Providers offering process short cuts and adviser incentives may be driving competition, but this will not build a strong distribution model in the long-term, Aegon's Alun Beynon says.
The company's head of sales and distribution says all the major players are pushing for market share at a time when supply is exceeding demand and distributor numbers are falling.
In such an aggressive market, a careful balance is needed between making it easy for distributors to deal with providers, and making it too easy, says Beynon.
"Providing process short cuts and distributor-focused incentives will only serve a certain section of the protection market and is unlikely to support the long term objectives of a robust distribution model," he says.
Providers are working to make themselves more attractive to advisers by slashing premium rates, upping commission and suppressing commission disclosure - "which flies in the face of transparency", Beynon says.
In addition, others are offering reducing earnings periods, running a signatureless process, and by simplifying the application procedure using, for example, Big T underwriting.
While combining all of these elements may make for a compelling proposition for distributors, Beynon advises caution over relaxing risk controls.
He says: "When things sound too good to be true they usually are. The overriding consideration must be: does the customer understand the product? Has the customer been properly assessed? Will the policy pay out in the event of a claim?"
Nevertheless in 2010, Beynon predicts finding more effective and efficient ways to write business will be a key driver of innovation in the protection market.
But more stable support for robust future distribution channels will be engagement in new markets and finding new ways to add value, which will move from being "only spoken about" to being "actioned" this year.
"We need to get IFAs breaking old habits now, not waiting for 2012," he says.
Advisers are missing out on one key business opportunity by failing to build solid professional connections with accountants and solicitors, recent independent research commissioned by Aegon suggests.
Beynon says: "The trust people place in the judgement of accountants and solicitors to help them make crucial decisions could benefit advisers, if the professions recommend an adviser's services.
"The client is more likely to follow up and seek financial advice based on this type of referral, leading to genuine growth in the market."
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