & General and a very interesting new website from Exeter Friendly where you can ‘Get Bob dancing!'


© Article reproduced by kind permission of IFAonline

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