I write this as we await the initial outcome of the regulator’s investigation into the protection industry. Whatever the recommendations may be, I hope they result in more consumers being better protected.
If it didn’t already exist, and we were building the protection insurance industry for the first time, I suspect many things would be different.
A blank canvass with no legacy systems, no list of ‘first mover disadvantages’, greater investment in technology, different pricing, greater inclusivity, and quite possibly better products.
I’ve spent at least half my life working in the protection market, and the older I get the more it frustrates me that sometimes we let customers down.
It might not be many, but one is arguably too many.
Sometimes, when customers have told the truth and paid premiums in good faith, the outcome when something serious happens to them is that they bought the wrong product.
Occasionally, someone tries very hard to disrupt the protection market. But is it actually disruptable?
What they should’ve bought is [insert one of the following: life cover/critical illness/income protection/private medical insurance/redundancy cover/accident cover…]. But they didn’t. They bought [insert a different one from the previous list]. We’re very sorry but that doesn’t cover the awful thing that’s happened to you.
If we think about it, this doesn’t tend to happen with other types of insurance. Sure, some policies will always be more comprehensive than others (including third party and fully comp), but drivers aren’t expected to choose between serious crash cover, accidental crash cover, critical crash cover, death crash cover, private crash cover and so on.
Has an insurable event happened? Yes. Is there a policy that covers it? Yes. Did they buy that one? No.
So, we ‘could’ have paid out – if they had what turned out to be the most suitable policy (which, to some extent, needs a crystal ball) but this is also one of the biggest reasons we shouldn’t ever just discuss life cover on its own.
We know the regulator is looking at churn, commission, loaded premiums and more – and advisers tell us that service levels remain concerning with some insurers.
Kevin Carr: We help because we can
I don’t underestimate some of the challenges or frustrations we collectively have, but I also think we have chance to influence perceptions of our industry more positively.
Despite the challenges, the protection industry remains a robust outlier. It is rarely at the core of government, business or even family discussions, but whether it’s pandemics, financial crashes, inflation, global conflicts, AI or something else, not much tends to change in the protection market.
It carries on, largely as it did the week before, with a similar number of policies being sold in a similar way.
Some argue this can lead to lazy behaviours and a lack of innovation. Companies doing the same things in the same way because they’ve always worked, or introducing technology that replaces a human job with a digital one – without changing or improving the overall process, and so on.
Occasionally, someone tries very hard to disrupt the protection market. But is it actually disruptable? On one hand, many parts of the process are human/paper-based, and if we did a survey of, well, pretty much anyone, I’m sure the result would scream ‘YES’.
The irony is that protection exists to provide peace of mind, yet the complexity of products and processes often creates anxiety
But as someone said to me recently, “you can’t Uber protection”. Many firms have tried – and some of them are no longer here to tell the tale.
The irony is that protection exists to provide peace of mind, yet the complexity of products and processes often creates anxiety. When a claim is declined, it’s not just a financial blow, it’s an emotional one.
Likewise, loadings and exclusions because there are many situations where a doctor or consultant says something is OK, but the insurer sees it differently.
We have low premiums, increasingly flexible products, examples of innovation, high claims pay out rates, low complaint volumes, and some of the most altruistic and dedicated people I’ve ever met.
So, we carry on – working harder and smarter wherever we can. Because protection is a resilient outlier. And, despite its challenges, it’s worth betting on.
Kevin Carr is managing director at Carr Consulting and Communications and chief executive at Protection Review
