Tom's Speech LifeSearch Protection Awards 2024

Welcome Protection Industry leaders to the 21st LifeSearch Awards!
You find us in rude health, with revenues up 11% year on year.

That’s in part because our Income Protection sales are up 14% 
Which makes me very proud.
And in part because we are helping an increasing number of 
vulnerable customers to access protection insurance.
Which makes me even prouder.

That’s now, but from way back when, when we started these awards 
in 2004 on a sunny lunchtime at the Hiscox Café,
they were unique, and they remain so, because it’s LifeSearch customer-facers and their leaders who are voting: 
the soldiers if you like, in the customer-facing trenches have a chance to tell the generals in the manufacturers chateaus what we think of you! 
And that front-line: not fighting but understanding customers’ needs and wants, and protecting people properly every day, 
is who insurers most need to listen to. 
Well us, and the FCA of course, but more of them in a minute!

In 2004 I noted that “we protection specialists are a new breed.” 
Well that’s changed! 
So many have followed the path LifeSearch pioneered, 
that they, we, now have our own trade body, 
the Protection Distributors Group.
The PDG is not though a conventional trade body, 
its sole aim is to improve what our market does for consumers. 
That means that we challenge market bad practice, which other trade bodies might ignore. 

Our purpose is deliberately not commercial.
Except in that the protection market, 
which hasn’t really grown at all over the last 20 years, 
we feel that growth will only return if we all get better at what we collectively do for consumers 
and thus become trusted, even respected, by them.

And if you wish the PDG would stop causing hassle as we try to improve things, then remember  
That given LifeSearch was the 1st of the modern protection specialist advisers, then specialist protection advice 
was founded with a mission to stop poor protection practice  . 
For within my desire to protect people and families 
from the financial effects of the worst that fate might throw at them, 
was a consumerist anger at the high premiums being charged by the then the biggest protection retailers, whose 90’s ad campaigns boasted of value, when I knew their prices to be way higher than their customers could get through an IFA.

But while LifeSearch turned, and still turns, that zeal into success, 
it wasn’t at the expense of those who overcharged. 
No, no, they went from strength to strength for years, 
until the regulator had enough and effectively put them all out of the life-insurance business for a decade or more, by deeming their success one of mis-selling, and fining them billions.

And now I wonder if we’ve come full circle? 
For there is a classic power struggle going on right now: 
the FCA want to change the behaviours of our largest life insurers. 
but as with most market leaders, ours like the status quo.
I guess they lobby the Treasury, and maybe the Treasury might lobby Nihil Rathi and the FCA leadership, who might or might not tell Matt Brewis to take it easy on the GI and pure protection markets. 
But that battle of wills, 
between the consumerists if you like, and the biggest insurers, 
will decide how the regulator enforces the Consumer Duty, 
and how our market fares from here. 

We in the trenches of protection cannot often see what’s going on, we can but listen to the rumble of the big guns!
Except that we do now have an insight, 
because the FCA has changed its tone after their thematic review of GI and pure protection revealed that there was a lot going on that they didn’t like at all. 

In February Matt Brewis wrote a letter to the market which could not really have been more strongly worded. 
He got straight to the point, saying: “As consumers across the country are affected by the current cost of living crisis, the fairness of the price of financial products and services and the value they offer is more important than ever before.”
And after noting that the FCA had found shortcomings in the way insurers are defining the target market and fair value, 
for their products, including their distribution sales processes, 
Matt gets unusually specific: 
“We saw shortcomings in the quality of the fair value assessments undertaken by many firms, with common issues including … a failure to adequately consider the impact of distributor remuneration on the overall value of the product.”

His very specific words, seem to me to be a clear indication 
that of all the things that we need to reform in protection, 
the FCA is highlighting that the inflating of premiums 
simply to pay extra commission to dominant retailers 
is most certainly not fair value to consumers 
who are unwittingly paying far more than they should for no extra benefits.

What’s more, in recent PDG meetings with insurers, 
which are mainly focussed on our Claims Charter (another area exercising the FCA, though I suspect mainly in the GI context), 
we also (the PDG) now raise the points made in Matt’s letter. 

A common response on this one is that the insurer wants to see the end of loaded premiums, but dare not be the first to move, 
as they will just lose market share. 
At the same time, no-one wants the regulator to dictate policy in our market, as it has done, in others of late. 
To devastating effect

That’s a position crying out for leadership 
- from the leaders of those networks and intermediaries and their key supporting insurers who currently load premiums. 
There is already a trend downwards in loadings, they need now to voluntarily stop them all. 
As in effect the regulator has asked them to.

Let me be clear, it’s not price control that’s needed. Premiums should rise and fall in line with the cost of risk and the cost of doing business.
No, I’m talking here of premiums demanded by large networks and brokers, 
that are specifically inflated so as to pay them more commission.

A 2-tier market where those with scale demand they be allowed to overcharge their customers 
is an embarrassment that does not serve consumers, it rips them off. 
Consumers need an honest market in protection, 
where all premiums fairly reflect the costs of risk and doing business, 
leaving the achieving of better quality and more efficiency
able to improve outcomes for consumer, distributor and insurer alike. 
And we need those trading in loaded premiums to lead the change before the regulator gets fed up with our market..

Matt Brewis made another clear point throughout his letter, 
which resonated with me. 
For the PDG is often told by insurers, whom we ask 
to stop supporting the worst retail practices, 
that they, the insurers, are not able to dictate how their agents behave. 
But from Matt’s tone and content, it seems that the FCA do not accept this. 
Rather he is saying that if it’s poor value for the customer, the insurer needs to stop profiting from it.
And, of course, it’s vulnerable customers who are most at risk of loss from poor sales practice, 
they are least likely to spot the hard-sell 
that masquerades as guidance, 
that gets them to buy term-life when they have no dependants, 
or to buy critical illness when they need IP, 
or to never find out they are paying over the odds loaded premiums. 
The FCA is making clear that insurers need to stop enabling all this.

But for the senior execs of our biggest insurers, there lies the rub! 
If you’ve been trading with an intermediary for many years, especially if you are on their micro-panel, then their failure would seriously hurt your employer’s P&L, 
and no one wants to be the executive who triggers that.
 That I guess is where the Senior Managers Conduct Regime, which Matt pointedly refers to in his letter, comes in. 
This could all get personal.

But it’s clear the FCA is not going to find it easy to get insurers to genuinely reform those of their distributors who badly need it.  Maybe because he knows this, Matt ends with a very clear statement indeed: 
“We are actively considering the need for further supervisory and regulatory actions to address the issues identified…Firms who fail to meet their obligations in this area fully…should expect us to intervene using the full range of our regulatory tools.
Yours faithfully, Matt Brewis, Director, Insurance”

Matt, remember, is the FCA leader who decided that 
non-advised hard selling of high commission paying funeral plans  could not be reformed, 
and so he simply banned it and brutally re-engineered that market.

 I fear though that insurers are not planning radical change, 
but rather compliance teams are laying down miles of governance papers in the belief that, 
as previously with principles-based regulation, good camouflage means you can just keep doing what you are doing. 
Events this year have borne out that view. 
Millions of Consumer Duty justificatory words have been written, but have any bad protection practices been stopped voluntarily?

That continued obfuscation runs the real risk of seeing change driven by regulatory diktat, 
but even ignoring that threat, it is also a real pity, 
because it will only delay what our market really needs: 
to simply stop allowing loaded premiums, micro-panels and sales mechanisms that cause high lapse rates. 
Were insurers to do that, then our market would be reformed, and able to grow in a way it really hasn’t through all the years of these awards, 
even while LifeSearch grew like topsy, by trying to do things right.

For while it’s hard growing in a stagnant market,
LifeSearch, now reinvigorated under Debbie’s leadership 
is doing just that, not by loading premiums, but by taking protection out to new markets, 
be they traditional: wealth managers or GI brokers, or digital: 
motor insurers, challenger banks or pensions consolidators.

Every business with a customer has customers that need protection.

And though financial services may suffer a trust deficit, there are many powerful brands whose customers trust their choice of LifeSearch to guide them to the right protection solution. 
‘Digital when they want it, human when they need   it’ as Debbie says.

So, we celebrate them and our best life insurers today with some familiar awards categories and some new 
and purposefully different ones too, 
For our market is worth celebrating, notwithstanding the reforms we need to make, protection does a huge and vital amount of good in society. 
We are not medicins sans frontiers, we do not save lives, but we do save those enduring surely the worst days of their lives 
from some of the income shock they will be suffering and the poverty that can so often follow. 
We should be proud of what we collectively achieve in society, and keep trying to do it better.
So enjoy yourselves today, you deserve it! 

Thank you