Scottish Widows has pulled its protection quotations from industry portals, prompting concerns it too has effectively exited the protection market following Standard Life's departure earlier today.
Richard Jones, the firm’s protection market director, says “market conditions and our current protection focus” meant the move made “economic sense”.
The firm, which says the move may not necessarily be permanent, will now focus its distribution through Lloyds TSB bank.
Earlier, Standard Life announced it is withdrawing from the UK protection arena, saying a “fiercely competitive” pricing market and other factors had rendered its proposition non-profit making.
Previously, Scottish Widows provided the electronic quotations through six industry portals, including The Exchange, Assureweb and Webline.
Market commentators described the move as “effectively” pulling out of the protection market.
Richard Jones, protection market director for Scottish Widows, says: “We have conducted a detailed review of our protection offering across all distribution channels and as a result have decided to withdraw the protection quotation service from industry portals.
“We have not taken this decision lightly, but market conditions and our current protection focus means it makes economic sense for us not to continue with the provision of quotations via industry portals at this time.”
Today’s announcements have re-opened the debate surrounding the nature of the UK protection market, in particular the effect an apparent “price war” is having.
Roger Edwards, product director at protection specialists Bright Grey, says it was “inevitable” providers would end up pulling out of the market.
“There’s no getting away from it: we are competing in an extremely competitive price-driven market,” he says.
“The price war has been going on for some time and I think it probably was inevitable [that a provider would pull out of the protection market].
“Prices continue to go down, but demand is not going up. Perhaps today we have seen the first company to say: ok, it’s time to bail out.
"We have got to shift the emphasis away from price.”
However, others say price competition is an inevitable byproduct of business culture and can be good for consumers.
Mark Locke, press relations manager at AEGON UK, says: “For as long as I have been in protection, people have been talking about a price war. But we have to remember that price is an important factor in protection. Saying there is a price war is a bit of an exaggeration.”
Andy Milburn, IFA market manager at progress from Royal Liver, adds: “It won’t make much difference to the protection market or to the IFA because they [Standard Life] were not writing a lot of business.
“Scottish Widows has effectively withdrawn from the market as well."
020 7034 2636
£300bn of liabilities
View from the front row
Transfer from occupational scheme
Appointed by FCA and PSR boards