News Review: Protection Protection premiums could rise by 10% in 2012
by Kevin Carr chief executive of the Protection Review and MD of Kevin Carr Consulting
Protection premiums could rise by up to 10% if Hm rev- enue & customs proceeds with its proposed changes to the way protection products are taxed. Speaking at the recent Pro-
tection review conference in London, grant thornton senior actuarial consultant nigel cooke predicted the tax implications could force insurers to raise their premi- ums. cooke said: “if Hmrc
quite logically decides that pure protection should not be within the basic life in- surance tax regime, it prob- ably means that for a large number of insurance writ-
ers those premiums will rise by 5 to 10%, before anybody adds insurance premium tax to that. “the government would
be making it more difficult and unattractive for people to protect themselves, which i do not think is what they want.” the move would impact on
life policies, including those which combine critical illness cover with life insurance, but not stand alone ci or income protection products. as a result some experts
now predict a fire sale in the protection market, while oth- ers have begun to question the non-advised sales model, which relies heavily on falling prices. if prices are pushed up by 5-10% the market could see a reduction in new sales as fewer people would be able to switch their cover to save money.
RDR only just survived The FSA considered scrapping the retail distribution review at a board meeting in March this year but decided to continue with plans for fear of “losing face”, according to a key-note speaker at the recent Protection Review conference. Lansons director of regulatory consulting Richard Hobbs, said
the FSA came close to scrapping the RDR as recently as four months ago and claimed the regulator is “not particularly proud” of it. Hobbs told delegates that he expected the RDR to continue,
despite rumours to the contrary, after it was announced the FSA would be replaced by a prudential regulatory body at the Bank of England and a new Consumer Protection and Markets Authority. He said: “As for the RDR, I guess that will continue to
completion. There are a great many rumours around the market that the RDR is to be pulled - I think that is completely untrue.
Key points from the 2010 Protection
Review conference 2010 Consumer research highlights, in association with Hannover Life Re (UK): • 26% of people fear the NHS will decline post-election • People overestimate the amount of cover they hold – just 37% feel their protection cover is insufficient • Lower socio-economic groups still have the greatest interest in protecting their family and lifestyle • 31% of people with mortgages hadn’t thought about buying life cover • Younger generations are worried about funding parents’ long term care (27%) • Overall levels of trust are not diminishing (76% expressed a level of trust, 3% higher than last year) • 34% feel they could not survive financially for longer than four months
2010 Industry research highlights, in association with the Personal Finance Society and Fineos: • 52% said RDR will result in more advisers specialising in protection • Significant increase in respondents focused totally on protection (up from 0.8% in 2009 to 5.9%) • 37.5% of those surveyed
expected to write more protection in the next 12 months • Advisers are divided on the impact of technology but around a third have significant expectations of it • Better and faster service (82%) matters more than marketing support (60%) and technical training (52%) • Price (46%) narrowly beats good adviser communication (39%) and innovation in design (32%) as the key element in a new product
2010 Protection Review Award Winners • Innovation Award in association with Gen Re WINNER: Exeter Friendly • Online user experience effectiveness award in association with Space01 WINNER: Bupa • Individual Protection Adviser of the Year in association with PruProtect WINNER: Roy McLoughlin, Master Adviser • Organisation of the Year in association with RGA WINNER: GRiD (Katharine Moxham) • Underwriter of the Year in association with Risk Assured WINNER: Zurich • Protection Intermediary of the Year in association with PruProtect WINNER: Direct Life & Pensions Services
mortgage introducer SEPTEMBER 2010 11
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