News Review: Protection
Time for protection to move on by Kevin Carr,
chief executive of Protection Review
and MD of Kevin Carr Consulting
Advisers who know their protection from their re- jection know that when it comes to income protection ‘own occupation’
policies
are the ones to have. The validity of other defi-
nitions, such as list-based versions including work tasks and ‘activities of daily living’ have been questioned for many years. But the de- mand for change is gradual- ly becoming stronger: we’ve seen calls from intermediar- ies, industry surveys and de- clined claims in the media. While the majority
of
policies in force are based upon the better ‘own’ or ‘suited’ occupation defini- tions, where claims are typi- cally paid without fuss, some people, generally those with more manual or stress- ful jobs (including teach-
ers, nurses, drivers, manual workers etc) may have a different definition, such as work or living tasks, which are harder to claim upon. Advisers should always
seek out the better defini- tions wherever possible, and those who already have a policy should check their details.
“It is important that all genuine claims are paid quickly so that consumers have complete trust when taking out such an impor- tant policy”
IFA Roy McLoughlin of
Master Adviser, who also sits on the Income protec- tion Task Force, agrees: “In- come Protection sits at the
head seat of the protection insurance table because it is the claim that statistical- ly is most likely to happen compared to critical illness cover and life insurance. It is therefore important that all genuine claims are paid quickly so that consumers have complete trust when taking out such an impor- tant policy. However, some- times the most suitable poli- cies are not available on a direct basis, which is where advisers can add real value.” Offering an own occupa- tion product for everyone could price some people out of the market. However, as somebody once said: I’d rather pay more for some- thing I need, than less for something I don’t – and if the policy isn’t going to do the job, it frankly doesn’t matter how cheap it is. Ideally what the indus-
try needs to do now is find a fairer and more robust measurement that doesn’t impact too much on the price.
Oh, what a night! Late December 2012…
Confusion still reigns across the protection industry about just what exactly will happen regarding the implementation of the ECJ gender ruling as well as other legislative changes, which take place at the end of the year.
December may seem like an age away, but advisers should already be thinking about how the changes will impact their business – both before and after the event. In the run-up to December things may get very busy as people try to rush business through
before the expected price increases take effect, especially for cases which need underwriting. And after the price increases re-broking old business to save money could be a thing of the past, which could impact significantly on a number of business models. As of right now, the industry doesn’t yet know how changes to existing business will be treated, how GIO options will be impacted (guaranteed insurability options), whether or not the policy needs to have started or a future start date agreed and so on. We may even see ‘pink’ and ‘blue’ products, which in theory would be available to both sexes and priced the same, but clearly aimed at one sex – such as breast or prostate cancer CI product. What we do know, is that Q4 2012 is likely to be much busier in the protection market than Q1
2013. 20 MORTGAGE INTRODUCER APRIL 2012
News in brief
• More than a third of people going through incapacity benefit reassessment have been found to be fit for work, according to the first set of official statistics • Scottish Provident paid £90m to critical illness policyholders during 2011, with 91% of all critical illness claims paid • 2011 saw Legal & General’s risk division deliver solid performance with operating profit of £561m (2010: £560m) • Aviva has reviewed its IP occupational classes resulting in 95% of new clients being offered own occupation for income protection
• PruProtect sales leapt by almost a third last year to £31.4m from £23.9m in 2010
• More than a quarter of mortgage advisers are unaware that from April 2012 they will not be allowed to sell ASU style insurance products at the point of sale of a mortgage, according to LV=
• LifeSearch has warned against poor industry selling practices and the “laissez faire approach to the quality of distribution” by providers • Aviva UK life insurance operating profits increased by 8% to £920m in 2011, double the level six years ago • Ageas Protect has confirmed its new management structure, with Darren Spriggs replacing Martin Werth as managing director • Aegon UK paid out 93% of CI claims in 2011
www.mortgageintroducer.com
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