The Power Hour
market because there are so many products out there from so many different providers. It comes down to giving the client the cover they want at the price they’re prepared to pay. Whether you’re offering a single provider’s product or whether you’re offering a product from five providers, 10 providers or 20 providers, it makes no difference. As long as you are transparent with that client, what you offer and why you offer it, you’re demonstrating advice. P Brodnicki: I think it comes back to the quality and the commitment of the broker. Until about three years ago we were just sole-tied to a great provider but the perception was that multi-tied was better and we set up the option of a panel for our brokers. We still have advisers in the sole-tie arm producing great penetration rates. In fact, I’d say the more choice the more advisers chase on price. As long as the product you’re selling, the policy and the advice you’re giving is good and you’re listening to what the client needs I don’t think the number of providers makes a difference. RS: I have seen some good examples in the last couple of years where a single tie works very well because you can train it in and make sure that people sell it well. That means the customer ends up understanding what it is they’ve got much better. Sometimes going across the whole market is so complex it may not give the customer the same level of understanding of the product. As a consumer myself I rarely buy the cheapest thing on the market because I buy things that I think might last a bit longer and are a bit better quality. But there are also those want to buy the cheapest. One is not right and one is not wrong. I think it’s about there being choice and people should be able to choose who they wish to interact with.
THe number of Providers in THe ProTecTion markeT Has droPPed significanTly in recenT years wiTH THe consolidaTion of life offices and THe closure of several brands. wHaT if anyTHing Has THis meanT for THe markeT? PJ: Undoubtedly there’s been a fall in the number of providers in the market but I would challenge whether the top five or ten has shrunk significantly or whether we’ve still got a strong top five or ten providers. Some big brands have been bought out but others have come back into the protection market. My perception also is that competition continues to intensify no matter what the size of that market. GH: I’d say there is enough competition in the market to ensure that the prices are structured correctly. There needs to be continued innovation in the market and I think it is happening. Providers are always looking to innovate and do something different to give us that edge.
TradiTional criTical illness Policies ofTen don’T Pay ouT on diseases if THey aren’T advanced or severe enougH buT severiTy-based PayouTs are becoming more common wHere THere cusTomer can claim a PercenTage of THeir cover if THe illness is early sTage. sHould brokers be advising on THis TyPe of Policy if THe PayouT migHT noT cover THe wHole of THeir morTgage for examPle?
PJ: Those of you that know the PruProtect plan won’t be surprised to know that that’s what we’re all about, severity-based cover. Essentially if your customer comes to us with a cancer claim we don’t say: “Unlucky, not quite severe enough you get nothing.” We look at where their illness is on a scale and we’ll pay up depending on the severity. That opens up the door to multiple claims and ongoing conditions being covered so we think it’s an evolution of where critical illness has been in the last 20 or 30 years. The argument I’ve heard against it once or twice from the industry is that it sounds a lot more complicated than critical illness. But think of it in terms of car insurance. I’m driving my car on the road and someone bangs into the side of me and dents my door. I don’t expect a brand new car the next day, I expect the door to be repaired and my insurance will cover it. If the whole thing gets stolen I would like it all the money because I need to replace the whole car. So for consumers and the brokers, this is a very straightforward product. It’s just a fairer way of doing things. If a customer has got cancer, you’re not going to say: “Yes you have, but it’s not critical.” Your customer will perceive that the cancer they’ve been diagnosed with is critical to them. RS: I think it comes back to understanding the product and understanding what suits the customer because some customers will want full cover and others will want something that’s a bit more flexible. I think the debate behind that ultimately goes back to, it’s good to see a range of different products because that then gives us the choice. The difficulty that comes is making sure that the customer understands their limitations and that’s where it becomes the need for lots of educational training. n
42 mortgage introducer JUNE 2011
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