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CV: In February 2008 Chris McFarlane was promoted to the role of head of protection and pricing for LV=. Mr McFarlane retained responsibility for all pricing activity across the life and pensions business. He has been with LV= for four years and previously worked at Swiss Life and Unum. Mr McFarlane is a qualified actuary.

CV: At the start of 2008 Stuart Tragheim took on the new role of distribution strategy and business development director. Mr Tragheim is responsible for marketing, national accounts and e-commerce. Previously he was director of intermediary business at LV=. Mr Tragheim joined the friendly society in 2005 from the Association of British Insurers, where he had been director of the ABI's raising standards scheme. He was also previously sales director of Teachers Friendly Society.

MA: Can you explain a little bit about the history of LV= and what protection products you offer today?

ST: LV= is the largest friendly society in the UK with a history going back to 1843. Over the years we have evolved a number of products for different markets and we offer general insurance and on the life and pensions side we have a big range of with profits investment products ranging from child trust funds to investment bonds. A few years ago we bought an organisation called Permanent Assurance, which was a protection specialist and brought us into the protection arena. Our protection proposition is generally based on the belief that menu based propositions are a better long term bet for consumers than single standalone products. Our core proposition is the flexible protection plan, which is a menu proposition that offers complete flexibility in terms of selecting different covers. It includes term assurance, accelerated critical illness, standalone critical illness and income protection. That is the main stay of LV='s protection proposition. It is boosted by us having quite a good online capability. We have a good reputation for underwriting and innovation. The most important thing we have been doing recently is trying to work out where the protection world will go to help close the protection gap, which Swiss Re is quoting at £2.7 trillion.

MA: LV='s protection claims record revealed 86 per cent of claims were paid for income protection and critical illness policies in 2007. What are you doing to try and reduce incidents of non-disclosure?

CMcF: The main thing is we offer advisers a number of ways to apply for policies. We have a paper-based application form and advisers can also use the online system where they can complete the underwriting. Two-and-a-half years ago we launched - and have been growing ever since - express underwriting. That means the adviser just submits the basic details of the customer and the level of cover they want and then they are contacted by a tele-interviewer at a time convenient to them. The tele-interviewer will then go through all the underwriting questions and drill down where appropriate. We are confident the system gives us much better information and we are taking the burden of extracting that information and the risk of non-disclosure away from the advisers. Once we have captured that information we then send it to the customer to review and make sure we have got everything correct. If the facts are incorrect we ask people to come back to us and correct those details because we are all about paying all valid claims.

MA: What do you think has prevented mortgage advisers from arranging more protection in the past?

ST: It is an add on to their core competency and skills. Finding the right mortgage deal and making sure it goes through is their primary focus. The ancilliary bits that follow on from that like life insurance, buildings and contents insurance plus mortgage payment protection insurance happens a long way down the line. With the extensive interview process for mortgages sometimes people just ran out of time. The remuneration a number of mortgage advisers have enjoyed in the last few years was based heavily on the mortgage sale. With things changing with the credit crunch there will be a shift to more multiple sales so the mortgage plus protection cover.

MA: Will the credit crunch make it easier for mortgage advisers to sell protection? Has economic turmoil heightened awareness of the need for protection?

ST: As long as companies like ourselves and other publish claims data then confidence among consumers and advisers will return to the market. One of the concerns of consumers is they had policies but were not quite sure what it covered or would it pay out if they needed to make a claim. There has been a general level of concern about that but by publishing claims data consumers should be confident they can make a claim and it will be paid.

MA: How does tele-underwriting help you to treat advisers and consumers fairly?

CMcF: Advisers need to have confidence in the product and in the provider. The product needs to be simple and they need to be confident the provider is going to pay valid claims. One of the advantages of tele-interviewing is we do have a recording facility that we can revisit to make sure we asked the questions correctly and they were answered correctly. We can make sure we are giving the customer every opportunity to provide the details we need so they know how the claim will be paid. Treating customers fairly is all about communication and making sure the customer understands the product and the process they would go through. We spent a lot of time and effort researching the products and going through the customer journey to make sure we are as confident as we can be that what we have got is in tune with TCF. We are a mutual and therefore TCF is at the core of our views.

MA: How important is price for advisers and consumers when it comes to considering protection?

ST: I do not see price as being a significant barrier to the take up of protection. Prices have dropped in some areas and increased in others. Pricing is important but it has not been the biggest thing in preventing further sales. The biggest thing has been are mortgage advisers comfortable with fully protected mortgages? One of the education points in the market is to make sure people are comfortable in promoting fully protected mortgages to their clients. That is one of the advantages of using some of the new sourcing tools. It allows advisers to get access to key facts illustrations that presents the whole picture to consumers.

MA: What does the future hold for LV='s protection proposition?

ST: We have identified for LV= the mortgage advisory market is quite a new market for us. Even with all the problems in the market caused by the credit crunch the markets will come back..We see quite strongly the need to provide a different type of protection proposition made available to mortgage advisers and their customers in a different sort of way. If you go back to the current market there is a series of protection needs but the difficulty is trying to work out what they all are. You end up with term assurance, critical illness and payment protection insurance being a relatively easy sale and anything else being quite difficult. However the rolls royce of protection products has got to be income protection because of the level of cover it provides over the term of somebody's working life. What we have tried to do is build a complete proposition that looks, from a customer's perspective, as easy to access as payment protection insurance and that is what our new product does. It is called Mortgage and Lifestyle protection. It makes income protection much easier to buy than the current PPI market. The key to it is it is a fully underwritten product. Utilising the underwriting expertise we already have we can make income protection as easy to buy as PPI by using telephone interviewing.

MA: Are you working with the sourcing systems to make sure this proposition can be compared with others?

ST: Before we started dreaming up this we really critiqued with advisers and customers the payment protection market. The product is heavily built on that research and has been used for the words we use. At its core this is a consumer product and we recognise access is key. We are already in discussions with Mortgage Brain and Trigold. It will appear in the same places that mortgage advisers currently expect to see PPI and general insurance. They will be able to get quick quotes, quick access and a quick application. The application process looks a lot like PPI. There is a bit more to it when we go through the underwriting process. It is really simple we have tried to make sure we do not over complicate the product or the process and we are confident from the feedback we have had so far that the market will love it as it is so different from what has been out there before.

MA: Who is Mortgage and Lifestyle protection aimed at?

ST: We are really confident the premium rate is comparable to what mortgage advisers are recommending their clients pay for PPI. It is not double the premium but the level of cover is vastly different from PPI. With PPI you get a pay out for a couple of years but there is a limit of £25,000 or £30,000. We are confident we have got the right proposition, researched and priced properly with the right access routes.

CMcF: This is aimed at first-time buyers, remortgagers and those getting a second mortgage. One of the key points is you do not have to take out a mortgage to get the product. In terms of the pricing it is less affordable as customers get older so the core market is probably those aged less than 45 to 50-years-old. That is a massive market to go for and it has got great potential for mortgage advisers. The product offers incapacity cover and there is also the option to take unemployment cover as well. It is highly comparable to the MPPI products that advisers offer at the moment. The customer can choose a level of cover for their mortgage as a flat benefit over the term of their mortgage and they can also opt for a living expenses cover that can be level or increasing with the retail price index and that can be set for a longer of shorter term, whatever the client wants. The flexibility allows the adviser to tailor the cover to meet the customer's needs but it is still a simple product to explain. We expect that it should take just an extra 10 minutes from the mortgage sales to completing the application for most advisers.

MA: What does the future hold for the protection industry?

CMcF: Flexibility will be key. All customers are different. What we do with our range is work with individuals to rehabilitate them back into the workplace. It is not just about paying a cheque. It is in our interest and the customer's interest to get them back to work and earning. We offer a number of value added service that we think customers will find increasingly important.

MA: What commission is available for Mortgage and Lifestyle protection?

ST: Because this is a long-term product it has the same commission structure as a normal protection product. It plays 130 or 150 of Lautro upfront.

MA: What would you say to mortgage advisers who still have concerns about writing mortgage business?

ST: Try it and see. The only thing you can do is experience it and see how it goes. We have made access to the product range as easy as possible. This can get submitted in two screens. There will be very little extra work. The key thing is just explaining it to the customer and we are having roadshows to help them do that. We will have online training facilities of three simple modules that take three to five minutes each to complete that will help them understand how it goes.