Of course, we can’t meet in person and we all miss those informal conversations that tell us a huge amount about the mood across the industry.
Yet I get a strong sense that the retail financial sector, and the protection part of it in particular, is currently taking stock of what has happened, how they coped, what it means for clients and customers and where we go from here.
We have effectively live tested many aspects of remote working and remote communications with customers and clients. By and large this has been a success.
That discussion is beginning to turn to what combination of virtual and face to face meetings will become the norm.
Advisers continue to advise clients to take out protection and at Guardian we continue to grow and cover more customers.
Yet that is no reason to be complacent. The attitudes, priorities and maybe the life goals of some clients may have changed depending on their experiences in the last 12 months.
One great piece of news is that advisers tell us that some clients are more likely to mention protection insurance in conversations, sometimes remembering and reassessing what the adviser had said to them years previously.
In other words, advisers may have already laid the groundwork for more protection conversations and recommendations.
Remember the fundamentals
The protection sector needs to adapt accordingly, but I would also argue that it needs to consider the fundamentals as well.
We set up Guardian as a challenger because we thought we could do things better and indeed encourage change across the sector.
For at least the past decade, the whole of the retail financial services industry has been increasingly challenged by consumer campaigners, regulators and politicians demanding a fair deal for both new and existing customers.
The record is certainly mixed and ranges across savings, insurance and investments though in ways that are specific to each.
With teaser rates on savings accounts, some felt that banks and some building societies were winning new customers with competitive or even loss-making rates in year one but making their money back in subsequent years as rates were cut back significantly.
Generally, the costs to other customers have come to be regarded as unacceptable.The regulator baulked at an outright ban on teaser rates in 2015 in its cash savings market study but it required much better communications and warnings for customers about rate cuts. This hit the savings sector’s reputation.
The regulator has recently started voicing concerns again.
The current area of greatest concern is general insurance. A situation where customers renew policies each year has also seen many insurers ramping up the price in year two or year three.
Some might argue that customers can easily switch to another general insurer and indeed many do.
Caring for customers
The FCA’s final General Insurance Pricing Practices Market Study was published in September 2020, a consultation has been conducted and the market awaits final rules.
The pricing proposal is as follows – “Where a firm offers a renewal price to a consumer, this should be no greater than the equivalent new business (ENB) price that the firm would offer that consumer”.
To be fair to banks and general insurers, one of the drivers of the situation was the increasing influence of comparison sites. The pressure to be at the top of the tables can be intense.
An increasing number of price-sensitive customers have benefitted from being active switchers but generally, the costs to other customers have come to be regarded as unacceptable.
The situation with pensions and investments is slightly different. These are long term investments and so any pension or investment firm that has been in operation for any length of time is likely to have a legacy book often built up when charges were higher and when contracts had a different structure.
Yet we are also seeing moves to cut charges, encouraged by regulation but also many firms wanting to do right by their investors.
If that is the broad context, what about protection?
Well, it has some of the characteristics of the products mentioned above. Protection can be price sensitive. It is long term. It has felt the wrath of consumer campaigners in the past though mostly focused on claims turned down.
One difference is that protection is mostly intermediated and not just by comparison site algorithms but by financial advisers.
Keeping it fair for all
But it seems relevant to ask does it have the potential to discriminate against longer standing customers and if so, should it concern advisers?
Our answer is yes to both, because we can see a significant risk that the older part of the protection book can slowly become out of date if the cover is not updated for all customers.
It could also have a knock-on impact on claims if new customers are covered for some aspect of a condition and long-standing customers are not.
And for those who suggest this is a minor detail, we would ask what a longer-standing customer’s expectation would be, were we to ask them?
We can see from the above examples, that a market can evolve in ways that lead to unfairness.
That strikes us as an important debate for the industry to have now because customers' expectations and concerns may have changed.
If we do see increased interest from the public, whether prompted or unprompted, we think the protection sector should not take this for granted.
The older part of the protection book can slowly become out of date if the cover is not updated for all customers.Guardian avoids this issue because when a customer makes a critical illness claim, we check it against the definitions in their policy as well as the definitions we offer to new customers, and we pay out if the claim is valid under either.
This means existing customers are always guaranteed the best cover we offer. Occasionally, Guardian may introduce changes that won’t automatically be upgraded for free. If this happens, we’ll offer existing customers the chance to pay to add them.
It’s what we describe as our cover upgrade promise. We think this is something advisers should think about and indeed ask other insurers about too.
And we think protection firms should be wary of customers being treated differently across their books of business, simply because of when they took the policy out.
As I said at the start of this article, there is a sense that the financial services industry and its customers and clients are taking stock.
Perhaps the protection sector should spend some time considering whether its products meet all customer expectations and will continue to do so.
Peter Mann is chairman of Guardian
