The Life Insurance Market
Distribution has a vital part to play in closing the protection gaps, and I have long thought that it is the closing of those gaps that will restore protection to its rightful key role in financial services. However distribution has very little capital with which to do that.
That weakness means the initial drive to get consumers understanding the risks they live with and should insure against must come from the providers and reinsurers.
And happily they have taken the first brave step, all of them contributing to a substantial war chest now being used to fund the research and development of a consumer marketing and communications campaign.
We will see the results in autumn and decide then how we take matters forward.
In these dire economic times all such ambitions must be considered long shots, but there is no doubt that grim times make protection a far more important part of financial services than it is in boom times. I hope budgets previously denied to protection marketers can be opened up to them.
It may be in part because grim times make consumers more cautious, but I think it is because of our exceptionally hard work that LifeSearch’s sales are 17% higher than last year. This should make me a happy chap, and it does a bit, but across the market there is a niggling rise in lapse rates and as I’m certain consumers will find it ever tougher through 2009 I fear that trend must continue and worsen.
A year ago I warned that “the Government’s frankly adolescent handling of the economy and the Regulators’ hyperactivity might unhinge consumers and our markets.” Sometimes it’s just better to be wrong!
Government and regulator have helped ruin the world of work and the wealth of savers and though the international bankers share the blame I have no doubt that were Britain a lightly taxed and regulated country, with minimal red tape, we would be bouncing back already.
Instead we are promised more inspectors from a more expensive and more belligerent FSA, backed up by a Treasury who now fear creativity and innovation and are determined to slam the stable door shut after the sub prime horse has bolted.
It may well be that the wholesale markets needed and still need closer regulation, but in retail financial services the planned return to the days of the ‘inspectorate’ will only help cut further the ranks of those promoting financial responsibility to consumers.
One bit of regulation I predict we will not ever get is the RDR.
Bits of it perhaps, but 2012 is an election away and by then it will be ever more clear that the big business approach it envisages is not the way forward.
It is the world’s biggest businesses that have brought it to its knees, it would stand to reason that it might well be its smaller ones that lead the way back to prosperity.
In truth there is no chance of that just yet. So we’ll just all have to soldier on take what joy we can.
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