In total more than 50 questions have been asked of each life office in relation to their plans for G-day. The information is provided in a consistent style designed to make it easier for advisers to compare and contrast different provider’s plans.
In addition to issues around new business submission and processing, the tool provides information on the extent of providers’ support and resourcing as G-Day approaches; their approach to trusts in the run up to G-Day; and how lapses, guaranteed insurability options and how policy amendments will be treated
Is it a big deal?
Some commentators have suggested the prices rises will be little more than a drop in the ocean and thus are not too bothered. However, a 30% rise on a £50pm premium over 25 years is £4,500 over the term.
“People can be forgiven for thinking that this is one big marketing campaign by the insurance industry, but it isn’t. It is genuinely a call to action, because the prices available now will, for many people, be higher after 21 December,” said Peter Chadborn, managing partner of the independent financial adviser Plan Money.
Impact on business models
Q4 is expected to be busy as insurers rush to ensure as many policies as possible beat the deadline. December in particular is expected to probably be the busiest on record across the industry.
However, with rising prices the ability to switch business around on price is likely to come to an end. Policies can only be re-broked (or churned) in a market where premiums are falling, and it needs a good few years of falling prices before switching around becomes as common as it has been in recent years.
Any business models who may have relied on switching protection business to generate revenue will find it increasingly difficult to do so in 2013.
Following this logic through it is also likely that new business sales will fall across the industry. Nobody quite knows exactly how many new protection sales are genuinely ‘new’ but estimates suggest that around a third is replacement business, which means that new business across the industry could fall by a similar amount.
G-day around the world
Meanwhile, while UK insurers compete to see who can come up with the most complicated G-day process, the leading life insurer in Germany took quite a different stance.
They have been offering both pre and post G-rates for some time on the assumption that unless the broker says otherwise the cheaper of the two will be used (an option which was discussed with UK providers at F&TRC’s Protection Forum and promptly rejected).
