COVER interviews one of the insurance industry's back-room boys - Paul Robertson talks to Andy Couchman
At this, COVER thought ‘Oh, here we go again’, as many have problems with these products. But his reasoning was a little different to the norm. For a start, he has no intrinsic problem with IP. It’s more the attitude that counts.
“Income protection is a Cinderella product because it is complex,” he said. “Unless you get the intermediaries behind it selling IP on a regular basis, it is difficult to keep the knowledge up-to-date. This does not make a difference when sitting with an individual client, but over time you become less comfortable with the product and that comes through in the business stats. IP is a product where you need to be a fan to make it work.”
CI is more problematic: “I was involved with designing CI in the early days and I am a fan of the product, but it has become too complex.
“If you want to know what your policy covers exactly – a reasonable question – you need to dig into the terms and read a lot of stuff that would be unfamiliar. I write about this stuff nearly daily and there is lots I don’t know. We can’t expect customers to be medically trained.”
He posited an unlikely solution to the problem: “What I would ideally like to see is the insurers and medics come up with a list of conditions saying ‘this would be a critical illness for insurance purposes’. All we would need then is an agreement between the two and we would have a basic set of conditions. We can still have complexity, though.
“If we look at a car, the management system is hugely complex, but we don’t need to know that – it just needs to work. With CI, we have not got there yet.”
To be fair, Couchman is aware that this plan needs some patching to work – not least that the doctors would probably demand some sort of cut if they were to be involved in any meaningful way.
Once we are on the subject of products, it would be remiss not to quickly ask after simple products sold without advice. In essence, are we likely to see some of the big names coming in to soak the up the PPI market?
Couchman hopes so. He said: “The PPI market for all the problems it had, did a good job.
It was a simple buying decision – people want to buy the product designed for people like them in a given situation. PPI was simple to buy, whereas protection has lost a lot of that.
“There will always be a place for traditional IP with the widest possible cover, but that appeals only to a minority.
“The alternative is to look at selling simplified products, and we know the government is thinking along those lines.
“But are simplified products going to replace conventional IP or CI? No, but I’d like to see more of them.”
Selling unadvised is more of a problem, according to Couchman: “It is fine as long as the customer understands what the choices are, but where do they learn about these things? You could argue that COVER magazine be compulsory for the whole country, but until that happens…
“Non-advised sounds a great idea until you find you have missed something. At this point, unfortunately, some people look round and wonder who they can sue.”
WRITING THE FUTURE
One of Couchman’s major ongoing projects is, of course, the Protection Review. He started it with a fellow consultant in 2003, essentially because there was no guide to the entire protection and health market that reviewed what happened over the year and then went on to look at the year to come.
“We were fortunate because from the first it had a lot of support from the industry,” said Couchman. “This was important because when you read the review you are reading the opinions of a whole range of people across the industry.
“Our main market is insurance companies rather than intermediaries. It has an interest to intermediaries, but we recognise that others get to them much more effectively, with better and more resources. What we do is look at things that will bring the entire industry forward.”
In that vein, the Protection Review is to launch low cost generic protection training for IFAs this year, and will be piloting the courses, in conjunction with the Personal Finance Society, in the second quarter of 2011.
Couchman said: “There is some very good training in the industry already, mainly through the providers.
“But what we found was concern that intermediaries might come away from a training session thinking they were equipped for selling in this market, yet all they knew about was that particular provider’s product range. That is a risk if you then go into a whole market on that basis.”
“The aim is that, at very low cost, brokers will be able to hear about how they could be doing more in the protection space. We have been kicking this around for some time. A lot of IFAs and mortgage intermediaries would value generic information about protection, not just about the products and where they fit or how to operate in this market, but how to deal with the everyday questions and concerns of operating in this market.”
