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The Life Insurance Market
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To Pall Mall last Tuesday, lured by the chance to hear actuarial guru and show-stopping speaker Ned Cazalet give his updated lambasting of the Life Insurers, courtesy of the top-end and often rather beautiful headhunters, Horton International. It was noted that outsourcers might be more in demand than head-hunters through 2009, but that there was little point now in us trying to stop the gravy train because the buffers are already in sight and the brake handle is in the hands of Accelerating Alistair and Go For It Gordon. If big spending is not the trick, then Britain’s next posh dinner could be a long, long way off.
Ned explained, in his fire cracker, regimental sergeant major fashion, the lunacy of life offices’ historic new business acquisition models and the inevitable doom they now face. Sadly, I once had a regimental sergeant major, and though Ned has many trillions more brain cells, he shares the same brutal profile and ability to hurl abuse (or abusive statistics in Ned’s case), in such waves of thoroughness that there is nothing for it but to accept the orders given. Ned’s assembled audience of provider board members, consultants, management consultants and IFA CEO’s, of which your columnist was the most junior by far, grew ashen faced at the grim future that awaited the providers. They really are in the last chance saloon. IFA’s too came in for serious and thoughtful flak and it was hard to argue that a sector that has so singularly failed to turn in profit (bar those who are not really IFA’s at all) was collectively of much use to the economy and public just now, despite the many worthy individual efforts all acknowledged.
The Treasury were singled out (though not by Ned I should say, as I would guess he has them on his client list) as having rendered all advice a minefield through the ridiculous complexity of benefit, pensions and tax law, and thus witlessly denuding the vast majority of the population from proper financial advice. It was proven too that the FSA clearly only realised shortly before Callum McCarthy’s Gleneagles speech just how badly their previous 20 years’ work had debased the country’s once prudent financial habits. In short all agreed that as a force for promoting good consumer behaviour across the populace, we are broken and thus many are shortly to be broke.
Now I’ve attended dozens of such self-flagellations over the last few years and I find myself ever more irritated by the focus on what is past. I pointed out that many life companies had left the past models long behind. Indeed one, Standard Life, does not even think of itself as a life company at all any more. Its job according to Sandy Crombie, who should know, is that of “administering and managing assets” on huge scale. All agreed that platforms were the way to go, although as Paul Bradshaw and Bruce Wilson had formed a Nucleus on one side of the table to counter my verbose promotion of their competitor at the other, that may just have been cowardice on the part of the other worthies there present.
While some blamed the ABI and others of us explained patiently that trade bodies could not lead disparate memberships unless in turn led by Chris Cummings; most agreed that the real issue was that Bankers or General Insurance boards ran our biggest Life Insurers and that there was unlikely to thus be any material effort to change consumer habits as there was more profit in them borrowing or insuring their cars, homes and pets with their money, rather than saving it through overregulated plans which denied providers any chance of profitability.
There was no agreement on what to do to return the Life Insurance Sector to its once powerful position, each earnest suggestion struggled to survive the battery of gainsayers, until one voice of reason explained that the last surviving profitable, ethical sales to the mass market was protection. If a consumer spends a bit each month on protection the seller and provider can profit. By extension, Life Insurers must focus on that which they can sell profitably and looking forward, that’s just what many are doing.
Most all now agree with Ned that stickiness of business is more important than sales volumes, but achieving this needs a positive industry marketing approach, where money is spent on promoting what we do that is best for consumers, so that the Life Insurers’ can regain their once important place in our culture. That will need a concerted effort at persuasion I feel, but there is a plan and a team starting to do that and as soon as we fight our first battle we’ll go public win or lose, I promise.
This article appeared in a recent edition of Money Marketing.
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