News Review: Protection


Perfect design doesn’t mean perfect product


by Peter Le Beau, managing director, Le Beau Visage


It’s rare to see an actuary in a state of excitement. My mind goes back to a buffet I went to in the early 80s. It was a time when the coffee was accom- panied by a port or a brandy and my actuarial friend was waxing lyrical. Te source of his excite- Flexible Whole Life


ment?


Plans. He was describing them as “the perfect product”. I rather teasingly pushed him on why this might be and he retorted that it could meet all of a client’s needs just by con- suming units to buy life cover


or adjusting back to invest- ment as the insured’s circum- stances changed.


Acceptable in the 80s Tis was a good example of 1980s product think. Most of the enthusiasm for these plans was drummed up by reassur- ers who weren’t quite as clued up on marketing then as they were on underwriting and ac- tuarial product design. Every- body seemed to have one and they were used for mortgage cover, key man and all sorts of other uses—just like you’d ex- pect the perfect product to be. Flexibility was the watchword and yet there was a catch. My brother-in-law picked


up on this last year when at his premium review his pre- miums increased fourfold. He


is an intelligent chap. We went to the same educational estab- lishment and declined Cae- sar’s Gallic Wars and learnt about the foreign policy goals of Gustavus Adolphus togeth- er. I spent about thirty min- utes explaining the reasons to him before we both lost the will to live. If company direc- tors with successful business careers and degrees can’t un- derstand how these products work I suggest that most of the rest of Joe Public won’t ei- ther. Tat was a problem with a lot of the things invented in the 1980s - they didn’t age or travel well. Still the man who invented “Deely Bobbers” made a tidy short-term kill- ing even if they aren’t around anymore. Te problem is that I don’t


Welcome to the Abu Ghraib care home two out


by


Alan Newman, psychologist and


management consultant, The Finance IT Network


What names do you associate with long term care needs? If you work in or with the protection sector the chanc- es


are you’ll say Andrew


Dilnot, Baroness Sally Green- gross and Dame Jo Williams. Other names that might come to mind include Hon- eymead, Lime Trees, Oakfoss, Southern Cross or Winter- bourne: care homes where residents (inmates?) were abused. Tere are four other names


with which we should be fa- miliar: Arendt, Asch, Mil-


www.mortgageintroducer.com


gram, Zombardo. Te re- sults of their research tells us that “warehouses for wrinklies” are unlikely to be a major component in a civilised approach to long term care needs because abuse of residents is as likely to be the norm as it is to be the exception. Hannah Arendt covered


the trial of Adolph Eichmann and wrote a book about the Nazi war criminal entitled A Report on the Banality of Evil. She noted that ordinary folk following orders can and will do extraordinarily evil things. In the Milgram experiment


people were asked to give a subject an electric shock when the subject made a mis- take on a memory test.


actual fact the subject was not (In


receiving shocks but acted as if he were). About


of three people continued administering shocks to the highest level, 400 volts; and all participants administered shocks at 300 volts, designat- ed a danger level. In Zombardo’s prison ex-


periment, 24 volunteers were randomly assigned to either the prisoner group or


the


guard group. Prisoners were to remain in the mock prison 24-hours a day for the dura- tion of the study. Guards were assigned to work in three- man teams for eight-hour shiſts. Aſter each shiſt, guards were


allowed to return to


their homes until their next shiſt. Within a week the experi- ment was halted because the


think insurance products should date in this way. We think long-term in our busi- ness and we need to ensure that when someone claims on our policies they still do what we expected them to when we bought them - and they do it at the price which we signed up to pay. It’s apposite to consider this


as the simple products debate intensifies. Flexible whole life might have been seen as the perfect product but it certain- ly was nowhere near a simple product and I doubt if more than one in 100 of the people who bought it (and sadly a large number of those who sold it) really understood how it works. When you get com- plexity you get mis-selling concerns.


guards became abusive and the prisoners began to show signs of extreme stress and anxiety. Not surprisingly the Mil-


gram and Zombardo studies are controversial and would probably not be allowed to- day. But caveats notwith- standing,


the work of these


people shows that a mixture of obedience, conformity, and abuse of authority are likely to be a toxic combination. Te bottom line: sadly, it’s


whether a prison like


Abu Ghraib or a care home in the UK, we should not be surprised at reports of abuse. To misquote John Philpot Curran:


“Te price of dig-


nity for the elderly cared-for is vigilance”. And vigilance is expensive.


MORTGAGE INTRODUCER OCTOBER 2012 23


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