Do you know? What will be the Next Big Thing in Protection Insurance?

When do you think we will see the next big “thing” in the protection market?

I asked this question in an introductory speech I made at the LifeSearch Protection Awards 2014. I would be fascinated to hear your views. As background, I’ve included an edited version of the speech below. And for the “time poor” here is a brief three-minute video edit of what I said.

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By “thing” I don’t mean going to a medical dictionary and looking up a new rare illness, with a three-line Latin name, and adding it to a critical illness plan. And by “thing” I don’t mean finding ways to cut the headline premium rates only to cut the number of lives we accept for those rates.

I mean when are we going to see something that genuinely makes people sit back and say, “Oh My God?”

Some of you will know until the autumn of 2013, I was Managing Director of Bright Grey & Scottish Provident. Indeed I was one of the founder Directors of Bright Grey back in 2003. As a result of changes within the Royal London Group last year, I decided to take voluntary redundancy and to start my marketing business.

This means that for the first time in 25 years I no longer have to tow the corporate line. Now I can say anything I like.

About anybody. And any company.

So I can genuinely say to Louise Colley at AVIVA and that I loved your Paul Whitehouse TV adverts and not siding with the critics who said you ruined Downton Abbey for them. And of course I can say how jealous I was of your budget.

Or being a fitness instructor on the side I can say to Phil Jeynes that I love the PruProtect fitness links without having to think of a sales aid to rebut them.

Sometimes it’s good taking a huge step back from something that you been involved with for such a long time. You’ve heard the phrase “Can’t see the wood for the trees.” What you need to do is get into a helicopter and fly so high up so that you can see the forest and beyond.

Well I can’t afford a helicopter; I didn’t negotiate a big enough settlement. But I have a great “virtual helicopter” and leaving my job made me reminisce about the past and ask myself how what’s happened in the past has contributed to the shape of the forest I now see below me.

So indulge me for a minute and let me tell you how the first “menu of benefits” protection product came was launched.

This was nearly twenty years ago. It had been a very busy morning in the office. Meetings followed meetings and pressure from all sides. So pretty much the same as now!

I had missed breakfast and so by lunchtime I was absolutely ravenous. I felt like having something really tasty to eat. Something that would sate that morning of meetings induced hunger pangs.

So I decided to head out to Princes Street in Edinburgh.

I wanted to find a high quality restaurant.

I wanted to find somewhere offering real fine food.

I went to Burger King.

RE LPA 2014

When I stood in the queue waiting for service I had my light bulb moment. There above the tills is the huge Burger King Menu. You can see each price of the burgers, Whoppers, Chicken Royales, fries and drinks. And then you can see the cost of the “meals”.

Of course the cost of the “meal” is always cheaper than the sum of all the separate items.

Whatever you might think about Burger King  – the menu works well for different customers.

If they want a burger on its own they can have it. If they want fries and a drink they can have it. If they want a whopper meal, go large, they can have it.

And they’ll get a discount on the “meal”.

I started thinking about the protection products in the market then. Everyone offered separate term assurance, critical illness and income protection products. If a client wanted term assurance they could have it.

But if they wanted more than one cover they would have to fill in two applications, take out two separate policies, pay two policy fees and be bombarded with two sets of paperwork.

Whereas Burger King would have bunged the two items in a paper bag and given them a discount.

Thus was born the idea for the “menu” protection product launched in 1996.

It combined life cover, critical illness cover and income protection together in one plan. One application process, one set of charges and as many combination of benefits as the customer wanted.

And we would wrap it up in the equivalent of a paper bag and give them a discount.

I particularly remember the London launch.

London was the key one for us to get right. In the audience was John Joseph who at the time was one of the most influential advisers in the industry. His words in the media could mean the difference between success and failure of a new product launch. Although he is a small guy, John can by quite daunting. He always wears a three-piece suit with a multi-coloured waist coat.

I made my presentation and thought it went really well, except that John Joseph just sat there with his arms folded and a frown upon his face.

At the end of the presentation John Joseph stood up and gave me a slow clap.

“Congratulations,” he said. “You’ve just launched the most complicated product I have ever seen.”

He didn’t smile. I held my breath and stared back at him expecting a wave of criticism.

And then he said, “But I love it!”

The rest of the advisers loved it too and how it would let them create a tailor-made solution for their clients

That product went on to get a share of 32% of the UK adviser protection market. Of course had I been more savvy in structuring a bonus arrangement back then I definitely would have been able to afford a helicopter now.

Looking back and compared to the menu products in today’s market, that original version was actually quite simple by today’s standards. It had 16 illnesses and an 8 page application form.

Menu products available today cover over 45 critical illness and more partial payments, have a 32 page application forms, and a 90 page policy document.

90 pages! The owner’s manual for my car isn’t that long.

And what about the application process? Back then there were 5 main health questions. Now there are of 20. Online processes make the process slightly less tedious but why has the application process become so complicated?

Well it’s a symptom of the price competitive position we find ourselves in. 20 years ago we were accepting 94% of cases at ordinary rates.

Now some companies are accepting as little as 75% of cases at ordinary rates.

Disappointing 6% of customers was bad enough but 25%? Imagine going into a shop and being told that every 4th item that you bought was actually more expensive that it said on the display. Would you be happy?

So from my helicopter high above the forest I see an increasingly complex market.

Incremental innovations lay more complexity on an already very complicated proposition.

RE LPA 2014a

Did you ever think there would be a day when there were more non-standard ABI definitions than standard ones?

Whilst these innovations allow companies to continue to compete within a flat market, they do not promote growth of that market. I wonder how long we can continue in this way.

The structure of the market perpetuates these issues doesn’t it? Compliance means we have to prove why we wouldn’t recommend the most comprehensive product or the cheapest rate. The comparison engines perpetuate the view that cheapest is best.

And what about compliance teams that reject innovative products if there is nothing to compare it against?

Does compliance stifle innovation?

It’s a tough conundrum to solve.

We can break out of this rut – but I do wonder who is going to lead it. Is protection a big enough prize for large providers to make the necessary leap?

Perhaps we have to look to distributors such as LifeSearch, and smaller providers to show the way ahead.

If the distributor is setting the standards for customer service does that mean that in the future the distributor should be setting the standards for future proposition development. Will companies like LifeSearch create the stimulus to innovate the protection industry out of its current rut?

I asked you at the start what you thought the next big “thing” would be. Do you think the future lies with simpler products and easier processes? Or do we just need to keep the current list of illnesses and simplify the definitions? Will the definitions ever just say, “Diagnosis of Heart Attack by a Consultant Cardiologist?”

Full Stop!

Or is it all about process and service innovation, and digital App technology.

What will be the next big “thing” in protection insurance?

What do you think?

Now it’s your turn: If you read this far – thanks for sticking with me. I would be very interested in your views. Please leave a comment or post a link to your own article or blog.

If you think anyone else would like this article please send it to them.

Pop Quiz! A Heart Attack. Can you describe EXACTLY what it is?

On my recent First Aid refresher course, the tutor asked our group to describe what a heart attack is. Having been in the protection industry for many years I was ready to trot out a paraphrased version of the ABI heart attack critical illness definition.

If she’d asked me.

She didn’t.

But only 1 out of the 8 the tutor did ask got it right.

My latest article for Financial Reporter asks what this means for customers and how they see critical illness products. Please click on the picture to read!

Heart Attack

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And when I say we need simplification, I don’t necessarily mean fewer conditions covered. But what about simpler definitions?

“Diagnosis of a heart attack by a consultant cardiologist.” Full stop.

From a pricing point of view that might not be possible but it would certainly be easier to understand than the full ABI technical definition.

Now it’s your turn: What could we do to make critical illness products easier for consumers to understand? Will we ever be able to move away from the complicated, technical definitions that we use today? Please share your views. Leave a comment or a link to your own articles.

Listen! Have you heard what people are saying about Life Insurance?

It’s one of the fundamental keystones of marketing.

Companies need to listen to their customers to understand what they want from their products and services.

Big corporates can afford to do qualitative and quantitative research, including focus groups, to tease from customers their likes and dislikes. They ‘ll employ insight analysts who can spot the trends that lead to opportunities for product developments or service improvements.

For smaller businesses insight comes from one to one meetings, phone calls and possibly a post-sale questionnaire, and genuinely knowing their client base intimately.

But for everyone, in any industry, there is another way to hear what people are saying.

We all have access to social media and this is where our customers shout loudest. This is where they will unload their thoughts without mincing their words. They’ll be candid, critical, and scathing.  But often they’ll be constructive, complimentary and supportive. And we can learn so much from what they are saying.

It’s like being in the pub with a million people.

Just try going on Facebook, Twitter or Google+ and type in a financial services or a protection term – and stick a “hashtag” in front of it. For example, #LifeInsurance.

You’ll certainly see results where some companies advertise their products. But you’ll also see what people actually think about life insurance. Happily, there are many who realise that they should have some but they haven’t got round to doing anything about it yet. This proves some people want it, albeit grudgingly.

Others have already decided they need it. One great Facebook post said:

life insurance

Then, of course, there are those who are not fans. Some think that it is too expensive, that life insurance companies will try to weasel out of paying claims or that it is just too complicated to apply for.

None of these objections will be new to anyone who works in the protection industry, but it does show how word of mouth, or is that word of screens, can perpetuate perceptions.

I came across a tweet recently which described life insurance as follows:

“A contract that keeps you poor all your life so that you can die rich”

Again here is someone who thinks that life insurance is expensive. But is £20 to £30 a month for a couple of hundred grand’s worth of cover really going to bankrupt someone? They probably have gym membership of around £80, a SkyTV subscription of around £60, a mobile phone contract for £50 and many other outgoings.

Of course, the person is correct that he can’t benefit from the payout. But his family can and will if he dies. They will be the ones left having to find the money to pay all those monthly bills mentioned above and more.

Listening to all this deafening noise in the social sphere tells us what content we need to produce to over come these objections and perceptions. The more positive content (marketing material, blogs, videos, podcasts, case studies) the industry puts out the more chance that it will also be heard.

And perhaps the next big innovation will come, not from an insight in a focus group, but from a comment on a blog, Facebook or other social media platform.

Now it’s your turn: What have you heard about life insurance from the social sphere? What are the best one liners? What are the worst perceptions that we need to address? Please share your thoughts and links.