Analysis: Protection providers at odds over sales approach to EU gender directive

Women can expect a 20% rise in life insurance costs

Dispute over potential damage of 'short-termism' to industry reputation

A dispute has broken out among protection providers over how brokers should be selling life cover in the run up to the European gender directive.

Exeter Family Friendly sparked a war of words when it branded other insurers “sad” for encouraging advisers to promote life sales before prices go up later this year.

From December 21 2012, insurers will no longer be able to take gender into account when underwriting policies, which is expected to add up to 15% to the cost of life insurance for women.

Many believe this represents an opportunity to promote life cover to consumers, particularly women, in the meantime and in April Scottish Provident launched a campaign urging advisers to do precisely that.

Roger Edwards, propositions director at Scottish Provident, said at the time that the EU ruling is a “fantastic opportunity” for advisers to engage with female clients and promote the need for life insurance.

He said: “It’s a simple message to get across – buy now or pay more later – as prices won’t be this cheap again.”

SHORT-TERM OR LONG-TERM?

But Nick Jones, brand and marketing manager at Exeter Family Friendly, says this is just the sort of short-term thinking the protection industry could do without.

He argues that such messages put monthly sales figures before long-term objectives and could damage the industry’s reputation by losing consumers’ trust.

He said: “For years, insurers and industry commentators have spoken about the need for advisers and consumers to engage with protection and value the importance of what we can do for our customers.

“It’s surprising therefore and quite sad, that some insurers are trying to use the gender deadline as an opportunity for a short-term boost in new policy sales.”

Jones said that if providers want to build the value of their products in the eyes of consumers in the long-term, then marketing communications based on short-term price gain may make their job harder further down the line.

But Edwards said he is not advocating the use of price to sell products, but merely urging advisers to use the legislation as an opportunity to open dialogue with customers.

He said: “My viewpoint is that UK consumers, particularly women, are drastically under-insured and this is a chance to talk to people about the fact they are not protected and tell them they might want to take out cover sooner rather than later because the price is going to go up.

“IFAs will still have to go through the same advice and compliance processes so I can’t see any downside to this approach.”

Phil Brown, protection and underwriting director at Zurich UK Life, said that while the change does bring opportunities, price should not be the only factor taken into account on sales.

He said: “We believe it is important that consumers are aware of the impact of the gender directive and its implications for price, but there are additional factors which consumers need to consider when taking out a policy.”

TIME TO ACT

But Mark Jones, head of protection at LV=, agrees with Edwards that brokers should use the directive as a reason to pick up the phone to clients and talk about protection.

comments powered by Disqus