Protection: Innovation or back to basics?

Few attempts to transform the healthcare and protection sector have involved as much investment and attracted as much publicity as the launch in July 2008 of real life cover by Fortis Life, but more than four years later the product is barely mentioned.

The concept designed by the firm – which changed its name to Ageas Protect in 2010 – in conjunction with specialist intermediary LifeSearch ‘to revolutionise the market’, combined a handful of different protection covers with the option of unemployment cover.

It was aimed at customers who knew they needed more than just term insurance but found it difficult to choose between the different types of cover available, or saw them as too expensive or complicated. The cover offered affordable essential protection throughout the customers’ working lives.

But while the rave reviews and awards flowed in, the sales did not. Ageas Protect acknowledged that “sales have been very sluggish” and that the “one or two” intermediaries, other than LifeSearch, selling the product were doing little business. Even LifeSearch referred to sales as merely “ticking along and nowhere near as big as standard life and critical illness sales”. So where did it all go wrong?

Steve Casey, head of marketing and propositions for Ageas Protect, cited the complexity of real life cover and the fact that intermediaries were wary of new things and disadvantaged by its inability to sit comfortably on their search engines. It is listed on Avelo Exchange under CI cover but is not on any of the others.

One cannot help feeling that it would not have been beyond the wit of man to detect such potential obstacles during the pre-launch research. After all Bright Grey, which took part in the early workshops and considered partnering LifeSearch, soon established that the product did not fit in with the way financial advisers felt protection should be offered.

But feedback from the market suggested that, while IFAs can often give a very positive response to ideas during research, projects frequently fall down when it comes to trying to persuade conservative network compliance officials to put products on their approved lists. Even advisers who think something is a strong proposition can therefore be put off by having to work harder to justify the sale to their network.

New products in the healthcare and protection sectors are, however, quite capable of bombing without IFAs or networks being involved. Virgin cancer cover, for example, attracted huge attention at launch in 2006 by aiming to provide a new form of CI product that covered only cancer. But by 2009 it had been withdrawn for new business. The delivery and marketing were understood to have been more to blame than the actual product design.

It is also quite possible to have a disaster even if you have the full support of the intermediary community. National Friendly’s healthcare deposit account, which was highly regarded by many private medical insurance brokers, was launched in 2006 as a unique PMI policy that offered policyholders fixed premiums and money back if they did not make a claim. But in 2010 the benefit structure was made significantly less generous and in 2011 National Friendly stopped selling the product, citing higher than expected claims experience.