Life sellers must lay down the scattergun
Sunday 10 September 1995
Essentially, life companies have missed the point. So determined have they been to comply with the letter of the new rules, that they have failed to address the bigger issue. That is, how to rebuild the confidence of consumers and secure a viable future in the long-term savings market. Failure could mean the end of the insurance industry as we have known it.
Contrary to what some in the life industry appear to think, the sector's biggest problem is not regulation. The new rules may lay down an unduly prescriptive, cumbersome and costly way of forcing companies to heed the interests of consumers, but they are only enforcing a philosophy that should be central to any life company with a long-term commitment to the UK market.
In my view, the industry has a greater difficulty: its slowness in recognising the fundamental shift that has taken place in recent years in consumer attitudes and expectations.
Despite the new disclosure regime, designers of life products remain obsessed about points of detail that are all too often lost on the consumer. Huge amounts of energy, ingenuity and money are still being expended on devising over-complicated policies to meet straightforward needs. Little wonder that life products are no longer seen as relevant by large swathes of the population.
Most life companies either make blind assumptions about consumers, without trying to get a proper understanding of what they actually want. Or they research consumer attitudes thoroughly but then fail to take the findings into account when designing products.
This is not just a case of consumers being sold products they do not need or want. All too often they do not even understand what it is they have bought. Many life offices retain the notion that people do not - and perhaps cannot - understand finan- cial products. Hence they do not provide the facts that consumers need to judge whether or not they are getting a fair deal - a failure that the new regulatory regime has done little to correct.
Consumers want to know exactly what they are buying and how much it costs. The disclosure rules provide some help, but the quantity of information they stipulate - and the way in which it is presented - probably leaves people more, not less, confused. Even for the most sophisticated buyer, it only allows comparisons to be made between life offices. There is still a reluctance to tell customers exactly what proportion of their premiums will go in charges and what will be invested for their benefit.
Eagle Star's answer is to cut through this jungle by instituting a simple and transparent charging structure on a new generation of policies, announced this weekend, which with the help of a new and more flexible computer system eliminates "hidden" costs such as bid/offer spreads, exit penalties and the like.
Life products also have to be more flexible. Historically, they have been highly rigid and even the newer generation of policies marketed as ultra flexible are often fairly unadaptable, or provide flexibility only at a price. People who need to change life, investment and protection policies still tend to face swingeing fees, while cancelling policies early can render them virtually worthless because of exit charges.
All life companies have to offer better value for money by reducing expenses and charges. The current industry average of one transaction per salesman per week is absurd. That one sale has probably emerged from phone calls and personal visits to up to 200 other potential customers, all of which - in effect - the single purchaser has to pay for.
This scattergun approach to selling, combined with the pressure placed on the salesperson, is responsible for much of the low esteem in which the industry is held. It has not only fuelled resistance from consumers, it has also inflated the cost of insurance products and reduced their competitiveness against other financial services.
To escape this spiral, the life industry needs to change its atittude to selling. It should concentrate more on building long term relationships with existing customers. Salesmen, in other words, should be trained - and given incentives - to advise and to nurture their clients, not just to sell.
Logically, the insurance industry is best placed to assume the mantle of responsibility which governments are shedding. Regaining the hearts and minds of consumers will not be easy, but insurers should start with some radically new thinking.
q Dr Ian Owen is managing director, Eagle Star Life.
Independent Partners: See how much you could save by switching credit cards. Compare now
Geoffrey Macnab reviews American Hustle, also starring Christian Bale and Bradley Cooper
- 1 America's 'virgin births'? One in 200 mothers 'became pregnant without having sex'
- 2 Sun will 'flip upside down' within weeks, says Nasa
- 3 Christmas comes early: Justin Bieber is 'retiring from music'
- 4 Iain Duncan Smith leaves Commons food banks debate early
- 5 Children evacuated from swimming pool after prosthetic leg mistaken for paedophile
Exclusive: Young people ‘want UK to stay in Europe’: Four in 10 adults aged 18 to 24 are ‘firmly in favour’ of membership, poll shows
Tom Daley ‘is gay because his father died’ says UK evangelist
You can STILL be jailed for being a republican, government confirms, and it remains illegal to even 'imagine' overthrowing the Queen
Kiss and yell: Italian protester charged with sexual assault after kissing riot police officer
Iain Duncan Smith leaves Commons food banks debate early
Fighting back: the woman giving a voice (and 49,999 others) to the victims of sexism - by giving an airing to their horror stories
- < Previous
- Next >
iJobs Money & Business
£500 - £650 per day: Harrington Starr: Harrington Starr is working with a Glob...
£27000 per annum: Harrington Starr: Junior Consultant (Excel, Financial Spread...
£500 - £600 per day: Harrington Starr: .NET Quantitative Developer - Contract ...
£55000 per annum: Harrington Starr: Technical Operations Analyst (UNIX, Linux,...
Day In a Page
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.