Insurer PruProtect has insisted that protection insurance should be made compulsory.
Calls for protection insurance to be made compulsory have been made by PruProtect, who have also claimed that they are “already seeing high net worth brokers entering into protection” in anticipation of the Retail Distribution Review (RDR).
Speaking at a media briefing, the actuarial and product director at PruProtect, Deepak Jobanputra, highlighted the concept of simple products and suggested that protection should be mandatory for the benefit of the public. He went on to explain that, “What the market interprets as simple is around price and therefore cheaper. We focus on people’s needs but what consumers are focused on is buying life cover as cheap as possible…People are engineering these risks without understanding what the consequences are.”
This vocal push from PruProtect does appear, however, to contradict the Association of British Insurers (ABI) who have- on the whole- avoided pushing for most insurance types to be compulsory.
The Assistant Director of health and protection at the ABI, Nick Kirwan, voiced that whilst there was a need for people to protect themselves, there were significant problems with making this compulsory. “What do we do with people who are ineligible due to ill health?” He asked what of those who don’t comply; would the industry be criminalizing them? He also drew attention to the fact that the existing compulsory motor and employers liability insurances were largely to fulfil the legal obligations of third parties.
Herschel Mayers, CEO of PruProtect, stressed the company’s stance by stating that “Protection is undersold in this country and has not been popular, particularly in light of the payment protection insurance scandal. But there is a definite need for it, with all the changes taking place and increasing life expectancy, and that offers a huge opportunity in the protection advice market.”
However, he warned the industry must not “fall into the payment protection insurance trap” where products are “flogged and forced down people’s throats”, but they needed to be sold with clear, transparent advice, “IFAs must do a proper job explaining the products and why the customer needs them.”