Are we simply opposed to simple products? Nick Jones investigates the simplicity minefield.
Another interesting finding was what role a simple product should play; what is it designed to do?
The consultation paper highlighted that the Government view was that whilst a simple product may not offer the best possible cover to everyone, it should never be a bad choice.
This is an important reflection and lesson for our industry, have we spent too long developing "perfect" products, with the best intentions, only to put off potential customers with complication and the number of decisions they need to make to purchase?
Do we need the Government to help?
The simple products debate has kicked-off at a time when there are a number of different and positive initiatives going on within the protection industry such as the formulation of a quality standard, or kite mark for income protection products. So the question is, do we need the Government intervening, or are we moving in the right direction already?
The consultation paper is positive on the whole and we should embrace it as an opportunity to develop, not a criticism to refute.
Yes, we have made positive moves over the last few years and many insurers have made a real commitment to simplifying their products and propositions, but anything which encourages and speeds up the process is good news.
But, that does not mean we have to pack up what we've already done and start again.
The "quality standard work" from the Income Protection Task Force is a good example of an initiative which is entirely in-tune with Government thinking.
The need for consumers to readily make comparisons between protection products is essential, so the launch of an independent grading that gives customers, and indeed intermediaries, belief and confidence in the products they are buying or considering, can only be a good thing.
We should continue with this good work for two reasons; firstly, because it's the right thing to do and secondly, much of the work could be useful in any on-going debate on simple products.
Simple Products and The Regulator
The simple products debate also occurs a time when the regulator (FSA, FCA, whatever the name...) is looking to take an increasingly hands on approach in product development.
The threat of intervention into the product development process is looming, where the regulator thinks consumer detriment is likely. How does this sit with the challenges that will face us all on simple products?
Intervention is a word which is likely to strike fear into insurers up and down the land, but it is not all bad.
Firstly, if the regulator commits to what and how it will engage with insurers and at what part of the process, what it wants to achieve and any action and interaction undertaken, then that would be positive.
We all like to know the rules, so clarification will help. If this could be taken further and an open dialogue could be had, then all the better.
But that does not mean that an over-intrusive approach would be welcomed or needed.
Not only do we need to stimulate innovation and truly original (simple) thinking, but we also operate in a market which generally serves its customers well, designs products which do what they say on the tin and pays a high proportion of claims.
Let us not forget that, even though we have to make some simplification to bring what we do to more people.
We can be confident that we have good principles in place to take us forward. It would be wrong if the regulator were to treat the wider protection industry as an extension of payment protection insurance.
Finally and briefly, a taster of what simple products look like and where are they sold.
There are four key principles about a simple product that this industry needs to get right. Firstly, it needs to be affordable; there is no point in developing any product if only the affluent get to experience its benefits.
Secondly, it involves as few decisions on the part of the consumer as possible. There's no doubt that we put off novice customers with too much personalisation, too many decisions to make.
Thirdly, the customer journey needs to be smooth and speedy. In 2011, can we really expect consumers to wait 30 days before being told whether they're allowed to buy the cover they want? Simple should mean quicker.
Fourthly and most importantly, simple products still have to deliver.
They may not deliver quite as much (or for quite as long), but they must meet their promises and do what they say on the tin.
Nick Jones is brand and marketing manager at Exeter Family Friendly Society
