There were some clear market leaders by sales in 2017, according to Swiss Re’s research. Legal & General sold 131,515 new CI policies, followed by Aviva’s 126,824. The gap between these two and the third-place provider Vitality Life’s 52,375 is significant.
But those on the ground have noted other changes on the horizon. A new firm has entered the market with a notably different approach to the established players, and developments over the past 12 months have already moved providers in a more customer-friendly direction.
New kid on the block
This new firm is Guardian, a company that rebranded as a protection challenger this year, initially focusing on CI.
The firm’s offering differs in various respects from rival products. Guardian seeks to make it more straightforward for customers to claim on conditions, in part by doing without some of the traditional requirements for a payout.
If, for example, a customer claims for a heart attack, traditionally they may have to give evidence of their levels of troponin, a protein released into the bloodstream during such an incident. But Guardian, instead, asks for confirmation of a heart attack from a UK-based consultant.
Other new approaches include a reserved cover offering. Once an individual has bought a policy, they will have the option to increase their level of cover or add a new type for up to 27 months without further underwriting on the original pricing. The 27-month period is aimed at those whose two-year fixed rate mortgage has recently expired.
One drawback of the Guardian offering comes in the form of cost. As Table 4 shows, it is more expensive than those rivals who disclosed pricing for Money Management’s latest CI survey. The firm says it is focusing on quality rather than price.
“We are not the cheapest and we are quite actively embracing that,” says Katya Maclean, Guardian’s proposition director. “It’s the highest quality cover that you can have. We are describing it as the price of certainty.”
Emma Thomson, life office relations director at LifeSearch, a protection advice company, says Guardian may have an impact on the broader market regardless of its success.
“Hopefully it can help more claims get paid faster,” she says. “I think will make a big difference and I expect other insurers to follow.”
Mr Lakey views this as an important moment for the industry. While he notes that some rivals have questioned the sustainability of Guardian’s business model, he expects the big names to be “fighting back” and embracing similar approaches.
Some elements of Guardian’s offering may not be entirely welcome to intermediaries. Mr Lakey notes that an option to upgrade cover definitions may cut advisers out – though they may not begrudge this.
