Yes, the days are getting shorter, the nights longer, the wind chillier and the warm fire in the local even more inviting. The high street is already stocking up on Christmas lights and novelty Santa stocking fillers and it's almost, but not quite, party season!
There’s lots to look forward to and the last couple of months has also seen much going on in the industry to bring good cheer and possibly a new future for the protection market.
The Law Commission’s recently proposed review of contract law has certainly got people talking and thinking about what the future could hold for protection – which is only a good thing. If implemented in its current format, we’d be hoping to see an increase in consumer confidence in a product that we all know desperately needs it. Along with a proposed three-year maximum look back period, flipping the responsibility of disclosure from customer to insurer, and introducing the concept of ‘no gain, no loss’ to all cases bar fraudulent ones, the Law Commission has taken some interesting steps. Nothing like a new set of eyes to get you thinking!
Imagine a double-page spread in the Sunday press: ‘Family in financial crisis saved by critical illness policy’. Sorry, I’m probably getting carried away there, but with increased consumer confidence and more claims being paid we should in turn see a shift in the type of media coverage we’re sadly all too used to seeing nowadays.
And onto another ‘reason to be cheerful’ (what we’d all give for a quick injection of capital to revitalise the market). A little bit extra that could help innovate products, embark on ‘whizz bang’ marketing campaigns and possibly reduce premiums. Too good to be true? Maybe. But the FSA’s paper on changing capital requirements should certainly be cause for some excitement.
The paper basically recommends that the amount of capital providers currently have to hold can be reduced, for example to take into account a prudent level of lapses. At the moment, insurers release these particular funds intermittently as cases lapse but the new proposals would release a large chunk of capital upfront. Such a cash injection could lead to new product or system development. And the relaxing of the capital rules could also mean that the cost of writing protection is cheaper going forward and barriers are reduced for new entrants into the insurance market. At the time of ‘blogging’, the consultation hasn’t closed so I’d suggest watching with interest as the outcome is likely to affect us all.
On reflection, the next couple of months - despite the wind, the jingles and the clocks going back - should certainly be looked forward to, for the protection industry there are interesting times ahead.
Nick Kirwan is protection market director at Scottish Widows.
The views expressed are those of the author and not those of the company he represents.IFAonline
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