News Review: Protection
Out of favour PPI should drive innovation
by Kevin Carr, chief executive of the Protection Review and MD of Kevin Carr Consulting
While the trend to fine firms for payment protection insurance mis-selling seems to have faded, the legacy very much remains. it is hard to avoid those “Have you been mis-sold PPi” adverts on tV and the British insurance Brokers association recently claimed PPi mis-selling had caused a 70-fold increase in Financial Services compensation Scheme levies for some insurance brokers. andrew tripp, chairman of
the association for medical insurance intermediaries, agreed in a comment made earlier this year: “this increase is on top of an eight-fold increase last year and is mainly a result of compensation payments for PPi misselling. “as almost all amii members never sold any of
these policies, it is unfair that they are footing the bill on an equal basis. this huge increase has come out of the blue totally and will have a serious impact on many intermediaries.” it also seems somewhat
ironic that the industry is seeing a push towards simplified
products
combined with a possible return to the compulsory purchase of protection products on mortgage loans when the competition commission’s ban on selling PPi at point of sale comes into effect in april 2012. innovation, change and product development, however, appear to be stifled nonetheless. mortgage adviser and protection expert dean mason, of mason’s Financial Planning, agrees: “the PPi market has had to evolve and re-invent itself in recent years but i’d question whether much has really changed. as an add-on to iP policies it works and additional back to work
Ageas Protect and L&G top
protection system ratings Ageas Protect and Legal & General have finished joint top in an independent survey of protection providers’ online systems. The results benchmark 48 different areas of life office propositions including areas such as new business submission, functionality, pipeline track- ing, policy servicing and other online tools. IFA Roy McLoughlin, of Master Adviser, said:
“An IFA’s day is increasingly taken up by admin- istration and any systems which allow business to be transacted smoothly and quickly will always be appreciated. “ Each provider was measured against the same objective scoring model for each specific area on
16 mortgage introducer MAY 2011
benefits are a nice touch, but little else has changed in my book.” as does HSBc’s director
of Life, dennis Smith: “on the proposition side there have been lots of attempts at innovation and turning the proposition into short-term income protection but little genuine progress.” When the investigations
and fines finally began to arrive many of us thought - in fact assumed - that the less consumer friendly elements of PPi would become a thing of the past, and that everyone would start selling income protection overnight. How naive we were.
it’s never that simple and although some have moved down this road with varying forms of simplified and limited payment period iP / StiP, iP sales continue to fall. martin Sincup of LV=
believes lessons can be learned about simplicity and volume: “the protection market can learn from
the basis that they either have the functionality in question – or they do not. There are no subjec- tive or opinion based elements to the scoring process. Ian McKenna, managing director of technology
consultants F&TRC, said: “For the first time in the history of our e-Excellence research, two com- panies have tied for the top spot. Ageas Protect and Legal & General both have clear blue water between themselves and the rest of the market.” Eleven providers took part in the survey and
were ranked as follows: Ageas Protect / Legal & General; Friends Provident (now Friends Life); PruProtect; Friends Life (formerly AXA); Bright Grey; AEGON; Bupa Health Assurance (now part of the Friends Life group); Aviva; Zurich; Scottish Provident.
m/PPi that protection can be sold in volume. the simplicity and ease of taking it out (little more than ticking a box) was key in this and there is clearly a link between this type of cover and customer anxiety, especially when it pushes the button at the right time.”
News in brief • LV= has reduced its reliance on GP reports for underwriting by 50%
• L&G announced it paid 93% of all income protection claims in 2010
• Pink has launched a new protection panel consisting of Aviva, Bright Grey, Legal & General, LV= and PruProtect • Scottish Provident paid 98% of life cover claims in 2010 • Holloway Friendly has launched a new income protection plan for mortgage advisers
• Royal London has agreed to potentially buy the Progress protection back book busi- ness as part of its deal with parent company Royal Liver • Aviva paid almost 95% of critical illness claims and 99.6% of death claims last year
• National Friendly has withdrawn its 5-year fixed healthcare and healthguard products for sale to new customers • Abolition of life assurance premium relief could lead to higher premiums or reduced coverage for around 1.5 mil- lion policyholders.
• PruHealth has launched a quote and application iPad app for its new healthcare plan
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