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Tom’s Talk – LifeSearch Awards 2022
Yesterday we had a great time hosting the LifeSearch Awards, and we hope everyone who attended had a great time too.
Here you can download The LifeSearch Report, which seeks to illuminate better behaviours within Protection Insurance and below is the transcript of the talk Tom Baigrie gave at the awards.
Read Tom's Talk
I’m not sure any awards host has ever asked their guests to first read a 26 page report and told them it would form part of the event agenda! But then again, I’m not sure any awards host has ever tried to explain an inconvenient truth to their market in the way LifeSearch is doing.
But before I discuss that truth, let me make 3 things clear:
Firstly, we are not being anti-competitive; LifeSearch is focussing solely on reducing provable consumer detriment and deception and we are doing so publicly. And anyway, if the reforms we advocate do take place LifeSearch might well soon face very large, well-funded direct competition in a way we currently don’t.
Secondly, nothing we advocate reduces consumer choice. No consumer has ever knowingly chosen the protection sales channel that so needs reform. They fall into it when they click on an ad that does not make clear the reality of what is being offered.
We’re seeking to reform a sellers’ choice, not deny a consumer one.
Thirdly, the issues our report details and that I’ll be summarising, are not to do with any one firm at all. They are a host of anti-consumer behaviours that are routine across a whole sales channel, perhaps our fastest growing one too. We are simply trying to stop our market sleepwalking into long term decline and distrust.
We are driven by the certainty that there is a much better way forward for the whole protection market, that there is a real chance that we can become a genuine force for good in society. We can see this potential growing in recent years, with a real effort across much of our market at working out how we can gain consumer trust, how we can make our products more relevant, and improve them as well as access to them, for all consumers, not just the most healthy; how we can help vulnerable customers and above all how we can do more good for society by growing the number of consumers who protect themselves and their families properly, or in other words, by growing the market for protection generally and income protection particularly.
But the truth is that more and more of the potential customers approaching our market endure an experience – a sales process – that is always less than honest, and in some cases gets truly horrible. While that sales process remains and even grows more dominant, there is no way we can collectively become more trusted, or offer better access and service to the vulnerable, no way in the end that we can grow overall.
The issue arises because as consumers select from online protection advertisers, they don’t realise that depending on which they choose, one of 3 very different things is going to happen to them.
Two of them are essentially honest, one is not.
The first of the two honest routes is what happens if they click on a price comparison site or a bank or insurer brand: they get a price or prices, relevant supporting information and if they want to buy then they can. Any consumer buying this way knows they don’t know it all, they accept they may not have the very best solution, but they are happy that they’ve made their own choices and they get that ‘on my own head be it’. And if the online customer doesn’t feel confident making that decision, then all the best sites offer very clear signposts to vetted protection advisers, who can answer questions and make sure buyers get it right. Online trading works for protection consumers, whether they’re keen to move fast and keep life simple, or keen to get it right for sure.
The other honest, clear, route happens if they click on an ad that turns out to be an adviser: they will end up talking to someone who will ask them some questions about their motives and situation, will offer advice and arrange policies as the customer wishes. Sometimes it’s all very simple and quick and sometimes it gets more complex. Crucially though, if that adviser persuades them to do something that turns out to be wrong for them, the customer can seek full redress from a fully empowered Financial Services Ombudsman. That’s real protection.
It’s the 3rd route, that is simply not honest. It’s deceptive. It sounds and feels to the normal person to be the same as advice, but it is totally different. If a customer clicks on many online ads, they’ll end up talking to a thing they’ve never even heard of, a “protection telesales non-adviser”, a salesperson who, like the adviser asks them why they are making enquiries and gets into a bit of detail as to what they might want, and then also proposes solutions. Sometimes, in parentheses, the seller might note that they’re not advising, they’re simply giving you the facts and letting you make your own choice. But as that’s just what any adviser does, people buy what they are sold, not realising that the salesperson’s words mean they have no duty of care as to the outcomes their persuasion causes the customer and their family.
The reason our market can’t be trusted by consumers is that this third route feels to any consumer just like talking to an adviser, but if the non-adviser mis-sells, and on our mystery shops, they often do, then when the customer or their family realise that they didn’t get what they needed, they get almost no right to the ombudsman’s protection. The non-advice firm will successfully defend itself by saying they did not give advice, the decision to buy what was sold was the customer’s alone.
Of course it wasn’t, they were persuaded. That’s how our market tricks a great many consumers approaching it today. It denies them the ombudsman’s protection by using words that sound harmless, but carry a hidden meaning consumers only find out about when it’s far too late.
You may ask what’s the harm in that, if you just talk people into some life cover and maybe CIC, something’s better than nothing. Well that’s fine with home or car insurance, but as we demonstrate in our report, peoples protection insurance needs are far more varied, subjective, nuanced and layered than their home or car insurance. If you are going to persuade people of things protection, you owe them a duty of care. As the British Insurance Brokers Association said on reading our report, “BIBA agrees with LifeSearch’s view that Protection Insurance needs to be recognised as different and separate to General Insurance and also that customers looking to talk to someone about protection Insurance are best served if they seek and obtain advice before buying.”
So the hard verbal sell does plenty of harm. Instead of helping a customer to understand what protections they might need most, it engages them in a high pressure sales process, that can, and often does, sell life insurance or critical illness cover when a primary need is for disability insurance. That pretends that Terminal Illness Benefit is similar to Critical Illness Benefit so as to churn a perfectly good existing policy. That routinely abuses consumers in these and other ways, many of which we capture in Appendix 1 of our report.
Non advised telesales may appear to any consumer to be advice in the normal meaning of the word. But it’s no such thing, it’s just hard sell, disguised as helpful chat. And when in financial services, or any market, has that served customers well? And remember no consumer chooses it.
In fact the harm to our industry reputation starts well before any sales conversation. Because if the customer decides that they won’t in fact take the call from the advertiser they gave their number, they very often face a barrage of call attempts, often from non-traceable numbers, that can run to 20 or even 30 calls a day. Ofcom rules are ignored, harassment and pressure are what works best in hard sell after all. How many people have fled from protecting themselves because of that experience, what must they think of a market that allows it?
But, as all that gets you thinking, know that reforming a market is very hard. Several of our biggest insurers rely on this channel for a huge and growing part of their volume. So how, given their vested interests, might the relevant insurers get to accept that while non-advised telesales are growing as a proportion of all sales, they are not growing the market, but doing quite the opposite? With every harassment or early lapse, they are destroying consumer trust. How can we get our business partners to see that the greater value to their shareholders lies in their distribution being as good as it can be, not as bad as it can get away with?
The first step lies in data and research. Our report gives a good example. An accepted indicator of bad retail practice is a high early cancellation rate. We asked a reinsurer for an estimate of year one lapses across a sample of non-advised telesellers. They noted that it’s often hard to be sure from insurer data what is and what isn’t non-advised business, but where they could tell that, they reckoned on their sample over 1/3 (38% was the figure they gave), of those who bought from non-advised telesellers cancelled within the first year.
You can’t grow a market that way. You can’t be more inclusive or help vulnerable customers or earn trust when 1/3 of buyers regret almost immediately what they’ve been talked into.
Is that sample representative? We really need to know.
And that’s why our first call to action as a result of our report, is to ask reinsurers and insurers to accurately record which of the 3 key sales channels was used to sell their product. Was it online or by human interaction? And if the latter, is it an advised purchase or a non-advised purchase? Let’s understand collectively what happens to our customers in each of those 3 fundamental routes. I hope that seems a basic, fair and non-contentious ask? Our report suggests other key data points. They include mystery shopping. It is in the end up to our insurers to control the hard-sell and the damage it can do to all our reputations. What we do with the data must depend on what they find.
The second thing we’re now asking insurers to do, is to test the telephony behaviours of their agents that they support financially, and to hold those agents to account for gross breaches of Ofcom rules. It’s easy to test, just leave a phone number on a website and don’t answer the calls that follow. I’d use a burner phone if I were you. Bearing in mind the culture prevailing among non-advised telesellers, it has to be the insurers – who do pay and enable their agents after all – who accept responsibility for protecting our collective reputation by refusing agencies to sellers who harass consumers.
Insurers need to accept that they are the gatekeepers to our collective reputation.
Again, can we not strive to be as good as we can be, rather than as bad as we can get away with?
And the last change we are now asking insurers to require from their non-advice telesales agents is a disclosure not only of their regulatory status, but what that means. And that should be made clearly at the start of a sales conversation. I don’t expect it will put many, if any, customers off, but it will stop non-advice telesellers misleading every single customer as they all do now.
Of course it might be that if you stop harassing people, open the conversation honestly, don’t mislead, don’t bully and churn routinely, and only earn what your retention metrics entitle you to, rather than being cross-subsidised by those of advisers, It might be that you can’t make money out of hard sell. Were that to happen you would have to change your business model so that it gave advice, you’d have to train up your advisers and reform your culture.
If the regulator were to demand you do that, they might give you 6 months to do so, so as to maintain market continuity. I’ve done it with individuals often enough to know that that’s easy. 6 months is plenty to retrain salespeople into advisers.
And imagine if that were to happen. Imagine a market where everyone a customer spoke to had a duty of care to do the right thing, a market where overall advice standards could constantly improve because they weren’t being constantly undermined by those who feel able to say whatever they like to customers.
Imagine how that market could grow and earn consumer trust through excellence of service and outcomes, imagine how generation X and Y would be attracted to a market that was all about doing a good thing well. Imagine how that market could help the disadvantaged and vulnerable. There is a brilliant future available to protection, where those who want simplicity buy online, and those that need questions answered verbally meet people who care. And the move from the deception and harm we now inflict on so many consumers, to being that fine market, is not a very hard one.
That’s why, over the next month, while Debbie runs LifeSearch much better than I can, I will be seeking to meet with reinsurers and the insurer leaders and the various trade bodies, with the aim of getting the case for reform and our collective potential to do so much more good, better understood.
I’ll see you then!
Convinced the protection industry could be rewired to favour customers over insurers and banks, Tom Baigrie launched LifeSearch in 1998 and sat as CEO until late 2021. Today Tom is company Chair and an asset as we lobby hard to change perception, access, and realities in protection.See all articles by Tom Baigrie
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