Tom Baigrie's pan industry protection consumer advertising concept has stalled. Paul Robertson précis Baigries' report on the reasons why
The demise of the Consumer Protection Insurance Engagement Campaign (CPIEC) was reported in last month's Cover, but the reasons why it failed are instructive for any future plans. A report on the response of industry to CPIEC, authored by LifeSearch and Baigrie Davies' managing director, Tom Baigrie, the plan's originator, makes interesting reading.
Conceived as an attempt to increase consumer uptake of protection, it is noteworthy that, of the 22 insurers and seven reinsurers invited to the marketing case presentations, not one disagreed with the central point that; "the conglomerate and disparate nature of our market's supply side, combined with the government's refusal to confront consumers with the realities they face if death or disability strike; mean that without a collective communications effort our overall share of consumer spend is most likely to continue to fall in real and even absolute terms indefinitely."
So, if the need was universally agreed, why the failure to implement? Perhaps surprisingly, cost was not a fatal factor.
Costs for this plan were estimated at £5m in the first year and £3m in the second and further years. This cost was to be organised by splitting the providers into four bands by estimated annual premium income and putting the reinsurers into the middle bands. Distribution and the service sector were not asked to contribute.
Baigrie anonymously quotes two managing directors of large providers as representative of the prevailing attitude; "I don't know what anyone else came here thinking, but there is no way we could do what we all want to do for less than £6m," and; "While £5m sounds a lot, I don't think you will change consumers with less than £15m in reality."
Financial hurdles
There were, of course, financial hurdles to overcome. The plan would require reinsurers to completely rewrite their marketing budgets, for example - they are simply not geared for mass marketing. Some firms accepted the amounts asked of them, while others demurred. However, this was an issue that was seen as needing work and leadership, and was not the straw that broke the camel's back.
Baigrie refers to ‘deal breakers', the cumulative objections that brought the plan to a halt. One was enough to bring a halt on its own; the three methods of distribution; Bancassurers; IFA and other advisers; and online non-advisers; could not be reconciled into one marketing unit.
Providers' responses depended on their individual distribution channel strategy, and the way firms assess future business was a stumbling block. Some insurers ran the pros and cons through their business plans and decided the CPIEC would not work. "The need for mathematical certainty is no friend to those who would innovate, particularly when the word of those agencies who have failed in the past is relied on," comments Baigrie.
Somewhat depressingly, those firms whose business base was in one of the three distribution methods tended to convince themselves that the other two methods would be the ones to most benefit from the marketing plan.
There was also a lack of belief, amongst providers selling through advised channels, in the IFA sector's ability to win out in the competition between distribution methods, and that non advised internet sales would be the clear winner.
Lack of belief
As an IFA, Baigrie is clearly disappointed with this attitude. He says: "As an IFA competing head on with non advice in the online space, I see CPIEC as a vital injection of aid to IFAs and a certain shifter of their business priorities towards protection, but (very roughly) the larger the IFA supporting provider the less likely they were to agree with me."
Furthermore AVIVA's current brand advertising activity, which mentions life and health insurance, caused others to fear that the CPIEC campaign would generate disproportionate leads to AVIVA. Baigries' comment on this attitude; that this is a circular argument, is insightful. "AVIVA's perceived success should perhaps have encouraged others, not deterred them," he wrote.
Now that the plan has been shelved it would be logical, one would think, to look to the Association of British Insurers (ABI) to take a lead in any further moves involving a pan industry initiative. According to the report this is a view held by many of the larger insurers.
This is unlikely to happen, as the report states: "The structural difficulties within the decision making committees are well nigh insurmountable.
"The main ABI board considers a vast array of matters and rarely focuses on ICOB protection. It delegates that to the Life Insurance Committee. But that team is overwhelmingly concerned with regulatory, investment and pension matters and delegates ICOB Protection issues to a strategy sub committee..
"In truth they were not given the chance, well before the meeting at which that sub committee was due to consider CPIEC formally, an informal sub grouping of the main LIC met and after brief discussion declared the ABI LIC disinterested."
In his conclusion, Baigrie is upbeat, claiming the attempt has clarified what is and what is not needed for the way forward. He concludes: "It remains open to those capable of leading the industry through its trade bodies and within the reinsurance sector, to take over the effort, fund its refinement and focus and bring it into a much needed reality."
However, as things stand the original premise all agreed upon seems the most likely outcome: "…our overall share of consumer spend is most likely to continue to fall in real and even absolute terms indefinitely."
Tom Baigrie is managing director at Baigrie Davies
