With the launch of the simple products steering group, what should be the focus for its protection element? Is there a hesitation about actually designing products that are simple?
David Heeney, Pacific Life Re
For many years, UK protection propositions have been designed for the adviser market, leading to a strong focus on price and complexity in the application process. While this ensures the cheapest possible cover for a small segment of the population, it ignores the needs of many, as there are simply not enough advisers to go around and it is not economically viable for mass-market distribution.
The ‘simple products' concept is a timely prompt for the industry to focus on expanding the potential market to include the majority who cannot be reached effectively by advisers.
But ‘simple' is not as easy as it sounds for providers, with anti-selection risks and concerns about losing controls they are used to. We need to focus not so much on the product (which is already simple - "if you die, we pay"), but more on the customer journey.
Only about 5% who apply for life assurance are declined. Outside the adviser market, it is possible to focus on the majority and offer meaningful cover at fair and affordable prices.
Ageas' approach with Asda is an excellent example. This is a clear, easy to understand, ‘no questions' product positioned to make it quick, painless and convenient for customers to buy a meaningful level of cover and be confident claims will be paid.
Yes, some people might be able to save a few pounds by getting expert advice and completing long application forms. But many have neither the time nor the inclination to do this, which is why such a high proportion of people who need protection cover currently have none.
Mark Jones, LV=
The focus for the steering group should be the proposition. The most commonly purchased product in our market is term life cover. This offering can be succinctly described to a consumer as: "You answer our questions completely and honestly, and continue to pay the price we agreed. Then if you die, for whatever reason, during the time that you stated you wanted the cover to last, we will pay out the amount we agreed at outset."
Can it be made simpler? I have great confidence in our industry's ability to meet the needs of consumers and put them in a better place for having engaged with us.
But if someone tells me something is very straightforward and then they are required by law to produce pages of prescribed wording, I am going to be more than a little suspicious that there's something buried there, which means it is not as straightforward as I'm led to believe.
