Financial protection insurance has come a long way since I first took an interest in the product area some 20 years ago as a new kid on the block at The Mail on Sunday.
Fired up by a mix of youthful exuberance and indignation, it was not difficult for me to pick large holes in an area of insurance that seemed designed only to pay up when all else failed.
Insurers, egged on by their reinsurers, seemed to enjoy trawling through claimants’ medical records to discover any form of non-disclosure (however trivial) that could be used to invalidate a claim. For a long time, the Association of British Insurers (ABI) was quite happy to condone such behaviour.
Yet the past, however grubby, is the past. The financial protection industry has moved on and today it is no longer the beast it once was. Some good work from the ABI, plus a number of great industry initiatives – for example, the Seven Families campaign plus the formation of ‘think-tanks’ such as the Protection Review – means we now have an array of financial protection insurance products fit for purpose.
Claims data for individual insurers are no longer locked away in the safe of the chief executive’s office, never to be seen by anyone outside the business. Now, with successful claims rates regularly up in the 90s, it is published with fanfare. Indeed, some insurers are quite happy to ring and give me their latest figures as an ‘exclusive’. Miracles never cease.
Putting protection insurance on the map
Today, I see a steely determination by some within the industry (advisers and company experts) to put protection insurance on the financial map – to make it more mainstream and consumer-friendly; to promote it as an essential piece of financial furniture.
None more so than Johnny Timpson at insurance monolith Scottish Widows. Although he comes with a long job title – financial protection market and industry affairs manager – this caring individual was instrumental in getting his employer to back the production of an important educational film (Change Of Heart) charting the first heart transplant in 1967.
This monumental event led, in turn, to one of the doctors involved in the transplant (Marius Barnard) going on to create critical illness (dread disease) cover.
Yet it is not just Scottish Widows doing its bit to wave the protection insurance flag. It is also refreshing to see a new ‘protection challenger’ – Guardian, run by Gryphon Group - enter the fray, determined to do things right by the customer. In other words, to shake things up a little.
What I particularly love about Guardian’s debut is its pledge on cover upgrades. Rather than setting a policyholder’s cover in stone, it has promised that when it improves definitions (as all insurers do from time to time), they will not just be applied to new policies sold; they will also apply to existing policies. If the upgrade results in a premium increase, Guardian will offer existing policyholders a choice: stick with what they have got or twist to the upgrade.