In Focus: Individual IP - targeting the mass market

A number of insurers have also produced notable sales increases as a direct result of implementing product changes. LV= reports sales to have increased by 20% in the year to May 2009, with the gain being sharpest in the early months of this year. This reflects its offer – initially available between this February and April and subsequently extended to the end of 2009 – that those who take out IP and get a critical illness receive a lump sum critical illness (CI) cover pay-out equivalent to three months’ IP benefit (even if they don’t actually make an IP claim).

Similarly, a product relaunch by Bupa in February 2008 contributed to the company experiencing a 40% increase in sales during 2008, and a product revamp by progress from Royal Liver this January (see box) has resulted in it experiencing sales in May 2009 a staggering 264% higher than those in May 2008.

Nevertheless, a number of trends could well help the IP community as a whole enjoy a genuine annual sales increase before too long. Widespread use of teleunderwriting, the action being taken against PPI by the Competition Commission and a proposed 2010 review of the Association of British Insurer’s (ABI) IP Statement of Best Practice should all count positive. So should an increasing awareness of the importance of educating intermediaries.

One of the most welcome features of the Income Protection Task Force’s second White Paper unveiled this April was its stated intention of launching a series of national roadshows this year sponsored by Task Force members. Rather than promoting individual product solutions, these will aim to ensure that advisers are aware of where IP sits in the protection hierarchy, that they understand how to demonstrate its importance to customers and to adopt processes so that application, processing and administration are carried out effectively and within cost parameters that enhance profitability.

This collective effort will hopefully help to correct a situation in which commercial considerations have meant that major protection players have tended to reserve their main educational thrust for other products.

Roger Edwards, proposition director of Bright Grey and Scottish Provident, says: “IP accounts for only 6% of the overall protection portfolio at Bright Grey and 15% at Scottish Provident, so it’s hard to write a business case to revolutionise the product. Educating the life and CI salesforce in IP requires quite an investment and at the moment we are not doing so because it’s incredibly difficult to write a business case to make changes to the product, let alone to train people. The training we give new staff obviously covers IP but actually going out there and focusing on it on an ongoing basis is quite another thing.”

Nevertheless, most major IP insurers at least provide very informative websites, and Friends Provident has been particularly notable for taking the online educational process to a new dimension through live online seminars. The four of these relevant to IP that it has staged during the last year have attracted upwards of 200 participants each, with at least the same numbers again subsequently viewing recordings. The main attraction of the approach is that no time is taken up travelling to and from the event.

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