The annual Protection Review conference took place recently in London, drawing a few hundred people from all corners of the industry to debate the key issues and what can further drive the protection market forward.
This year’s theme was ‘growing the market’, with sessions focusing on improving the customer experience, new distribution models and the opportunity presented by engaging employers.
Here, we look at the biggest talking points of the day, and how they could change the industry and influence the way advisers understand protection insurance.
Double commission – for advised sales only?
Arguably the most controversial point of the day was made by Michael Ward, founder of PayingTooMuch.com and previously the owner of Direct Life and Pensions.
During a panel debate about new types of direct to customer distribution models, he commented that the protection market could not grow unless commission is increased, arguing that there is currently no financial incentive to provide advice, as the seller receives the same commission on protection whether the sale has been advised on or not, despite advice taking ten times longer.
Mr Ward said: “We need more regulation because current regulation is not regulating the things that matter. We’ve got too many lead generators saying things that aren’t true to customers.
“If we paid agents twice the commission they get for an advised sale and leave non-advised sales’ commission where it is, you’d get more adviser business and they would go out and sell it.
“I think we need a better regulator and we need one that changes the emphasis. My great idea for a regulator would be one that cares about protection sales rising rather than making sure they’re just compliant.”
To highlight a similar point, Mr Ward commented that of his comparison site businesses, that travel insurance was selling twenty-times as much compared with life insurance, and that travel insurance is currently five times as profitable compared to life cover.
Commission has, of course, become a bit of a dirty word. In a post-RDR world, remembering that protection is (rightly) separated from the RDR, it implies a mis-selling scandal or at least a dodgy salesperson.
But does Mr Ward have a point? Is it right that non-advised sales earn the same amount when there is no advice and no responsibility for advice?
Make it personal?
An overriding theme of the day was that as an industry, we need to make the whole consumer journey more personal, including the products.
People are getting more and more used to services that are tailored specifically to them, and this will only continue to increase. However, insurers historically tend to have one product that is expected to fit a potential audience of 20-30m people.
It was debated that the personalisation of protection should begin with the products sold. Currently, protection products are largely generic, whilst designed to protect people with varying sets of circumstances.
