News Review: General Insurance


A new dawn for Payment Protection Insurance


by Kevin Paterson, sales and marketing director, Assurant Intermediary


Should the market have been surprised by the decision by the Lloyds Banking group to pull out of selling payment protection insurance across all its brands and products? Possibly not – after all, it is following in the footsteps of some other lenders although its decision is the most drastic measure to date. the bank has stated


that its decision reflects the uncertainty around the regulation of PPi sales and processes. it believes further changes in regulation will make it uneconomic to continue to offer these products in their current format. the


competition


commission will publish its final decision on whether to implement the point-of-sale prohibition on non-retail PPi amongst other measures in the early autumn. However, it


A QUESTION OF COST


The price of insurance is always an influenc- ing factor amongst consumers. The rise of the comparison sites has commoditised the major- ity of personal lines insurances, and I would be interested to find out just how many people buy on price without ensuring the policy is the right one for them.


The fact that insurance premium tax is going to rise by 1% as of 4th January next year isn’t going to help intermediaries. The British Insur- ance Brokers’ Association has voiced its con- cerns that increases to premiums as a result of the hike in IPT could lead to further underinsur- ance or even a lack of insurance protection. However, research from Deloitte brings a little


12 mortgage introducer SEPTEMBER 2010


comfort. The results of its third annual insur- ance survey shows that fewer consumers are expecting to make spending cuts at their next renewal date than last year. Only 4% said they would consider stopping their contents insur- ance compared to 13% last year, only 6% said they would consider stopping their payment protection insurance compared to 11% in 2009.


Consumers however show little loyalty to


insurers with over a third having changed insurer to save money. So clearly your clients recognised the need for insurance but are in the mood to shop around – why not take every opportunity you can to help them?


announced in may that it had provisionally decided that consumers would benefit from the introduction of the proposed prohibition on all forms of PPi bar retail. it is now consulting on changes to the way retail PPi is sold. the Financial Services


authority has also recently announced policy changes introducing a range of reforms to PPi with the aim of protecting customers, and ensuring they are treated fairly whether they are buying or complaining about PPi. the measures announced last month must be implemented by december 1st this year. the decision by Lloyds,


however, caused a rush of comment from consumer organisations claiming that it was the final nail in the coffin for this type of insurance. i disagree. i believe consumers will always benefit from some sort of insurance protection designed to help them meet their financial commitments if they happen to be off work through sickness, accident or unemployment. these core


triggers are never going to go away. arguably, the threat of unemployment is only going to increase over the coming months as the extent of public sector cuts is announced. For some, protection covering a specific repayment may still represent the best option. However, there is no doubt


that there have got to be changes to the way this type of protection is designed and sold – not the least because we live in a very different world to the one that it was first introduced to back in the 1970s. But that doesn’t mean we should throw the product out altogether. the volume of claims that insurers have experienced since the credit crunch first took hold three years ago bears witness to the very valuable lifeline it can offer. i believe that we’re going


to see a fundamental shift in how payment protection is underwritten aligning it more closely with how most personal lines insurances such as buildings and contents are rated. at assurant intermediary, we’ve


pioneered this approach and recently launched our new range of mortgage payment protection insurance which generates a premium that accurately reflects each individual


consumer’s


risk profile rather than considering them part of a pool of risks. We believe this move is likely to reduce the need for sudden price hikes seen recently.


THE OPPORTUNITY IS THERE


A piece of research carried out by an industry magazine into the protection market last month showed that out of over 1000 consumers polled, 34% felt that if there were to lose their income, they could not survive financially for more than four months. We know there are heavy job losses to come in the public sector. The Office for Budget Responsibility expects that some 600,000 could go over the next six years. While we have to wait for the Spending Review on October 20th for the government to announce exactly where cuts are going to be made, intermediaries shouldn’t delay getting in touch with all their clients to discuss what protection they have in place. Although public sector workers have traditionally received more generous payouts than the private sector, the level of cuts will have a knock-on effect and no-one will be immune from the threat of redundancy.


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52