1. short term income protection insurance
Steve Devine Protect Association 4th March 2016

2. MPPI – the unlucky one?
"When properly structured, explained and sold, payment protection insurance can provide worthwhile cover for consumers against unexpected changes in their personal circumstances. We were therefore pleased to see that sales of regular premium PPI sold with prime mortgages are generally compliant.“
Clive Briault, FSA Managing Director for Retail Markets, on 4 November 2005
following FSA PPI Thematic Review Phase 1

3. OFT Market Study – some of the findings you might not have seen
“61% agreed that PPI is value for money, and almost 9 in 10 agreed that it gives peace of mind which people are prepared to pay for.
3 in 4 of the PPI holders interviewed said that the salesperson advised them of the monthly PPI payment separate to the product repayment, and only 7% said they were dissatisfied, to some extent, with the understanding of how much the PPI would add to their monthly repayment.” -OFT Market Study Annexe B
General lack of consumer knowledge –although consumers were not aware of it “Over 2/3rds believed they understood PPI terms either completely or mostly, as well as giving a very high satisfaction rating regarding their understanding of various aspects, such as extent of cover, the exclusions or the amount and length it would pay out. They rated highly not only their own understanding, but also the actual features of their PPI policy” - OFT Market Study Annexe B – Gfk NOP research
“ In conclusion, the survey shows that the decision to purchase a PPI policy is not merely a financial decision, based on the cold calculation of costs and benefits in terms of money. Rather, many people worry about their credit commitments and purchase PPI in anticipation of the emotional benefits it can bring.” OFT Market Study -Annexe C- Rob Ranyard

4. Simply STIP (can you bank on it?)
Treasury/ Sergeant Review – Simple Products Must not look like PPI – Teresa Fritz Lack of appetite from providers Result - No Protection product in 1st Suite Initiative stalled – ABI Leading – more activity this year? STIP claims statistics – ABI ?
Protection is not simple but we need to provide simple, affordable cover/products Long term Protection products via Intermediary channel, is unaffordable to majority of working population and padded by high commissions.
Can we make Protection simple? if so how ?
The high street banks are seemingly being fast tracked back into the market by the regulator. What role could they play in selling protection insurance to the mass market given they were almost entirely responsible for PPI miss-selling?

5. STIP 1
There are 2 types of STIP – those written as long term policies For which we do have market data for and here is a snapshot of it
PSD - Long term IP sales just 104k in & 56,750 H (35% Budget / Limited Benefit period versions – more diverse and affordable covers)
92% of 2015 IP policies were advised sales, 8% non advised 96% non provider sales, 4% provider sales 30% IFA/Advisers & 24% Mortgage business, under 16% GI Intermediaries and less than 9% via Banks & Building Societies
Currently they only appear to be replacing long term IP with STIP/ Limited Benefit products, as the sales figures remain flat and depressed.
Where do you think this type of STIP products are going?

6. Stip 2
The other type of STIP product is the GI/ Creditor policies (ASU) for which I have no market data other than the policies that are available. Its sold D2C – on all the major Comparison sites and also via intermediaries.
The Product Cover still essentially ASU with the occasional Hospitalisation.
The cheapest price wins in a highly competitive market. The major comparison sites have adviser companies to sell/advise on the products.
Defaqto and their star ratings - is another source if you want to see what STIP policies are available. I have a problem with the star rating system, I think STIP does too. Because it favours the comprehensive policies and works against product innovation and affordable policies.
What do you think about the Defaqto star rating system and its effect on product design?

7. STIP – the main challenges – trust & value, the ageing process, and blind optimism
Lack of trust/ interest from consumers and also the providers and intermediaries selling the long term IP products. ASU style STIP does not have enough commission for many intermediaries, so why bother? Plus, its classified as PPI by the FCA.
Can you blame them? Who wants to sell PPI and take on the regulatory risk and the stigma surrounding it?
As providers/underwriters could we/ Should we have done more to distance STIP from PPI?
Or does that matter? Consumers either ignore, or, just don’t get product silos. To them an insurer is an insurer, whatever the product or sector.
Another big problem we face is overcoming the optimism bias that is hard wired into humans. “I know all about the things that can happen to people but it won’t happen to me. I am the special one.”
Is a typical STIP policy value for money? Especially given that peace of mind is not a measure of value (FCA).
Would combining them with cash plans help - they do pay out - e.g. eyesight /dental claims
Are current STIP policies catering for the ageing population? (i.e. Some policies only offer cover only until 59/60 years old)