News Review: Protection
January snowstorm did not freeze optimism
positive signs that should give monthly renewable contract, allows the insurer to review
by
Kevin Paterson
the mortgage industry and and premiums are driven in premiums in the future in
sales &
those selling protection prod- large part by the claims ex- line with their own claims ex-
by
marketing ucts some cause for cheer. perience of the insurer. un- perience. i remember selling
John Smith
director
one snowstorm persists surprisingly, unemployment these plans in the early ‘90s.
xxxxxxxxx
Assurant
specifically in the mortgage insurance is directly linked many insurers at that time
xxxxxxx
Intermediary
payment protection market: to unemployment figures and withdrew their reviewable
Britain’s maritime tem- premium increases. cost is they have risen steadily over policies as they expected a
perate climate means that one of the key reasons that the past 18 months. wave of claims in the next de-
we usually experience mild people fail to take out mPPi. insurers have an obligation cade from the forecast aidS
changes between seasons Sadly, cost of cover has be- to ensure the pool of funds is epidemic which, thankfully,
rather than extremes. not the come an issue for insurers sufficient to meet all claims. never happened.
case this winter, with Janu- and a cause for confusion Where funding levels are the increase in unemploy-
ary delivering the longest and amongst intermediaries and depleted by an increase in ment claims forced insurers
most widespread snowfall for their customers. claims, the insurer has to ad- to review terms and con-
many years, causing untold the assurant intermedi- dress the shortfall. there are ditions and pricing. Some
disruption to practically every ary team has received a lot really only two options avail- chose to introduce changes
area of the country. Should of calls from brokers whose able: increase the number of to terms and conditions; most
we really have been that sur- customers are confused as to claims that are rejected or put their prices up. But both
prised given the economic ex- why their mPPi premiums increase premiums. despite courses of action drew the
tremes that the credit crunch went up, then down, and have what many people think, in- attention of the regulator.
and resulting recession deliv- started to increase again. So, surers do pay all valid claims, concerns raised by the FSa
ered? to clear up any confusion, let’s so the first option is not really about variation and cancel-
i can’t have been alone in take a closer look at what’s go- viable. Premium increases, lation clauses in mPPi poli-
thinking that it was a case of ing on. however, also are difficult to cies led to discussions with
the fates trying to deliver a Whatever your own per- implement. So, most insur- the key trade associations,
knock-out blow to the faint sonal view of accident, sick- ers seek to offset losses with including the association of
signs of recovery in the hous- ness and unemployment a measured increase as well British insurers. this resulted
ing market towards the end insurance (aSu), it is prov- as calling on reserves built up in an agreement centred on
of 2009. However, it appears ing its worth to thousands of when claim rates were lower. insurers to refund any in-
that things are slowly starting claimants around the country this is not a new phenom- creases in premiums and
to get better. official statistics right now. as the economy enon. For those of you who reverse any reductions in
released at the end of Janu- continued its downward spi- have sold protection policies, cover for customers who
ary told us that Britain had ral, insurers experienced a you will be familiar with re- experienced changes to their
finally crawled its way out of significant rise in unemploy- viewable term policies. For policies in 2009. the FSa felt
recession. While it’s a frag- ment claims on payment pro- a slightly lower premium, that terms and conditions
ile recovery, there are some tection insurance. aSu is a clients have a life policy that issued by insurers did not
adequately specify that
Protection advisers buoyant as confidence nullows
premiums could increase in
future. only after issuing new
Legal & General’s fifth report in a quarterly series nulle most significant change is in advisers’ terms and conditions can in-
looking at IFA confidence levels in the protection vienull of the opportunities to talk to people surers increase premiums.
industry shonull that advisers have experienced about protectionnullnullich has become much those increases are now
a bounce in confidencenull more positivenull starting to trickle through to
customers.
mortgage introducer march 2010 13
MI p13_0310.indd 1 23/02/2010 10:58
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