Unisex rates and the gender directive could be a shot in the arm for protection
Start collecting names and personal phone numbers of younger female clients and prospective clients this very instant. Don't leave it a second more. Whether you are an insurer, a specialist protection IFA or a general broker advising on life cover or motor, you can do yourself a lot of good with this list of suitably attractive women.
Now before female partners start to get worried, male partners think you are changing sexual orientation or the editor of Health Insurance reaches for his censorship pencil, this is not some pervy article on how to find and chat up women (that's a shame - ed.).
Sorry to disappoint some of you but this is far more serious. It concerns the European Union Gender Directive – more commonly known as unisex rates – which comes into force on Friday December 21, the last day before the Christmas break. No matter how much some regret it, this is a done deal with no going back.
In just over six months, insurer discrimination on gender grounds is all but banned for new policies. A 30 year-old man and a 30 year-old woman in the same circumstances will receive the same quote. And no one can claim ignorance as the draft directive was published in December 2004.
The reason for collecting all those young women's names is that this is a moment that will fundamentally change premium quotations for both men and women.
So far, as LV= head of protection Mark Jones reminds us, there has been virtually no coverage in consumer media (and only a little more in the trade press where the Retail Distribution Review 10 days later has unsurprisingly overshadowed the gender issue). This should change as non-specialist media hit on the story.
They will want two things – the facts, and some fanciable females as case studies (although not necessarily in that order). It does not matter how compelling the issue might be to you, it will only run in the press, or on television if there is human interest and she has to look attractive.
Pictures make the story – look at the success of pet insurance where case study coverage is full of cuddly cats and adorable dogs with their equally loveable owners, or holiday insurance which is often an excuse for photos of bikini-clad lovelies on exotic beaches.
Most men like to see pictures of women. But so do most women (check the popularity of celeb magazines and websites).
The introduction of unisex rates produces winners and losers. These will need to be balanced carefully so if any insurer thinks they can get away with increasing premiums for the losers while leaving the winners unchanged they had better think again. This is a world of competitive comparison sites, always ready to monitor numbers and court publicity with a shock-horror rip-off press release.
Effectively, there are two stories – before and after the directive's December enforcement. The “before” story needs to point out the potential losers and the fact that provided they sign up before U (for unisex) day, they can enjoy the benefits for the life of the policy. So think lots of luscious lovelies splayed over car bonnets (younger women have more to lose than their older sisters). But as the real story is about life and other forms of protection, also recruit sensibly attractive women considering long-term life and critical illness plans for case study lists.
Make price comparisons in publicity but don't go overboard. The media are not stupid so while it is fair to point out the present gap between female and male rates, assume a more conservative half-way figure to come up with potential savings. This could create extra business as well as giving some IFA minds mental diversion from the RDR.
This pre U-day material should also include some educational material. Take income protection (IP). For decades, the press banged on about how its predecessor – permanent health insurance – always charged women 50% more. Because this was so clean-cut, there is a whole load of people out there (now in their 40s or older) for whom it remains true even if it isn't. And that applies to a fair number of journalists as well.
The tricky part is to combine the 'get covered before cut-off day' line with 'don't skimp on protection just because it could be cheaper after December 21'. Try to reassure men that IP rates will not soar after U-day – they should not as the majority of policies are already written on male lives so insurers have plenty of wriggle room – but there is certainly no harm in signing up sooner rather than later. Equally confusing is that the move to gender neutral should also reduce male life and critical illness rates.
For cover providers and brokers, the difficulty will be handling a last minute rush so it makes sense to get the message out there now – that way, people will be protected from now rather than in December. That's leaving aside the possibility of the chaos that is almost bound to affect at least one insurer.
Unisex rates should mean cheaper motor cover, especially for younger drivers, but as that is on an annual basis with little choice of when to sign up, there won't be a last minute rush although there will be photo opportunities galore of unfairness to the fair sex.
But the killer question is whether insurers will keep it simple and move to unisex or go for the small print get-out clause allowing limited sex discrimination.
Royal London says “the use of sex as a factor in the assessment of risk can be permitted if it is based on relevant and accurate actuarial and statistical data, compiled, published [whether in full or summary form] and regularly updated in accordance with guidance issued by the Treasury.”
This could involve changing the basis year by year (as the balance between male and female risks changes) and revealing data previously kept confidential. It might be easier for all concerned to embrace unisex pricing – and to use the changeover for a major protection push.