Regular COVER columnist Richard Walsh reveals a colourful past in Whitehall as an NHS reformer and his views on the future of the protection market.
"There is a marketing issue in the sense that I don't think the industry, apart from some notable exceptions, really has been as committed to it as it is to other products if you compare it with car insurance, for example.
"The product issue does actually overlap into the marketing issue in the sense that some of the products are pretty complicated. So you don't see it up front on comparison websites. But the issue remains right now that the marketing is not really there. And that needs to improve.
In terms of the products themselves, he noted that PMI has faced the issue of declining individual sales and that has linked to the removal of tax relief in 1997. So what does he think about the likelihood of tax breaks for protection and perhaps PMI reappearing?
"Well, it will never happen under a Labour government. It is a possibility, but how high it is on the agenda of Conservative politicians, I don't know. It certainly would not be something that at the moment you could see them going in as a manifesto commitment. I think they would be open to attack on that.
The ‘complex' story of protection
"With protection, it is a more complex story. If you are looking at group protection, there are actually already some incentives built into the system in terms of the way in which payments are treated. There have been successive attempts to get tax relief on the protection end of the product, and this government has made a little bit of progress there in terms of rehabilitation, for example.
"But not the products themselves. I feel that is still an area worth pursuing."
For Walsh, the key issue is the way in which it is treated at claim. Potentially, some people who have bought it could be not a huge amount better off with it than they would be on the state benefits, because they are taken down per pound off each other.
"I think one of the things that the industry should be arguing for is that they should be treated in the same way that group is, in other words as earned income. You could see that there would then be incentive for everybody to buy it."
Of course, the Income Protection Task Force recently announced it was tackling just this issue, looking at the use of IP further down the income scale.
Walsh is a fan: "I think the work that they are doing is excellent. A larger proportion of the population would benefit from this product than people currently think. I think the IPTF research it is a good way of defining who those people are, and that makes it easier to sell it to them.
"Also, it means that advisers will be much more confident they will be selling the right thing to the right people. So it is an excellent idea, I wish them well with it."
There is, of course, a difference in not thinking that an industry is at crisis point and not thinking that fundamental changes should be made. Walsh's two-item wishlist is at the very beginning and very end of a policy's life.
He has taken issue with the issue of medical evidence underwriting and with the industry's attitude to claims.
He is not alone in his view of medical evidence-based underwriting: "It is like, you go into a shop and you want to buy a TV and they say yes, have that one, it will cost you this. But for an income protection product, they will say: ‘Ah, well, this is what we think it might cost you, but we will not be able to tell you for several weeks'. And then when you do find out, it costs you more than you thought it would. Or you might not be able to have it at all.
"I know it is a bit of a facile comparison, because I know there are some who cannot be insured, but it is just not transparent and clear to a consumer what they are buying and what they are going to get, and how much it is going to cost."
Despite recent progress on claims, with the release of data perhaps sharpening minds on the subject, Walsh is also pushing for more to be done on managing claims, something he feels is more down to attitude rather than a systemic failing.
He pointed to the Financial Ombudsman's statistics in upholding complaints in favour of the consumer, which, if we ignore the PPI-driven complaints, works out at about 40%.
Walsh said: "I think that is too high, it should be more like 10%. You will still have some disputed but I suspect the ones that would be disputed in the 10% would be much closer calls. The end result would be that we would not get so many situations where a declined claim appears in the media and ends up being paid out. That is damaging the industry."
Of course, for Walsh this is a heartfelt matter having, in his ABI days, been dragged onto Watchdog to explain the industry's failings and very early in his career also been an adjudicator.
"I kind of know how the Ombudsman feels when he gets piles of papers and they are not in proper order, the case is not properly made and then you find out that you are ruling in favour of the claimant. Companies use this process as a way of putting people off.
"On the other hand, you get the people working in the claims departments who are getting claims that, from their point of view, are clearly spurious and they can get into that mindset of thinking that everybody is like that.
"I know it is not easy, but if you could get that number down, the overall effect would be very beneficial."
