Contractual Liability Insurance - Off the beaten track

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In today's market, insurers need to explore other ways to protect consumers. Paul Walsh examines the industry's failures and options.

Consumer mistrust has played a significant role in causing people not to invest in protection products. The PPI scandal continues and claims companies have helped to cultivate the myth that all insurers and lenders mis-sold PPI. Couple this with the squeeze on consumers’ incomes and protection is not viewed as a necessary expense.

Following the rebrand of protection products as income protection, insurers are struggling, as consumers do not relate to the term income as a personal asset that needs to be protected.

Various brands have struggled with this and tried out new terms such as Legal & General’s Lifestyle Cover, to try and engage consumers with the product, but with very little success.

CUNA Mutual identified this lack of resonance through focus groups. People do not think they have an income, rather they have wages or salaries. In order to familiarise consumers with the concept of protecting themselves, CUNA partnered with a number of credit unions around the UK in offering a free ‘wages protection’ offer for three months.

This allowed credit union members to experience protection and the peace of mind it can bring before committing to investing in the product. The offer was a success and the credit unions also benefited, as they were able to offer their members an added extra at no cost to themselves.

Imagination goes a long way

A little imagination can go a long way in insurance but the glimmers are few and far between.

Due to a reticence from certain major players in the market place, this much-needed imagination and innovation has been in short supply. With the new guidelines on sales of protection in force since April 2012, major players have invested in adapting to these new guidelines rather than looking at developing innovative new products that consumers actually need and want.

In a market dominated by consumer demand, it is remarkable that insurers have not realised the need to provide relevant, streamlined products, which reflect consumers’ wants and needs.

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