Protection Watch: Is product innovation on the way?

By Kevin Carr

Aug 23, 2018

Protection Review chief executive Kevin Carr looks at recent market events

New rules, new products

The government has announced that income from an insurance policy, such as income protection or mortgage payment protection, which is specifically to cover mortgage payments, will not be counted when assessing entitlement to means-tested benefits.

This is a huge breakthrough for the industry and the first time the Department for Work and Pensions has clarified its position regarding means-tested benefits.

It is important for advisers to understand these new rules as well those on Support for Mortgage Interest. Currently, the DWP has only confirmed the exemption will apply to mortgage related benefits and many experts believe this will lead to a range of new and simplified mortgage related products. There is still uncertainty about how existing policyholders and renters will be treated, however.

Making protection better for younger people

Protection sales are rising and there is evidence some of those new sales are coming from younger people. According to LifeSearch, the average age of people who bought critical illness cover last year was 36, while Scottish Widows says that, in 2016, 66 per cent of claims for cancer were from people aged under 35.

Younger people generally want to live in the now. They want something today rather than just the promise of a cheque in the future they might never need. Because if you are just not interested in something, it does not matter how much it costs. As such, the industry could see a time when today’s added value benefits, such as remote GPs, counselling services, gym and cinema discounts, become the core product, with a bit of insurance becoming the add-on.

New tech to improve underwriting

UnderwriteMe will soon be adding a range of new functions to its online comparison site for advisers. The new Protection Platform has been designed to provide intermediaries with all the information needed to compare, recommend and buy in one place.

The new questionnaire has reduced the number of clicks required to reach a full underwriting decision, and there will be one overall process, even to recommend different insurers for different products, while advisers can jump out at any stage to check prices from different insurers.

Also on the radar…

  • Old Mutual is the latest insurer to revamp its critical illness cover. It had arguably been left behind in terms of product improvements in a competitive market, so there were a number of areas open to change. It made 80 enhancements last month.
  • Aviva’s new claims report showed it paid 97.2 per cent of all protection claims last year and 96 per cent of claims across all business lines, including home and travel. More than £900m was paid out on life insurance, critical illness and income protection policies.
  • New research by Epoq Legal indicates that employees are more likely to insure their pets than their salary. Thirty two per cent of those surveyed have pet insurance in comparison to 25 per cent with some form of income protection.

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