Insurancereview – May 2012

We’ve all seen the advertisements that ask – ‘Have you had a credit card with any of the following companies? Or a loan with any of these banks? Or were you sold insurance you didn’t need or want? If so call this number now’.

Some of us have had numerous intrusive phone calls too, while some claims management websites use celebrity endorsements to build trust and others promote how much money they’ve managed to save people.

One website says its largest payment protection insurance win was more than £90,000, which is a heck of a lot of money.

Even the Financial Services Authority has joined the promotional bandwagon. “PPI payouts hit £3bn for consumers. See how to make your claim,” the official FSA consumer information twitter account recently stated.

This caused a bit of a stir among advisers on the social media site as it seemed to be promoting the compensation culture. Some people, including me, commented that if the regulation at the time had been better the mis-selling scandal wouldn’t have happened so compensation wouldn’t be needed.

Surely it isn’t a regulator’s role to allow a scandal to happen and then promote compensation. It’s not as if nobody knew what was going on 10 years ago – the personal finance press had been warning about it for decades.

But that is all in the past and move on we must. PPI claim chasing is the reality and rightly or wrongly many people are receiving thousands of pounds in compensation.

However, looking ahead, just how much damage is being done by these companies in the constant pursuit of possible mis-selling?

Every week I hear a new tale of a client or friend who has a relevant and valuable non-PPI policy, such as income protection, or waiver on their pension, who has been encouraged to complain and seek redress just in case, which is hardly contributing to the overall good of society.

The Financial Ombudsman Service once told me that any conversation is probably advice. This means that you can have the written disclaimers you like, but if the customer says that ‘I spoke to this company and they told me what to do’, the disclaimers will be rendered meaningless. So if these claims chasers are telling people to cancel non-PPI policies the years ahead could be interesting for them.

What concerns me even more though is what these firms will turn their attention to when the PPI well runs dry? You don’t build call centres to last a few years – once you have them you find work for them to do. Should we be afraid? Should we be very afraid?

Talking Points

THE COMBINED ROYAL

London protection brands of Bright Grey and Scottish Provident have seen new business levels rise by 45% with an 18% increase in applications in the first three months of the year.

PROTECTION SPECIALIST DIRECT

Life has launched a multiple-quote system for advisers that allows dozens of single plan or combined menu plan quotes to be produced at the same time removing hours of potential administration time.

ADVISERS WORKING WITH

The Finance & Technology Research Centre have launched a gender neutral pricing good practice guide for insurers to follow ahead of G-day in December to ensure customers are treated fairly through the transition.

THE PERSONAL FINANCE

Society and Protection Review have announced protection training dates. They are May 22 in Leeds, July 25 in Bristol, September 11 in London, September 18 in Bournemouth, October 2 in Exeter and October 9 in London. See the Protection Review website for details.

Sales tip of the month

Five reasons to write life insurance policies in trust:

  • In the event of a claim the monies are paid to the named beneficiary.
  • The Inland Revenue can take many months to assess the value of an estate, which must be done before assets can be distributed, but policies written in trust will be paid promptly.
  •  Policies are likely to avoid Inheritance Tax.
  • They tend to have far better persistency than those which are not in trust.
  • It is relatively simple and straightforward to do.