News Review: Protection
Gender ruling could be a positive for industry by
Kevin Carr chief
executive of the Protection Review and MD of Kevin Carr Consulting
the european court of Jus- tice ruled last month that policies written on the basis of gender constitute discrimi- nation and that the insurance industry has until the end of 2012 to adapt. most of the initial reaction
to the news has been negative with television news reports and the national press queu- ing up to ridicule this latest example of european inter- ference in our affairs. the na- tional media, as expected, fo- cused on car insurance and to an extent on annuities but the life insurance sector didn’t re- ceive the coverage it deserves, especially as women are likely
to lose out most when the cost of life cover begins to rise. However, some positive
views are already emerging. Firstly, while some protection providers might have had to pull their quotes temporarily if the ruling had been imme- diate, a few others were ready to hit the market with newly priced protection products. Secondly and more impor-
tantly, the removal of gender as an underwriting factor could drive some of the most innovative and forward think- ing underwriting changes the industry has seen with poten- tially greater use of occupa- tion, lifestyle, post code and more in years to come. that said the industry re-
mains unsure exactly how policies written between now and december 2012 will be treated. What is more, while the industry could turn the
Property remains the top protection trigger
Research from Scottish Provident shows pur- chasing a property remains the main reason why clients take out protection with over nine out of 10 IFAs considering it a major reason. The survey, which was conducted among over 900 IFAs, found the second most common trigger for clients taking out a new protection policy is because they have had children (80%), while nearly three in five (57%) said it is because their client simply wants peace of mind about the future.
Just one in 10 IFAs said their clients enquire about unemployment benefit ahead of other protection products.
While a quarter of all IFAs surveyed (26%) stated that their client enquired about protection when they had just lost their job, only 6% said previous financial difficulties were the reason their client sought protection products. Given that mortgages remain the key protec- tion driver it is no surprise that sales of individual protection products are roughly half what they were around five to 10 years ago before the mortgage market and wider economy suffered. Despite this fall in sales around one million people a year still buy basic life insurance in the UK and the rates available for most people continue to fall.
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“The removal of gender as an un- derwriting factor could drive some innovative and forward think- ing underwriting changes”
gender ruling to its advantage the question of where the line will be drawn remains a threat as there is another di- rective in the pipeline which relates to age and disability as well as religious beliefs. if a similar outcome is
reached we will see more chaos across the financial services industry - chaos that could completely re-write the protection industry as we know it.
News in brief • British Friendly has launched
a new Income Protection plan for intermediaries • Ageas (Fortis) was the main winner at this year’s LifeSearch Awards with three successes, including overall provider of the year. • PruProtect has launched seven new protection products including Education Cover and Family Income Cover.
• LifeSearch has called on the Treasury and the Association of British Insurers to fight against the ECJ ruling to ban the use of gender in pricing products. • The closure of Click, the protection distribution business, cost Ageas £5.6m linked to lapsed policies. • Aviva life and pensions sales rose 16% in 2010. • Yorkshire Building Society has reduced its mortgage protection insurance rates. • The ABI has revamped its Critical Illness statement of best practice definitions for Total & Permanent Disability. • Liverpool Victoria has improved its Critical Illness and Income Protection products. • Ageas’s protection arm saw a 90% yearly increase in protection customers, resulting in new annual protection premiums up 52.3% to £22.7m.
19 May 2011, Old Trafford, Manchester
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www.mortgagebusinessexpo.com/manchester Quote priority code MIM1
mortgage introducer APRIL 2011 15
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