11th January 2024

Reflecting on 2023: milestones, challenges, and innovations on the Protection landscape

In a manner similar to 2022, the year 2023 will be etched in memory for various reasons – some commendable, others disappointing, and a few rather mundane. One notable milestone is the 40th anniversary of the introduction of critical illness in the UK.

A significant letdown during the year was the reduction in options stemming from Aviva's acquisition of AIG and Aegon's decision in April to exit the protection space, with its back book subsequently acquired by Royal London. 

Aegon, a prominent provider, especially in the business insurance sector, opted for a profitable future in pensions and investments. This served as a stark reminder that profit margins in the protection sector are slender without substantial market penetration.

The Swiss Re annual Health & Protection Watch delivered an excellent overview, revealing a decline in protection sales from the peaks observed a decade or 15 years ago. Advisers' market share also dwindled, influenced by the ascent of aggregators, placing additional strain on insurer profit margins.

A notable highlight was Vitality's revamp of its serious illness plans, simplifying the options from a previously intricate array, making it more accessible for both advisers and consumers. Recognising the aversion to complexity, the three streamlined choices in SIC2x and SIC3x versions cater to discerning advisers, providing comprehensive protection. Given the significant risk of a second cancer or heart attack affecting 1 in 5 sufferers, the sustained protection for claimants is of paramount importance. 

Concurrently, CIExpert incorporated the current and historical plans on its comparison site, distinguishing itself as the sole resource applying values to the 60-plus unique conditions specific to Vitality.

Another positive development was Guardian's entry into the income protection arena, introducing an innovative 'own job' definition that enhances confidence in claim payments. Additionally, they included integral waiver of premium with a 4-week deferred period. 

Aviva, Legal & General, Royal London, and Zurich seized the opportunity to adjust their plans in response to the revised ABI minimum claim wordings, enhancing condition coverage and/or payment levels.

Zurich underwent a comprehensive overhaul of its critical illness plans, introducing three levels of cover. Children's CIC became optional for sums ranging from £10,000 to £100,000. The unique segmentation of children's cover allows parents who do not plan for more children to avoid paying for coverage they cannot utilise. This flexibility empowers advisers to tailor plans precisely to their clients' requirements.

At CIExpert, the ongoing integration with various portals was solidified through a partnership with UnderwriteMe. This allows advisers to access initially underwritten premiums, streamlining the CIExpert report process.

The Income Protection Taskforce continued its efforts with an IP awareness week in September, contributing to the positive trend of increasing IP sales, undoubtedly influenced by these initiatives.

Alan Lakey, CI Expert
https://ciexpert.uk/

Protection