Tom Conner, director at Drewberry Insurance, says that combined products might help grow the protection market. “In my opinion, one of the main reasons CI cover outsells IP by such a large margin is because of how easy it is to add it to life insurance.
"These CI sales may never have happened had it not been for the ease of addition to life cover, with one application.
“Thus, a method of growing the market might be to increase the number of products that can be coupled. Family income benefit and income protection could be one example, where the sales logic is clear.”
The market is now seeing whole of life plans with a ‘care’ rider: an addition that could be very much in demand considering the growing number of family members with a caring role, as mentioned earlier.
Ethical concerns
While big data is being touted as the future, there are still some major issues to be ironed out, as highlighted recently by the FCA when it published a feedback statement on big data.
The FCA stated: “The use of big data has the potential to leave some consumers worse off. Big data changes the extent of risk segmentation so that categories of customers may find it harder to obtain insurance.
“The FCA is also concerned about the potential that big data might enhance firms’ ability to identify opportunities to charge certain customers more.”
Although the ethical concerns raised here – and earlier in this article - have yet to be fully addressed, commentators have pointed out that using big data to provide more tailored underwriting for life and healthcare policies can actually be very helpful in a day and age where we are living longer and with increasing healthcare needs.
The most obvious provider using data from clients in their product structure is Vitality. Its ‘shared value model’ involves the collation of lifestyle data to incentivise wellness and wellbeing for consumers through Active Rewards – such as cinema tickets and other services.
Dan McMillan, head of PR at Vitality, says Active Rewards have had a positive effect in two areas. Firstly, in encouraging members who were not previously engaged in physical activity to become engaged: “Some 34 per cent of the sedentary group have changed their behavior and registered activity,” he explains.
Secondly, in motivating those who are already engaged to do more activity. “There has been an eight-fold increase in the number of engaged members hitting the weekly activity thresholds,” adds Mr McMillan.
There is a debate about whether or not such benefits increase complexity, however. Philip Smith, team manager and protection adviser at Vita, disagrees.
He comments: “It may seem a bit complex when you originally read about the product, however there is no arguing the point that they are trying to engage the nation about the importance of protection along with the importance of living a healthy life, while trying to reduce the protection gap all in one go.”
