Before I go…
As my time as co-chair of the IPTF comes to an end I’m sharing the first few items on my (still) to do list. In truth I believe many of these are best solved outside the collaborative environment of the IPTF and require the cut and thrust of competition in a growing market to enable brave innovation.
?Underwriting approaches need to be challenged
?Focussing on what people can do as much and not just what they cannot ought to be at the centre of underwriting, as it is when assessing claims today. If someone can demonstrate a history of resilience and ability to work through medical challenges, they could be given due credit.
?This would be particularly transformative when looking at people in the second half of their working life. The chance of getting a standard rates decision for IP reduces significantly as age increases.
?There is a philosophical challenge here – ought the pricing not enable a similar number of 20 somethings and 50 somethings to be considered a standard risk for their age? Naturally older people will have had more events – but they will also have more demonstrations of how they respond, and ultimately should be measured against reality not the somewhat boring perfection.
?Whilst the decreasing average age of people buying IP is seen as a good thing part of the reason for this is likely to be just how hard it can be to apply at older ages. I would like to see IP sales grow at all ages in the next 4 years.
?Another core concern raised by advisers this year has been around underwriting response to recent labelling of long-term symptoms. They report insurers reverting to a postpone decision on the basis of a recent diagnosis rather than consider the ongoing history.
?The most cited examples of this are a long history of low-level mental health issues evolving into a diagnosis of ADHD in the last year. Terms may have been possible with an exclusion pre-diagnosis, but for many insurers post diagnosis they look to see the impact of the diagnosis of and possible medication for ADHD before they offer terms, when the client sees a more positive outlook ahead.
?Lastly – the rise of reviewable exclusions is admirable and being frank makes the old school underwriter in me slightly nervous at the one way bet that this can produce. However, on occasions there is an acceptance of a reviewable exclusion where actually the need for any exclusion is scant at best – and the nature of an exclusion is that you’ll never learn if the decision was justified or not.
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Rates of misrepresentation are growing
Misrepresentation is on a gradual but clear rise across insurers, causing claims payout rates to drop. This is a real concern for the sustainable growth of Income Protection. The root cause of this is unknown, but in my opinion is likely to be a combination of:
-??????????? Long application forms that ask for so much information that applicants either struggle to remember or start to self-underwrite – “they can’t really want to know about those headaches 2 years ago…”
-??????????? New advisers to IP not appreciating the different levels of information required for Income Protection compared to a life insurance policy.
-??????????? New markets being reached where less honesty when answering insurers questions may be more acceptable
This is one where many issues are shared across insurers and advisers, and I hope to see more ongoing open conversations and use of technological innovation to ensure that there aren’t more stories of frustrated IP claimants to come as the market grows further.
?Income Protection shouldn’t just be for advisers
?Lastly, and possibly most controversially - a viable non-advised Income Protection market needs to grow. The flexibility of the product that enables advisers to fit around need and budget can and must be simplified if this is ever going to be a product that actually protects a significant amount of the population.
?The IPTF continues to have both a key role in growing the market and helping convince people it’s worth them solving these challenging issues. The rewards will be there in an increased share of a larger market than at any time this century. I look forward to seeing solutions emerge – and maybe even being a part of some of them!
Retired
2 个月As ever Andrew, very insightful. Now that I am no longer part of the IP industry, I’ll add some thoughts on your first point. There are still a number of chronic conditions that result in an automatic exclusion but many of those people manage their conditions very well and have little if any time off work. While I can understand more care needing to be taken at short deferment periods, surely 13 weeks plus should be more manageable for the insurer? Furthermore, looking at the principle that any insurance is better than none, offering 2 or even 1 year payout terms would be a way of getting a level of cover. Another way of looking at this would be a temporary loading which is removed after a period of time if the policyholder hasn’t claimed and can show they are managing the condition effectively. This can’t apply to all conditions but there are many more people who could be covered with a little bit more understanding. Finally, what is the higher risk - the person who has been diagnosed and manages their conditions well or the person who has it but doesn’t know? Why do we continue to penalise those who’ve seen a doctor?
Financial Services Leader | Social Media Management | ILAG Director | Women in Protection Ambassador | Board Trustee within Education | Follower of Arsenal FC
2 个月A nice balanced read - I definitely think there is a place for non-advised in IP too, the downside is, that will also increase misrepresentation. As a believer in the #greatergood theory, I’d rather have 20% more IP sales with a potential 5% increase in misrepresentation thst may come with it than 20% less having the cover they won’t regret.
Some excellent challenges laid down to the IPTF and the wider industry. And I’m looking forward to working with Andrew Wibberley in our new company The Interesting Life Company to solve at least some of them.