Fiona Murphy asks a mix of advisers, insurers and industry experts: What were the biggest developments in protection, how did these affect IFAs and what are your predictions for 2016?
Ron Wheatcroft, technical manager at Swiss Re
One of the biggest developments was providers coming back into the IFA market, a sign of the growing confidence our Term & Health Watch 2015 report identified this year.
With better propositions for consumers who prefer to purchase remotely, the market is well-positioned to deliver the products and services which consumers need.
Pension Lifetime Allowance limit changes have led to growth in non-pension death benefit workplace provision. In 2014, the number of people insured in Excepted (non-pension) Group Life arrangements increased by 17%. And new numbers of Relevant Life Cover policies grew by 13%. We expect similar or greater growth when we report the 2015 results.
A decision to defer the introduction of the Care Cap was deferred until 2020 which means it will be a long time before financial services firms can start playing a helpful role in the care market. There has been continued dialogue with relevant interested parties and we anticipate this will continue.
We anticipate slight recovery in the individual protection market. Raised awareness of mortgage protection should result in improved coverage.
The workplace will be a great area for skilled advisers as auto-enrolment becomes embedded and employers consider the wider benefit package, including risk benefits.
Pressure on welfare budgets present an opportunity for the industry to step up. The industry need to present rational arguments to remove disincentives to the development of long-term disability protection.
Peter Chadborn, director at Plan Money
The biggest and most significant thing that has begun to influence protection for IFAs this year and next year is the advent of technology such as UnderwriteMe and IPipeline's XRAE.
This year has been a big year with auto-enrolment (AE). But there's a paradox here. AE has been a perfect example of us being able to talk to employers and say this is what you need to do, they identify the problem and ask: ‘what will you do to put it right and what it the cost?'Then, the employers decide not to take it further.
Generally it's easy for IFA firms to position themselves in terms of process, cost, overheads and output and articulate that to the client. But that's impossible in protection because of underwriting. The industry says we should get people engaged and we need to get advisers selling protection. That's why I'm keen to see more technology.
Many advisers reluctantly do protection because of this anomaly in managing client's expectations in doing a lot of work and being paid little, doing little work and not receiving a lot [in terms of commission].
For me, what's exciting is new technology will hopefully make more advisers engage or re-engage.
I think the protection industry can be blinkered in that if the industry as a whole doesn't understand the dynamics within IFA firms, you can tinker the products all you like but it won't make one jot of difference if advisers continue to choose pension and investments [fee based income and greater certainty over what and when they will be paid] over protection.
Kevin Carr, chief executive of Protection Review
AE has been a positive driver for advisers, especially those who might be finding it difficult to adapt to a post-RDR landscape.
And continuing the positive theme it is difficult to argue that the Seven Families project hasn't galvanised the industry and in one way or another raised the profile of Income Protection.
In the mortgage market, however the MMR is considered to have had a negative impact on protection sales. In an ideal world the first rule of any lending regulation should perhaps be that if you can't afford appropriate protection, you can't afford the loan. Instead, regular outgoings such as pensions or life insurance, can count against how much you might be able to borrow.
In brief, the market has also seen the gradual rise of differing forms of new technology, such as CI Expert, F&TRC ratings, UnderwriteMe and others, not forgetting new market entrants including Scottish Widows and Canada Life with man from the Pru knocking at the door.
We saw the end of the coalition and the introduction of further spending cuts, while Friends became Aviva and insurers across the board continued to play around with their product features, pricing and management teams.
As the year closes there is talk of falling sales in the D2C space while some adviser firms are experiencing record months. While there is probably little to read in to this, what is true is that reaching an interested audience is becoming a key challenge facing everyone in the protection market.
Growth predictions: One of the most significant changes last year was the increase in IPT from 6% to 9.5%. This impacts the balance between long and short term protection and creates another opportunity for IP in particular. It will also affect employee benefits, again creating opportunities for long term protection but also for wellness programmes.
The financial services industry is getting used to shocks in the budget and the regulator too could have an interesting year. Having stayed away from the protection market for a few years an impact could be felt depending on how the Financial Advice Market Review and others work out.
Barry Pappin, business protection specialist at Vita
A refreshing change from previous years is the evident reversal of the critical illness condition race. Instead, quality in the form of better and clearer definitions is now firmly the priority for most providers and advisers alike.
This change has helped be cemented thanks to tools such as CIExpert, which enables advisers to provide better customer outcomes.
There has also been the welcome introduction of F&TRC's Quality Analyser, a support service for Advisers that assists in making informed selections when assessing different providers and their products.
Some adviser firms, such as Vita, have become numb to slick marketing campaigns on the basis that there are now independent tools more readily available to help analyse the proof of the pudding.
With regards to providers, this year has been one of consolidation in the main, with acquisitions, re-brands and relatively ordinary product enhancements. All of which have served as a general tidying up of the protection landscape, as opposed to any particular game-changing industry developments.
As life expectancy continues to improve, more people will require long-term care, however, there is a misconception that the state will provide the funding.
The protection industry is well placed to continue introducing policies that are geared towards financially supporting later life needs, as Vitality, AIG Life and Zurich have already done. The positive for the industry is that later life policies can help grow the market in 2016 and beyond.
Also, next year we can hope to gain clarity from the ICO regarding the SARs debate, however, let's not assume it will be one that's based around what's best for customers, rather it could be an outcome based around a technicality.
Deepak Jobanputra, deputy CEO at VitalityLife
What we would really like to see next year is a healthier and better protected society. That's the big picture and we're doing everything we can to make it happen.
We'll also be keeping a close eye on technology and, while we expect to see more new entrants in the market, we also expect further movement across the industry towards a more severity-based model.
As wearable technology evolves, there will be far more we can do with it to help consumers better manage their health. The pace of change in this arena is vast and I believe it will change the way insurance works for the benefit of consumers and wider society.
Medical technology will continue to improve and we will respond to these and other changes in society to make sure we continue to offer comprehensive and appropriate products that meet consumer needs now and anticipate what they will need in the future.
Our industry needs to reach more consumers, which is why we are investing in the brand through our engaging advertising campaign. Greater awareness is fundamental and we hope to see growth in the market. I'm looking forward to seeing how the industry responds to the new products and initiatives we will launch in 2016.
