Protection Review Conference Innovation – what innovation?

1. Protection Review ConferenceInnovation – what innovation? Roger Edwards , Product Director, Bright Grey

2. So how innovative are we at the moment? So how innovative are we at the moment?

3. Spiral of price competition Industry infra-structure geared to price only Ambitious plans to grow market share Short term need to meet targets beats long term desire to innovate and be different Prices fall further

4. Protection markets Critical Illness Term Income Protection

5. Life cover for less than 26p per day When it comes to protection are retailers behaving like retailers?

6. Better mortality Psuedo - preferred lives Tele-underwriting Reassurance deals 3% 20% Online transactions Offshore admin Persistency initiatives 12% 65% Commission Expenses Risk Profit Will price continue to fall?

7. Difficult to break out • Prudential Flexible Protection Plan • Same market • Alternative to CI • Virgin Cancer Plan • New market? • Alternative to CI

8. What advisers recommend? Given regulation, advice justification, reasons why, threat of legal action • Existing CI • Cheap rates • Comfortable with cover • Proven concept • Millions paid in claims • Impact based CI • Higher rates • New definitions • Unproven concept • No claims history

9. Is innovation taking too big a risk? • Long term • Strategy • R&D • Innovation • New product lines • Short term • Sales • Profit/share price • Tactics • Safety in similarity

10. Difficult to break out • Can you launch something new into the adviser channel and expect instant success? • How many companies will take a long term view? • More than one company launching something new might work – but what about the Competition Act?

11. To summarise the current environment • Doing the same things • To the same people • With the same products • Using the same processes

12. So is it really possible to innovate? So how innovative are we at the moment?

13. How to change the current environment • Doing the same things • To the same people • With the same products • Using the same processes • Do different things • To people who are NOT currently customers • With different products • Using different processes

14. Evolution or revolution?

15. Innovation We couldn’t do that because…… That’s a daft idea….. The Reassurers won’t let us do that…. My only concern is that…..

16. Innovation • Are we designing products for consumers or our distribution channels? • Bells and whistles that let our consultants get one up on the competition or benefits of real value to the consumer? • Recent examples • silent heart attacks

17. What is a protection product? a piece of paper to file away and forget about? a promise to pay money when something horrible happens? peace of mind? compensation for life changing events? debt repayment?

18. The traditional protection product • Piece of paper • Promise to pay after a horrible event • Just money product

19. The problem • Exciting • Status - you can polish it • Material goods • It’s an experience! product

20. the customer product experience Reality comms apply product claim • piece of paper • promise to pay after a horrible event • just money • experience • perception • experience

21. comms apply product claim Where to innovate Innovation needn’t be confined to the product – think about all the proposition touch points

22. comms

23. Communication • Create a better perception • Engage with the Government • Education: on school syllabus, free consumer guides • Cultural influences

24. Affordability

25. Information overload • Innovation on advice • Navigate through the massive maze

26. Don’t understand it TPD PHI LTA SACIC MER GPR PMI PTD IP ACIC

27. Perception “Buy one get one free” “In the event that you procure one item, as defined by the appropriate boxed quantity and confirmed by the electronic point of sale supervisor, we will assist you in the procurement of a second item, as defined by the appropriate boxed quantity, for no charge, that is, no monetary transaction, as defined by an exchange of currency, would be needed”

28. Communication innovation • What about 24 hour protection channel? • What about advertising on DVDs? • What about the flavour of the month boy/girl band promoting protection? • Include a protection podcast on each new iPod?

29. apply

30. Apply • 1992 application form • 2 pages • 2004 industry average • 32 pages 1992 App

31. Are we doing preferred lives? • Even more intrusive questions • Less people accepted at ordinary rates • Preferred lives products through the back door • Length of process leading to reduced mortgage protection sales?

32. GP report • Expensive • VAT • The Holy Grail is a replacement for the GP report • …or to do away with it all together

33. Do we have the bottle to replace the GP report? Is the industry obsessed by removing every possible risk from writing risk products?

34. Application innovation • What about blood spots and saliva profiles? • What about drop ins to Boots for medicals? • What about microchips embedded into the back of the neck? • What about full medical details on the new Government Identity Card?

35. product

36. CI?? Debt repayment Income replacement Consumer needs Decreasing life Level life Family income benefit on death Income protection for occupational disability

37. Innovative products • What about IP - when are we going to fix it? • Is evolution of CI restricted to illness definition nitpicking? • What about hybrid products? • What about ‘Impact Based Cover’? • What about a replacement for TPD? • What about protection in a box or on a smartcard?

38. Lessons for the IP market?

39. Wow! • Benefits payable for full term or age 60 • Own occupation cover • Tick box application – no underwriting • Everyone pays the same rate

40. But….. • 3 year pre-existing conditions • Stress, backache or nervous disorder.

41. Longer term Is the answer MPPI+ or IP- Mortgage Brokers Financial Advisers MPPI IP

42. claim

43. Claims • Long-winded process – often a repeat of initial underwriting • Private detectives • Treating people like people, not policy numbers • Clarity – “We are declining your claim because of caveat emptor and uberrima fides.”

44. More than money • More than just a hand out • Helping Hand • Best Doctors • HCML • Real valuable service to all customers and their families • Money when needed and pro-active help • “Best advice” benefit to the adviser • Repositioning protection to be help first, money second

45. Claims innovation • What about paying them (ha ha!)? • What about no financial underwriting at claim for IP? • What about immediately paying 5% of every critical illness claim? Or cover their monthly outgoings until the decision is made?

46. the customer product experience Summary comms apply product claim • piece of paper • promise to pay after a horrible event • just money • experience • perception • experience

47. Summary • Do different things • Not just price • Not just stealing existing market share • To people who are NOT currently customers • Other markets • Other distributors • With different products • New product models tailored to market niches • New propositions • Using different processes • Simplified underwriting • Easy application