Protection Watch - Kevin Carr's market roundup

Kevin Carr gives his verdicts on five key developments in the industry this month.

1. Time for IP to move on

Advisers who know their protection from their rejection know that when it comes to IP, ‘own occupation’ policies are the ones to have. The validity of other definitions, such as ‘work tasks’ and ‘activities of daily living’ have been questioned for many years. But the demand for change is gradually becoming stronger, with growing calls from intermediaries, industry surveys and declined claims in the media.

Offering an own occupation product for everyone could price some people out of the market. However, as somebody once said: “I would rather pay more for something I need, than less for something I do not” – and if the policy is not going to do the job, it frankly does not matter how cheap it is. Verdict: Back to the lab

2.  Fitter, happier, more productive?

More than a third of people going through incapacity benefit reassessment have been found to be fit for work, according to the first set of official statistics. This either means a bunch of people have suddenly got better, or the previous tests may have been too easy.

Either way, people are realising more than ever that they can no longer rely on the state as they perhaps
once did. Verdict: Promising lead

3. Code Red – think twice before selling that policy

Protection intermediary LifeSearch has warned against the poor industry selling practices of some distributors and the “laissez faire approach to the quality of distribution” by some providers. In a bid to rectify the situation the firm is seeking feedback on a new code of conduct for protection sellers.

It is a very well intentioned piece of work that, given further dialogue across the industry, should raise standards. It is somewhat ironic, however, that despite 25 years of regulation the proper protection industry – not PPI, that’s a general insurance product – should feel the need to effectively regulate itself to ensure better outcomes for consumers. Verdict: Promising lead

4. Hello! Protection industry calling. How you doin’?

It has been suggested the industry needs a protection ‘awareness day’ to raise interest for families and advisers – and generally speaking it is a very good idea. One of the aspects would be an annual protection statement, which is not a new idea.

However, the proposal that each one should be sent on the same day every year is probably impractical. There are millions of policies in force and as such these should be staggered by either birthday or policy anniversary. Verdict: Back to the lab

5. Oh, what a night! Late December 2012…

Confusion still reigns across the protection industry about just what exactly will happen regarding the ECJ gender ruling (and other legislative changes) that take place at the end of the year. December may seem like an age away, but advisers should already be thinking about how the changes will impact their business – both before and after.

In the run-up to December things may get very busy as people try to rush business through before the expected price increases take effect, especially for cases that need underwriting.

Afterwards, when prices have gone up, re-broking old business to save money could be a thing of the past, which could impact significantly on a number of business models.

As of right now, the industry does not yet know how changes to existing business will be treated and whether or not policies need to have started (or a future start date agreed) but what we do know is that Q4 2012 is likely to be much busier in the protection market than Q1 2013. Verdict: Back to the lab