Bulletin 13, 2007
Round up
9 - the number of term life insurance rate changes announced by life insurance companies since the last bulletin (Bright Grey, Liverpool Victoria (x2), Scottish Provident, L&G (x2), Royal Liver, Bupa and Aegon Scottish Equitable)
16 - the number of days on average it takes Royal Liver and Legal & General to process life insurance protection applications - the fastest in the UK!
50% - the amount of LifeSearch Income Protection cases in May where Pioneer Friendly were the recommended provider
32,416 - the number of lives insured by LifeSearch in the past 12 months
435,595 - the number of individual term life insurance policies written by Legal & General in 2006, almost twice that of their nearest rival
FSA LIFE INSURANCE REGULATION AND ADVICE (sorry it's a bit long but we think it's worth the read!)
Our Bulletin no.6 from 2005 included the following section:
Advice v non-advice
LifeSearch is not looking for the non-advised (execution only) buying of life insurance and family protection products to be scrapped. What we are seeking is that those selling this way either offer advice or make clear that buying 'off the shelf' is not equivalent to buying with advice. To treat their customers fairly, we believe non-advising sellers should:
- Make clear that the customer will not be receiving advice and not make misleading statements such as 'we can help you choose the right life insurance policy and cover for you'
- Explain any limitations in the range of life insurance products offered
- Make sure that those considering ASU or Critical Illness Cover are at least made aware of Income Protection
- Point out that their customer loses the protection of the Ombudsman in the event they make a mistake
- Not pretend that 'covering your loved ones is simple'
We agree that customers can make an informed decision and buy on their own. However, we believe that customers must surely first be given the information with which to make that decision.
And our Bulletin no.12 from 2005 said this:
'You will not receive advice or a recommendation from us for life insurance and critical illness insurance. We may ask some questions to narrow down the selection of life assurance products that we will provide details on. You will then need to make your own choice about how to proceed.'
Warn your customers and readers to look out for this sentence when buying life insurance and protection. It is there in the small print and often hidden deep down in the websites. It is highly important because this sentence means no advice, which means the customer carries the can if they buy the wrong life insurance policy.
LifeSearch believes this sentence should be compulsory at the start of every non-advised sales process so that consumers know whether or not they are receiving advice. A clear warning regarding the complexities of critical illness and income protection and the loss of support of the financial ombudsman service should also be included in the message.
A lot has been said since and now we have FSA consultation paper 07/11 - Insurance selling and administration. Section 5.5 reads as follows:
'For all firms we are proposing a new requirement for a customer in a non-advised sale of a life insurance or protection product to be informed that he is responsible for ensuring the suitability of the product offered. Customers often believe they are receiving advice when this is not the case, and this new requirement is designed to make the position clear to them. It applies to all sales, including a telephone sales or a sale where information cannot be provided in a durable medium before conclusion.'
We welcome this move from the FSA which will no doubt cause concern for a number of non-advised sellers. And rightly so! This is good for advice, good for advisers and most of all its great news for consumers.
We would urge all non advisers to make sure their communications, both written and oral, are focused on the outcome the FSA want, sooner rather than later.
Protection press watch
This is a new section that we will include monthly that quickly tots up all the consumer life insurance and protection coverage that we are aware of. We're doing this because we're fed up of industry people who say there is never any positive coverage of life insurance and protection. You're wrong – there is. We don't see everything of course, but we'll know about most things.
By our reckoning there were at least 26 separate positive and fair consumer press articles on life insurance and protection in June, including articles in The Telegraph, Daily Mail, Mail on Sunday, Sunday Mirror, Sunday Express, FT andThe Scotsman.
Heroes of the week
Friends Provident
Who this week announced they will pay proportionate claims on life insurance and protection policies, for unrelated non-disclosure. Provided the non-disclosure is not related to the cause of the claim, and the application wouldn't have been declined at the start, Friends Provident will make an offer based on a proportion of the total claim. For example, if they would've doubled the premium at the start, they'll pay half the sum assured.
Legal & General
Who won Life Insurance Company of the Year at this year's British Insurance Awards.
Scottish Provident
Who have been awarded a five star rating by Defaqto for the second year running. Defaqto’s star rating is based on a number of considerations, including flexibility, additional features such as a buyback option and the scope of the definitions.
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