Friends Provident today announced a deal with retail giant Tesco to distribute protection products direct to the consumer (D2C).
The "in principle" agreement with Tesco Personal Finance may see products including life insurance and income protection (IP) made available without professional financial advice before the end of the year.
It follows a growing trend of providers utilising the big-brand power of supermarkets to reach the mass market. Existing D2C distribution arrangements include life insurance deals between LV= and Boots, and Legal & General and Sainsbury's.
Previous moves caused uproar among advisers as retailers were discounting their commission from their product prices in a bid to pull in the customers.
Last month, Peter Le Beau, co-chair of the IP Task Force, told IFAonline providers "will probably need to go direct" if they want to reach the mass market.
Asda broke the mould last year by offering life insurance, critical illness and IP with the option of financial advice via broker LifeSearch.
Simon Clamp, Friends Provident managing director, UK, says it is "absolutely delighted" with the Tesco deal. "They [Tesco] were looking at the market and they chose us," he says. "We're really pleased." CEO Trevor Matthews describes the deal as "a very exciting development". The arrangement will bring Tesco's current deal with Direct Line to an end.
Friends Provident today said individual protection sales in Q1 2009 fell by £800k to £9.1m from the same period last year. Group protection sales doubled to £2m in the same period. Elsewhere, it said sales of life and pensions products fell 40% over the past year.
Earlier this month, Tesco announced group sales in 2008/9 reached a record £59.4bn - £1bn a week or £142.85m a day - helping the supermarket giant to annual profits of more than £3bn for the first time.
Current retailer/insurer D2C deals:
- Friends Provident - John Lewis
- Friends Provident - Tesco (in principle)
- LV= - Boots
- PruHealth - Boots
- Legal & General - Sainsbury's
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