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The Life Insurance Market
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Protection distributors and providers often work together in a very disjointed and sometimes dysfunctional and often even disrespectful way.
That disconnect may be the key reason for our growing failure to convince legislators and consumers that our products are relevant.
But all in this industry should be proud, for though we are not Doctors, we do save lives in a way. We all do vital work for the consumers and the wider economy we serve.
THE PROTECTION MARKET
• In underwriting processes things are getting a little better every day. Across the rest of the protection business things are getting worse.
• The consumer’s welfare state illusions and the government’s economy with the truth about the paucity of welfare state benefits and our industry’s failure to communicate with consumers are rendering our products marginal. My biggest competitor is a government lie!
• We say so little as our industry is dominated by conglomerate savings, investment and protection businesses who are happier marketing dreams rather than nightmares, and who find it hard to focus customers on what might go wrong, rather than how well their investment products might do for them if nothing goes wrong.
• We all know though, that the welfare state is a terrible state to find oneself in, and we all need personal cover against the financial effects of physical catastrophe. Consumers just need to take personal responsibility. And now is a good time to tell them that.
• But our regulator is a frighteningly disinterested one. Jon Pain covered the whole of his retail markets brief last week and did not refer to consumers’ protection needs once. That omission is a terrible indictment of our industry’s inability to communicate with its regulator.
THE EFFECT OF NON ADVICE
• In protection market terms, LifeSearch represents an advisory front line. We generate our enquiries online and turn them into advised clients. Non advised sales dominate online, with their partial covers, often higher premiums and very high lapse rates.
• And life insurance is in places already just a loss leader for securing customers for more profitable products like roadside assistance. That’s a shameful place for a product of vital social value to find itself.
• But we know that 76% of those who talk to us having bought a policy without advice find they want to change something important about that policy when they speak properly to an adviser. That’s why non advice needs a health warning.
• But insurers must take proper risks to profit fairly and life insurance itself is a very mature market which does not resonate with a population with little or no genuine fear of early death.
• Until the more likely working life risks of disability and morbidity are appreciated by consumers our market will continue to fade.
• What’s needed is to start waking consumers and their distributors up to their needs and the perfectly useable tools we offer for taking the risk of catastrophe out of their financial lives.
• The big brand name “Life Insurance” needs to stop meaning death insurance and start meaning insurance against real life catastrophes that happen to lots of working age people.
• If we can change our core brand to include disability elements, through products that, though diverse, are similar enough to be classed as one market, then we can again become relevant to our consumers’ perceptions of their needs.
THE NEED TO EDUCATE CONSUMERS THROUGH MARKETING
• The following 4 point logic sequence convinced 22 insurers and reinsurers to fund a research and marketing study, aimed at delivering an industry marketing plan. It will have a clear and simple branding, and will aim at disturbing consumer complacency through education. The process completes next week, with the 5th presentation to the industry’s corporate decision makers.
1. If consumers are not properly cognisant of the effects on their lifestyle of the physical catastrophes of death or disability or critical illness, and the government won’t tell them about those risks and the state’s inadequacies, then our industry has to, or accept decline.
2. What we sell is glum not glam and thus must be sold rather than flying of the shelves just because we give it a new brand or feature or capability.
3. But there are no huge sales forces, so it has to be marketing that sells, that gets the consumer asking us the questions.
4. And there is little point in reforming and innovating in an industry in long term decline. If we can get sales figures growing again, then all sorts of innovation and progress will naturally follow, as big business seeks to gain new market share, rather than merely squabble over old market share.
• The presenters are the UK’s largest behavioural change ad agency – much used by the government; the UK’s biggest advertising research agency, and Zenith, who are one of the world’s largest media buyers. We have built a marketing “A team”, coordinated by specialist large scale campaign coordinator and we’ve added a substantial focus on public affairs work.
• The industry is right now working out if it is prepared to fund its own resurrection or if it just accepts decline while it waits in vain for people to start dying young again.
• I’m pleased to note that this audience of 100 senior industry professionals voted 99 to 1 that the protection industry should commit to the £5m 1st year spend the plan requires.
And all these innovations would become affordable if our market was growing as consumers need it to, rather than shrinking because it has no voice. Now is the time to change that.
Tom Baigrie
LifeSearch
(Edited version of speech to the Panorama Underwriting Conference 1.10.09)
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Posted by @
03:52 PM, October 07
Just some feedback on the article by Mr Baigrie.
Firstly, well done on such positive work on the protection campaign. I’m sure it has taken considerable effort to co-ordinate such an initiative.
It was probably a rhetorical question, but a ½% levy on adviser fees is an excellent idea to promote the need for protection, especially from independent advisers – it would mean better economies of scale, and better quality advertising, with more impact, than the small and medium sized firms can afford. It would also help close the worrying protection gap many families have. This is good for families and good for the industry.
Many seem bitter and cynical in our industry, and would rather moan about situations, then resolve them. It is very pleasing to see a leading company, like Lifesearch, really make a difference in such a positive way and wanted to applaud this.
All the best, and good luck.
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Posted by @
12:28 PM, October 07
As is often the case, I agree whole heartedly with what Tom Baigrie has said above. Whilst most of teh work we currently do for clients is Investment and Pension Planning, we remain committed to meeting our clients protection and mortgage needs. The problem is delivering it and making sure we are paid for work on regular premium advice when we still see people who think that buying the cheapest on-line is great. They only know it wasn't right when they get to the claim stage and find that the small difference in premium for a plan paying commission was money well spent as they eitehr got the right product and trust as a rsult of teh advice, or if they did not they have a right to complain about poor advice which they do not with on-line purchase with no advice!
Innovative ways of marketing and delivery using good IT is the way forward, but ultimately protection is SOLD not bought...............
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