Bulletin 29, 2006
Round up
0 - no life insurance rate changes again this week.
5 - the number of health events relating to the life insurance industry in November, including lung cancer awareness month.
15.7% - in relation to critical illness, the drop in cancer mortality rates in those under the age of 75 since 1996, according to figures from the Department of Health.
35.9% - the drop in cardiovascular disease over the same period.
PTA, regulation and advice
We have said before that Pension Term Assurance is complex and should not be bought without advice. However, the recent suggestion that it is too complex for ICOB advisers to advise upon and that customers should only be able to buy with COB advice or no advice would, by default, cause the majority of consumers to go it alone, with a complete lack of protection if they get it wrong and only general information on which to base such an important decision.
In short, what is suggested is exactly what Money Marketing’s award winning ‘No Advice No Protection’ life insurance campaign is aiming to protect innocent consumers from.
Advisers are trained to assess the client’s situation and should have basic Treating Customers Fairly procedures in place, often at different stages of the decision and application process, to ensure that the very small number of consumers who might be affected by the pensions limit do not get caught out. If Pension Term Assurance was suitable at the time, however, circumstances have changed; most life insurance providers now offer an automatic switch out option. In reality, there is no realistic chance of the average man being caught out and therefore in the current environment Pension Term Assurance4 is likely to be the best solution for the mass majority, and where not, the Ombudsman will decide.
However, we believe it is wrong to suggest that the life insurance industry should leave consumers up in the air and the lack of consumer protection regarding the suitability of their purchase is exactly why consumers should take advice – and why ICOB advisers should give advice. We are, after all, a service industry driven by our customers and their need for life cover.
Regulating life insurance as a pension would deprive the public of access to what is likely to be the best value life cover they can buy – and this would not help to close the protection gap. The FSA understood this when they first considered the matter. They made the right decisions then and should stand by them.
LifeSearch expands in Leeds
We will be opening a third office in Leeds in Q1 2007. The office will operate in the same way as our existing London and Milton Keynes operations with it’s own manager, life insurance advisers and life insurance support staff.
Comments of the week
‘LifeSearch has built a life insurance model that is quite capable of rapid expansion and it seems wise to undertake a major part of this expansion in a place renowned for the quality of its job candidates and life. The fact that I have supported Leeds AFC since 1975, when as a boy I listened in Cape Town South Africa to the BBC broadcast of the European Cup final and wept in rage at the unfairness of it all, has nothing to do with our decision.’
Tom Baigrie,
Managing Director
‘Providers should design life insurance industry products for specified target markets identifying consumer types for whom the life insurance product is likely to be suitable or carve out consumer types for whom the product is not likely to be suitable...’
‘Providers should keep the quality of distribution under review at a high, strategic level. This could include consideration of sales volume in relation to the expected size of the target market and of whether a distribution channel remains appropriate for the life insurance product being sold.
Sarah Wilson,
FSA Director, Speaking at the annual TCF conference last week
LifeSearch says…
Think about the supermarkets, websites and mortgage brokers selling life insurance and protection products, perhaps your products, and then ask yourself, ‘Is selling just life cover to a single mortgagee with no dependents under the banner of simple family protection really suitable?’
LifeSearch’s target market has always been anyone in the UK who needs financial protection, and not just anyone. How many other distributors can generally say the same thing?
Heroes of the week
The winners from Scottish Widows’ first ever IFA Awards held at the Royal Courts of Justice last week:
- Lifetime achievement - Ken Davy of SimplyBiz
- Industry initiative of the year - Tom Baigrie of LifeSearch
- IFA newcomer - Anthony Williams of Evolve Financial Planning
- Personality of the year - Tom McPhail of Hargreaves Lansdown
The award was presented to Tom for the 'No Advice, No Protection' life insurance campaign. The judges also commended LifeSearch in calling for full underwriting for Critical Illness Cover so that claims cannot be declined for non-disclosure.
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