Presentation on theme: "Protection Review Conference Innovation – what innovation? Roger Edwards, Product Director, Bright Grey."— Presentation transcript:
Protection Review Conference Innovation – what innovation? Roger Edwards, Product Director, Bright Grey
So how innovative are we at the moment? So how innovative are we at the moment?
Spiral of price competition Short term need to meet targets beats long term desire to innovate and be different Prices fall further Ambitious plans to grow market share Industry infra-structure geared to price only
Protection markets Income Protection Critical Illness Term
Life cover for less than 26p per day When it comes to protection are retailers behaving like retailers?
Difficult to break out Prudential Flexible Protection Plan Same market Alternative to CI Virgin Cancer Plan New market? Alternative to CI
What advisers recommend? Given regulation, advice justification, reasons why, threat of legal action Existing CI Cheap rates Comfortable with cover Proven concept Millions paid in claims Impact based CI Higher rates New definitions Unproven concept No claims history
Is innovation taking too big a risk? Short term Sales Profit/share price Tactics Safety in similarity Long term Strategy R&D Innovation New product lines
Difficult to break out Can you launch something new into the adviser channel and expect instant success? How many companies will take a long term view? More than one company launching something new might work – but what about the Competition Act?
To summarise the current environment Doing the same things To the same people With the same products Using the same processes
So how innovative are we at the moment? So is it really possible to innovate?
How to change the current environment Doing the same things To the same people With the same products Using the same processes Do different things To people who are NOT currently customers With different products Using different processes
Evolution or revolution?
Innovation We couldn’t do that because…… The Reassurers won’t let us do that…. That’s a daft idea….. My only concern is that…..
Innovation Are we designing products for consumers or our distribution channels? Bells and whistles that let our consultants get one up on the competition or benefits of real value to the consumer? Recent examples –silent heart attacks
What is a protection product? a piece of paper to file away and forget about? compensation for life changing events? a promise to pay money when something horrible happens? peace of mind? debt repayment?
The traditional protection product product Piece of paper Promise to pay after a horrible event Just money
The problem product Exciting Status - you can polish it Material goods It’s an experience!
Reality productcommsapplyclaim the customer product experience perceptionexperience piece of paper promise to pay after a horrible event just money experience
Where to innovate productcommsapplyclaim Innovation needn’t be confined to the product – think about all the proposition touch points
Communication Create a better perception Engage with the Government –Education: on school syllabus, free consumer guides –Cultural influences
Information overload Innovation on advice Navigate through the massive maze
Don’t understand it SACIC TPD ACIC PMI PTD PHI IP GPR MER LTA
Perception “In the event that you procure one item, as defined by the appropriate boxed quantity and confirmed by the electronic point of sale supervisor, we will assist you in the procurement of a second item, as defined by the appropriate boxed quantity, for no charge, that is, no monetary transaction, as defined by an exchange of currency, would be needed” “Buy one get one free”
Communication innovation What about 24 hour protection channel? What about advertising on DVDs? What about the flavour of the month boy/girl band promoting protection? Include a protection podcast on each new iPod?
Apply 1992 App 1992 application form –2 pages 2004 industry average –32 pages
Are we doing preferred lives? Even more intrusive questions Less people accepted at ordinary rates Preferred lives products through the back door Length of process leading to reduced mortgage protection sales?
GP report Expensive VAT The Holy Grail is a replacement for the GP report …or to do away with it all together
Do we have the bottle to replace the GP report? Is the industry obsessed by removing every possible risk from writing risk products ?
Application innovation What about blood spots and saliva profiles? What about drop ins to Boots for medicals? What about microchips embedded into the back of the neck? What about full medical details on the new Government Identity Card?
Consumer needs Debt repaymentIncome replacement Decreasing life Level life Family income benefit on death Income protection for occupational disability CI??
Innovative products What about IP - when are we going to fix it? Is evolution of CI restricted to illness definition nitpicking? What about hybrid products? What about ‘Impact Based Cover’? What about a replacement for TPD? What about protection in a box or on a smartcard?
Lessons for the IP market?
Benefits payable for full term or age 60 Own occupation cover Tick box application – no underwriting Everyone pays the same rate Wow!
But….. 3 year pre-existing conditions Stress, backache or nervous disorder.
Longer term MPPIIP Is the answer MPPI+ or IP - Mortgage Brokers Financial Advisers
Claims Long-winded process – often a repeat of initial underwriting Private detectives Treating people like people, not policy numbers Clarity – “We are declining your claim because of caveat emptor and uberrima fides.”
More than money More than just a hand out –Helping Hand –Best Doctors –HCML Real valuable service to all customers and their families Money when needed and pro-active help “Best advice” benefit to the adviser Repositioning protection to be help first, money second
Claims innovation What about paying them (ha ha!)? What about no financial underwriting at claim for IP? What about immediately paying 5% of every critical illness claim? Or cover their monthly outgoings until the decision is made?
Summary productcommsapply the customer product experience perceptionexperience piece of paper promise to pay after a horrible event just money experience claim
Summary Do different things –Not just price –Not just stealing existing market share To people who are NOT currently customers –Other markets –Other distributors With different products –New product models tailored to market niches –New propositions Using different processes –Simplified underwriting –Easy application