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The Life Insurance Market
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One insurer after another is publishing excellent critical illness paid claims statistics at present. Aviva and LV= are the latest to announce they are paying out well in excess of 90 per cent of all claims. The Mail on Sunday ran an opinion piece in February highlighting the major improvements the insurance industry has made in this area.
It has been a long hard road for a product that was widely berated in the consumer press until not that long ago as being the policy that would least likely pay out.
No doubt the work by insurers and the Association of British Insurers to cut back on non-disclosure, improve tele-underwriting and clarify illness definitions played a crucial role. So too did LifeSearch’s campaign several years ago to get all providers to publish their claims figures.
Transparency exposes the problem and forces people to find ways to fix it. Would we have enjoyed the recent boost in paid claims without that impetus? It is doubtful but that is a matter for conjecture.
Yet not all income protection providers publish their statistics. Many do - and boast excellent figures - but some do not.
The point of publishing claims statistics is not so that advisers can create a league table to compare insurer A and insurer B, especially when there is relatively little to choose between CI cover providers at present.
The point is to coerce those that lag behind to improve and to demonstrate to a doubting public that protection providers really do pay out when customers need it most.
Not publishing the numbers raises eyebrows. If the claims statistics are poor for a genuine reason, such as a new insurer having a relatively small claims book, that is fine. But it is better to be transparent about these things.
If protection insurance is to take up the huge slack left by the retreat of the welfare state, we have to make sure we are ready to meet that desperate need for cover from the unprotected public. That starts by making sure people have faith in the products we offer. The argument that the very nature of income protection makes calculating claims statistics difficult is a fair one. They are, after all, not one-off payments.
We should agree one way of doing it and stick to it. It is only a matter of time before IP payments come under scrutiny. I hope IP will stand up to this attention as is not just the industry but also the consumer that stands to be worse off if it does not.
Matt Morris, Senior Policy Adviser, LifeSearch (This article was published in a recent edition of Money Marketing)
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Friends Life launches today as the newest face in the Financial Protection market (Life Insurance, Critical Illness Cover, Income Protection etc).
Friends Life combines the talents of three major insurers - Axa, Bupa, Friends Provident - in one company. Friends Provident chief executive Trevor Matthews will head the new brand.
LifeSearch has welcomed the launch and we're confident that the collective talents which made the three companies so successful will flouish under one banner.
Matt Morris, Senior Policy Adviser, LifeSearch
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Last night in Mayfair, Baigrie Davies LifeSearch won the accolade of “Best Financial Adviser” at the Money Marketing awards. These are by a long way the year’s most important in our world of advising people about their finances. The awards are voted on by a panel of the most senior and reputable names from the world of regulation, investment, banking, pensions and insurance.
We won in part because both our businesses are now clear market leaders in their respective areas. Baigrie Davies in New Model Advice – the approach to managing people’s wealth which will, we think, reform both the IFA and the Private Banking sectors; and LifeSearch in advising some 3000 people a week on their life insurance and protection needs over the phone and online. Other factors were that our culture is provably, “Customer first and profit next.” – the only way to deliver honesty in a sector plagued by the opposite; and the fact that our regular sampling of our clients anonymous opinion of us shows us average 4.3 on a scale where 1 is poor and 5 is excellent.
Rest assured we are not complacent and if your thought on reading the above is, “You are not so good as they think you are!” PLEASE e-mail us and tell us (in private if you would!). But if by and large your experience validates the judges view, then do please help us grow the customer-first model until all financial services does it our way. You can do that by telling all you talk to that your adviser, be it Baigrie Davies or LifeSearch, is the best at what it does in Britain, and that they too should become our clients. We’d love to help them! Thank you for your support.
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Posted by @
04:48 PM, March 28
i used lifesearch for life insurance several years ago . they are by far the best out there
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Posted by @
09:29 AM, March 28
Lifesearch were quite understanding, quick and really helped me to obtain life cover with a simpe process. Well done Lifesearch I believe your award is quie justified
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Posted by @
09:23 PM, March 27
Well done to you all and thanks once again for your super efficient job of arranging my mortgage protection. Lovely friendly staff too.
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Posted by @
10:12 PM, March 25
I think this is brilliant news, very much deserved! well done Life search X
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It is ridiculous that by the time you read this, just hours after I write it, the whole world of insurance could be utterly changed. Those who are paid to know assure me that the business model that has operated for 100’s of years is about to be fundamentally changed. If they are wrong, do forgive me and open a bottle of Bollinger.
Except that, even if they make the right decision, the mechanism which can cause chaos in orderly markets still needs to be dismantled. To explain; the lunacy comes from the top. Nowadays the top is not the PM, it’s 13 barristers drawn from a pool of 27, each one coming from a different European state. Few know anything about insurance. These opinionated folk have it in mind to cause chaos across a highly reputable and proper global business – or at least its European elements – in an announcement expected on 1.3.11. The change and chaos arises because they wish to make a philosophical point.
Simply put, they are considering stopping insurers calculating premiums with reference to behaviours mathematically provable as linked to gender. So girls’ motor insurance premiums will soar as will boys’ IP and so on. For the first time, except for a few provincial friendly societies, actuarial science will bow before political correctness. Insurers will be forced to overcharge until they can be certain of the overall costs this change will cause and its effect on their book of business and so consumers will need to pay higher premiums overall, probably for many, many years.
This is not good business or government. It's not even good law making as it makes the majority worse off and it's thus certainly not democratic either. Whether they do this or don’t; these judges should never be allowed to bypass all checks and balances in this way.
Premium rises tend to help brokers, and will certainly reduce lapse rates, So I can hope LifeSearch will not be affected too negatively, but I’d rather take the consumer’s part and ask the coalition government to refuse to accept such judicial tomfoolery as binding. I have no idea how a truly international market centered in London will react to such meddling, but I suspect Singapore and similar financial centres will find trade moving there way fast. If you can quote cheaper rates from Singapore you will!
The sad bit is that this may halt in its tracks a small supply side boom in our tiny corner of the insurance market. The UK Protection sector has been picking up I reckon. Nowadays protection seems to be much higher up the average IFA and FPA radar. Perhaps that’s a result of the property market slump, the wider recession or RDR, but who cares; it must be a good thing for the big society that we help people provide themselves the wherewithal to look after themselves financially in their hours of most need?
Furthermore the providers, while consolidating, are also better led and managed today than at any time previously. A greater proportion of claims are being settled than ever before. And whether it’s Aviva’s advertising, Ageas’ swifter underwriting or AXA’s excellent CIC or any of the many other excellent innovations happening these days there is plenty of activity from providers to improve the policy range and process we have with which to protect our clients.
All of which makes it a shame that those Euro-barristers have to power to now change the rules if they fancy it.
Tom Baigrie
Managing Director
LifeSearch
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March 2nd 2011 saw the 8th LifeSearch Awards, attended by all the leaders of the protection market in the UK. At these occasions, that recognise the best and most outstanding achievements in the industry, Tom Baigrie, in his introduction to the event, takes the opportunity to make a clear statement about the current ‘stare of affairs’ within the industry, and with this week’s European Court of Justice ruling on gender, this year’s topic has major implications for us all.
Welcome all to the 8th LifeSearch awards – the ones that get more important each year without getting longer. There has been talk as to whether a protection trade body could have stopped the ECJ. In truth I doubt that though I hope the ABI and Treasury can find a way of challenging this ignorant threat to London’s vital insurance market.
One of the difficulties in creating a specifically protection trade body is that it’s 3 elements, reinsurance, insurance and distribution, are not always aligned in their profit drivers. Nor should they be in my view. In Financial Services, the industry as well as the consumer is best served by distributors who act as agents for their clients first, not their product suppliers.
That need not be the only model, tied agencies and on-line non-advisers have their place in penetrating all corners of a market, but independent advice keeps us all honest and is thus the most vital distribution channel even if by definition it cannot be perfectly aligned with anyone other than its client. Events like this and the Protection Review and the Cover Awards serve to bridge that proper gap in our alignment. So please avail yourself of this cracking networking opportunity to meet and talk to strangers, for you are all at merely one degree of separation and no more I promise.
You could start conversations by discussing whether insurance rates can discriminate or whether they do not merely differentiate on mathematically and scientifically proven grounds. Or whether the ECJ’s commitment to the fine cause of equality has perhaps led them to put religion ahead of science. And whether that makes them more like some Mediaeval Pope than the liberal reformers they aspire to be?
But despite the upheaval we must now all endure and remember there is often profit in upheaval; this has been a good year so far for the protection market. Sales are up and prices are not falling as fast as usual There has been a bit of a supply side boom and even a seriously high quality bit of AVIVA TV advertising to support it. The two will be linked, for IFA’s watch TV too. With two dynamic and innovative new providers beginning to seriously impact on the market, and rejuvenated management in most of the remaining bigger players, perhaps a consolidated provider market can become confident enough in its proposition to make the case to IFAs that quality is far more important than cheapness in every consumer buying decision, even the most apparently commoditised.
And happily this year has seen much evidence that those who believed commoditisation to be an overwhelming inevitability are perhaps as wrong as I always thought you were! It seems most consumers need plenty of comfort and persuasion before making properly sized protection buying decisions.
It’s becoming clear that that comfort and persuasion cannot be honestly provided over the phone without giving advice and if you support those that channel, I think you are doing what’s in another trade is called “aiding and abetting” ! That tribe’s most visible player has happily been liquidated, and you should insist the others convert to advice. It’s not that hard to do in truth and it increases conversion rates, cuts NTUs and lapses and thus serves you and your customers far better.
That’ll be why LifeSearch’s revenues month on month are some 27% higher than last year and why we are recruiting and growing at record rates. LifeSearch is moving forward as fast as it viably can into the gap left by the retreating welfare state And I’d ask you to reflect on the huge opportunity you as an individual and we as an industry now have.
You personally – for in this room today stand most of the leaders of our sector – you personally have a once in a lifetime chance to seize the initiative and help the millions the state never will again. And it really is up to you, each of you here, to be brave and bold and seize your best career chance ever to do something effective for those of your countrymen and women who need you most.
Posted by Matt Morris
Senior Policy Adviser
LifeSearch
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Today the European Court ruled that insurers are no longer allowed to use gender as a basis for calculating premiums. LifeSearch believe this is a huge mistake:
• Prices for men and women will now be the same
• Insurers have until December 21st 2012 to alter their systems
This is a horrible mistake by the European Court. It is essential for insurers to use gender to calculate risk based on solid actuarial evidence and statistics. It is price differentiation, not discrimination, as it is not a decision that comes down to the whim of an individual.
Prices will go up across the board as insurance companies try to build in the new risk. Women currently pay less than men for Life Insurance, whereas men pay less for Income Protection. It is very unlikely that premiums will meet in the middle because there will be huge costs to the industry of re-pricing and updating their systems so everyone will end up paying the higher rate.
However, people who already have policies will not experience any change. It will only affect those taking out new policies.
Matt Morris, LifeSearch Senior Policy Adviser
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