When it comes to the Sergeant Review, can a simple IP product really work? John Letizia investigates.
Finally, pricing at group level would ensure affordability for both men and women alike as workplace policies will not be affected by gender-neutral pricing. The legislation allows providers to quote by the gender balance of the workforce as a whole.
Accessibility
There is undoubtedly still significant work to do in raising awareness of IP among consumers.
Even with government support and endorsement, many may not hear about simple IP. Equally, if they do, they still may not have the confidence or financial acumen to go looking for cover. Group policies could be one way to improve take up of protection policies.
The on-going introduction of auto-enrolment pension schemes is a useful parallel. The legislation has demonstrated that the workplace is a strong channel to raise awareness and take-up of financial services products.
And the introduction of auto-enrolment has been a catalyst for businesses to re-evaluate their entire benefits packages. Since a company pension is no longer a point of differentiation, many firms are undertaking a comprehensive review to ensure their benefits packages remain competitive, and consequently are considering introducing workplace IP schemes.
Finally, the ability to reach large numbers of employees through group policies would help to keep costs down for providers, helping to ensure that the simple IP products would be commercially attractive.
Availability
Group IP products could allow far greater access to cover than individual policies. The vast majority of workplace policies will secure some level of protection for all employees, regardless of their medical history.
The only requirement is that they are actively at work at the time of joining the employer scheme.
A key requirement of a new simple IP product is that the vast majority of individuals will be eligible to purchase a policy; no matter how easy to understand it is, a product is of no use if it excludes significant numbers of applicants.
However, even with simplified medical underwriting - including yes/no answers – in many cases people may not be able to secure cover in the individual market due to pre-existing conditions or previous history of ill health.
Acumen
Even with the simplest possible IP products, it is perhaps inevitable that consumers will have additional questions about their proposed policy before signing up.
The current reality is that many individuals will be wary of trusting advice from product providers. Making simple IP available through the workplace could be one way to help this with the implied third-party credibility from the employer. HR departments would also be able to act as a trusted source of advice for employees who may have additional questions about their protection policies.
A question being asked is does the February deadline for the final report allow sufficient time for simple IP? It seems clear that implementation of simple IP will be significantly different to the other simple products being considered by the Sergeant review – namely banking and savings accounts. It is fair to ask if the February deadline for publication of the final report is a realistic time frame.
