Cheap Rate Life Insurance is increasingly just an Illusion

Price rules in the term assurance market.

Compliance, the comparison engines (such as IRESS and iPipeline), and the consolidators perpetuate the notion that cheapest is best.

Cheap Rate Life Insurance

Over the last two decades I’ve sat in sales a marketing meetings and heard a similar plea from the sales teams.

“We have to be competitive”

“We’ll need to be there or thereabouts”

“Top five but average third or we’re out of the race”

You’ve heard these phrases to haven’t you? You might actually have said them on occasion.

In order to keep headline prices low, providers re-tender their reinsurance frequently, and re-adjust their prices daily.

But cheap rate life insurance is increasingly just an illusion.

Despite competing fiercely for the cheapest headline rate, providers do not actually accept all clients at these rates. Ordinary rates acceptances are averaging 75% compared to 95% over a decade ago.

That means one in four clients don’t get the rate quoted.

If you went into a supermarket and one in four of the items in your trolly was incorrectly priced would you be happy? No. You’d complain. Why is it acceptable then in the protection market?

One company allegedly only takes 65% of cases at ordinary rates. That’s even worse.

In order to charge extra for the 25-35% providers have hardened their underwriting terms and routinely gather more information on applicants, either through longer application forms with reflexive questions or tele-underwriting.

It’s a strange situation that an industry that makes such a big deal out of offering the cheapest rates, actually disappoints at least one in four of its customers in this way.

Advisers and consumers constantly complain about the lengthy process brought about by this underwriting approach and clamour for simplified acceptance. But of course simplified acceptance requires a higher headline price which does not fit with the mechanics of the industry.

And the cheap headline rate prevails.

We discussed this issue at the Protection Review Conference in London recently. The majority feeling was it was wrong. But I felt little appetite to do anything about it.

How long will it be before this practice becomes unacceptable? When providers load 50% of cases? Or 60%?

There’s an opportunity to try something different here. Perhaps to introduce a pricing system where the client has a better chance of getting their quoted rate. Or a shorter application process in return for a higher start price. Launching such a proposition would be difficult given the focus of the market on headline price.

There is at least one way we could move to a shorter application form without hiking the price too much.

But is anyone brave enough to do it? And would a market that’s stuck with the illusion of cheap rates accept such a solution?

Now it’s your turn:

Do you agree that cheap rate life insurance is increasingly just an illusion? Is it acceptable that we disappoint 1 in 4 of our customers? How do we break out of this cheap rate trap? Please leave a comment or post a link to your own article.

Phil Knight on PMI Podcasting and Social Media – MPAF Episode 5

You might think that Private Medical Insurance, Podcasting and Social Media are strange topics to lump together.

In Episode 5 of the Marketing Protection and Finance Podcast – my guest is Phil Knight.

Phil has worked in the medical insurance sector since 1994 for the likes of WPA, Standard Life Healthcare, AXA PPP and Simply Health and financial services more generally from 1989.

He set up his own specialist medical insurance practice in 2011 (working with Premier Choice Healthcare) and advises clients on all aspects of medical insurance in the UK and around the world. He promotes his practice as a fusion of technical knowledge and focused customer transparency.

Away from work he has two main passions: technology and martial arts. I wanted to get Philip on the podcast so that we can talk about how he uses technology via his medical insurance podcast to pass marketing messages and information on to his customers.

Here’s a little known fact – Phil has studied several martial arts since 1980 and now holds separate black belts in two styles of karate – but so far Phil hasn’t found a way to successfully merge martial arts into his business life!

You might think that Private Medical Insurance, Podcasting and Social Media are strange topics to lump together. But Phil has boosted the success of his private medical insurance business by launching PMICast and using social media to drive traffic to his website.

Phil Knight on PMI Podcasting and Social Media

Listen to how he has generated new leads and built a loyal audience of advisers and clients.

You can’t miss this uplifting, informative and inspirational interview.

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Now it’s your turn:

If you enjoyed this episode – Phil Knight on PMI Podcasting and Social Media – please leave a comment or a review on iTunes. And if you know anyone who would enjoy the show – please share it with them. You can use the buttons below to share on social media.

Edmund Tirbutt on Financial Media Case Studies and Storytelling – MPAF Episode 4

Positive Stories. Case studies and videos could be the way to overcome the poor perception consumers have of the financial services industry.

In Episode 4 of the Marketing Protection and Finance Podcast – I talk to journalist Edmund Tirbutt.

Edmund is a freelance journalist and writer and has covered financial services topics for the last 27 years.

His articles are always painstakingly researched and hard-hitting.

A one time semi-pro stand-up comedian, he’s recently started doing comedy again, performing alongside world-renowned comedians like Mike Wozniak and John Maloney.

Listen as Edmund talks about his early days as a media champion trying to get declined claims paid. Hear his views on how we use humour in financial services communications. He asks whether seminars in the workplace the key to future market growth.

Edmund Tirbutt on Financial Media Case Studies and Storytelling

Edmund feels that positive financial case studies are key to improving the public’s view of financial services. Listen as he explains what works and how advisers can talk to the media to showcase their positive stories.

Don’t miss an episode of the MPAF Podcast – subscribe now.

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Now it’s your turn:

If you enjoyed this episode – Edmund Tirbutt on Financial Media Case Studies and Storytelling – please leave a comment or a review on iTunes. And if you know anyone who would enjoy the show – please share it with them. You can use the buttons below to share on social media.