Nicola Culley examines recently launched individual critical illness plans that typify both poles of the market.
While most would agree choice and variety is healthy and needed, it is not unfair to suggest the market could look quite poor should providers lean too far towards the mass market with no specific offering.
Jefferies said while there were one or two providers at the top end, most were positioned in the middle.
“In the last few years we have seen less choice in the market perhaps from consolidation like when three providers became one in Friends Life,” he explained.
“There are fewer CI plans available and feedback from advisers suggests they want more choice both top end and cheaper options.
“The bulk of protection business is sold through advisers and that it will remain the case for years to come. I do not see vast amounts of CI being sold without an adviser.”
Jefferies said he had not heard much noise about any further new entrants. But he said the entrance of D2C Beagle Street had been “interesting” because there had been no real offering for the mass market.
Simple solution
Beagle Street’s individual CI offers 23 conditions including children’s cover up to £25,000. The definitions abide strictly by the ABI model wordings and aim to be a low-cost simple, direct-to-consumer plan.
The product is simple but Beagle Street has made a point of emphasising it is more importantly about simple processes.
The idea is to make term assurance and CI accessible to all. The product does not involve any medical forms. The online technology-driven process comprises a 10,000-strong question set which is streamlined by the system to prompt relevant questions for consumers to answer as they go through.
The provider has received a decent amount of criticism from the industry and particularly from the adviser camp. Its critics have argued that while the product features are simple, it did not translate to a clear proposition to satisfy consumer understanding, given limited claim wordings and consequential raft of exclusions.
But Beagle Street hit back to say its 23 conditions listed covered 90% of conditions that were claimed for overall.
Matthew Gledhill, managing director of the D2C provider said penetration rates direct from the website – as opposed to purchases through aggregators - for its individual CI product had been hitting 20%; much higher than initially expected.
He said: “We are trying to open the market up to more people. It is an alternative to adviser-sold complicated products. We need these types of products to cater for those people who need basic cover.
“I do not think adding arbitrary conditions onto products adds value. People who fall outside the remit of advice need cover options.
