We look behind the Seven Families Initiative to see if this is really the most important campaign in income protection history
The UK Insurance industry at times needs beating over the head with a big stick to get them to put aside their competitive nature with other insurers to put the greater good of the industry first.
This is where bodies like The Income Protection Task Force (IPTF), The Protection Review, industry experts and trade publications come into play. Since I started taking a serious interest in the UK insurance and financial industry back in 2010, it became apparent there are many good aspects to the industry, but looking back over the years the same arguments are raised time after time.
For example, increasing the sales of income protection (IP) in the UK has been a long term problem, even though the industry has been aware of this for many years not much has changed in their approach to promote this type of insurance.
The statistics relating to lost income by employees is staggering. According to the latest government figures published in 2014, employees lost out on around £4 billion in lost earnings during 2013. Employers meanwhile faced a yearly bill of around £9 billion for sick pay and associated costs during 2013, with the taxpayer funding around £13 billion a year on health-related sickness benefits and £2 billion a year in healthcare, sick pay reimbursement (PTS) and other taxes
When you consider as many as 960,000 employees were on sick leave for a month or more on average between October 2010 and September 2013, with around 300,000 people a year falling out of work and into the welfare system because of health-related issues selling IP should be a simple job shouldn’t it?
The UK insurance industry figures for sales of individual income protection sales to be blunt are dire. Take the comparison between Critical Illness (CI) Cover and Income Protection. CI outsells IP by around 5 to 1 which equates to around 100,000 new IP policies sold every year, compared to 500,000 critical illness policies.
There has been previous efforts made to raise awareness of income protection, such as Aviva’s TV advertising campaign or LV= ‘Near Misses’ YouTube videos. Even though these attempts should have been welcomed they both failed to have the right impact from both consumers and the industry.
Take the Aviva TV ad campaign which featured during Downton Abbey in 2011. Alan Lakey a partner at Highclere Financial Services told Money Marketing at the time: “Those of us who focus on protection and preach the benefits of income protection applauded the initiative of Aviva and welcomed the adverts as the first ever television push for IP.
“It never occurred to me that a tweeting backlash would erupt, that viewers would recoil at the reality presented to them. It was even more discouraging to find that at least one well known financial adviser was amongst that denigrators. The tweeters seemed upset at an assortment of matters – the “depressing” content, the motor bike and most importantly that it intruded on their precious Downton Abbey.
“Surely this highlights the problems that advisers have to contend with – a malaise of indifference, a failure to accept the realities of life and an anger born of having their cosy viewing interrupted by a worthwhile message rather than an assortment of happy faces, meercats and Gary Barlow.”
So, it is clear that something needs to change to persuade consumers towards income protection and it may be fair to say it could be an uphill struggle to achieve this. The insurance industry has not had much success, so will a non for profit organisation called The Income Protection Task Force (IPTF) have come up with a plan to improve awareness and significantly increase sales.
The above Podcast sees Peter Le Beau talk through how the Seven Families Initiative came about and its significance for the protection industry.
The idea is to take seven families (hence the name) and provide them with an income of around £20,000 for a year as if they were receiving payments from an IP policy and then follow their story. With significant backing from UK insurers, charities, the media and press, Seven Families is being described as the most important campaign in the history of the protection market.
From personal experience as a policyholder who was prudent enough to buy income protection, only to see my claim refused, I should hate insurers and their “useless” products. The fact is I don’t, even though I am sure many others would after what I went through. My case showed a major flaw with income protection in 2009. The policies can be so damn complicated with unnecessary complicated definitions which in the past created serious problems when claiming.
I like to believe our campaign against work task definitions helped play a part in making income protection products simpler. Since 2012, UK insurers have moved towards the own occupation definition for all NEW policies meaning that the chances of a successful claim have significantly improved.
To prove a point Zurich became the first UK insurer to announce that it paid 100% of all income protection claims in the first half of 2014. This just goes to shows that it is possible to have claim statistics that are normally only associated to life insurance claims. Even though claims stats are on the up there is still a big gap between insurers with the lowest insurers only paying out 88 per cent of IP.
I genuinely believe Seven Families is not just another PR stunt by the insurance industry, but if this is going to work the message needs to remain clear.
- Two million people every year struggle to survive on government benefits
- 300,000 fall out of work due to health problems suffering financial hardship
- 1 in 10 people are unable to work due to illness or injury for more than 6 months
- The myths of insurers not paying claims should also be addressed just as much as the benefits of the income protection
- If you lose your income through sickness or accident you could see your family income drop between 65% to 85% if you are solely relying on state handouts
- Most income protection cover you for 65% of your income which would see 35% of your income lost in the even you could not work through sickness or accident
angrypolicyholders.com supports Seven Families and The Income Protection Task Force’s dedication to improving awareness of IP and doing their bit to help improve IP sales. Lets hope that this is the start of something big and not just a one off attempt to improve awareness and sales.