The chief executive of the Protection Review rates this month's developments in the protection market...
Mortgage intermediaries investigated over protection sales
Fears of an increase in commission-led protection sales have caused the FSA to review the sales standards of pure protection products sold by mortgage intermediaries.
In its recent RDR consultation paper, FSA says it is concerned by the movement of intermediaries into product areas where they have little or no experience and will be reviewing the sales standards of pure protection products by mortgage intermediaries, which is fair comment.
However, while some advisers have criticised the regulator for targeting smaller practices when it should concentrate on bigger players (banks), the most important issue is that many people have taken on more debt than ever before, which needs protecting against ill health and redundancy.
I’ve said before it is quite difficult to mis-sell or even over-sell proper protection products (few claimants complain about having too much cover) and, while the debt probably should have been protected at the time, it will be a case of ‘Better late than never’ for many. Verdict: TBC
The Income Protection Task Force (IPTF) is going on the road with a series of adviser seminars across the UK to educate advisers on the need for IP and its importance as part of the financial planning process.
Many advisers say IP should be customers’ first protection priority. But sales lag far behind that of life cover and critical illness. Let’s hope these roadshows really help to raise the profile of IP. Verdict: Up
New ABI director general Kerrie
The new ABI director general, Kerrie Kelly, will be the keynote speaker at this year’s Protection Review dinner on 15 July. Kerrie will join a list of outstanding speakers at the event, including the CEOs of Friends Provident and Aegon UK. Verdict: Up
Aviva is piloting a system that lets advisers sell customers ‘top-up’ protection after asking them just a single question.
Much of the success in the over-50s protection market has been down to a simplified repeat sales process where people who bought once, usually quite recently, are given the chance to top up their cover without all the hassle of starting again.
Many of us have said over the years that this process could benefit the mainstream protection industry greatly and so I hope Aviva’s trial is more than successful. Verdict: Up
Total premium disclosure
If, when about to buy your last car, the salesperson pointed out exactly how much you would spend on petrol and car insurance over the lifetime of owning said vehicle, what might you think?
If you think this sounds rather wise, then you will be in favour of this particular FSA requirement. It not then you, like many within the protection industry, might feel it’s a bit over the top. You may also think it could put some people off buying the cover they need in the first place.
Last month, the Association of British Insurers (ABI) issued guidance on how insurance providers should disclose the ‘total premium’ for individual long-term pure protection contracts.
In a nutshell, anyone selling protection will need to tell the customer the total premium over the term of the contract at the start. But there seems to be no evidence suggesting consumers would benefit from this change. This really is a pointless exercise that could easily be ignored if it wasn’t for the potential negative effect that such information can produce. Verdict: Down
What made financial headlines over the weekend?
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch