Following publication of the Government’s response to the consultation process on “Improving lives: The Future or Work, Health and Disability” the initial opinions and reactions seemed to suggest a fundamental difference of opinion on group IP. Government was suggesting that the providers need to develop cheaper and simpler products, whilst the immediate reaction of providers was that we already do. From my perspective the issue is clear, it is not one of product development, but fundamentally one of communication.
At this point Government clearly doesn’t fully understand what providers offer and this is perhaps not a surprise given we all know the general levels of awareness and understanding outside of the industry are incredibly low.
Of course the employers and employees that really need the cover are most likely in this same group with a relatively low awareness. As a provider, I can fully understand the initial reaction from my peer group – of course we offer an incredibly comprehensive range of solutions which will meet the needs of all types of employers with variable amounts of money available to fund group IP cover; the advisers serving the existing market also fully understand what we offer and that’s great.
But we are not talking about the existing market here – we are considering the 98 per cent of employers that don’t provide the cover for their employees, and this will include many that really need it.
Along with the “comprehensive range of solutions” I mentioned comes multiple options, complexity, technical jargon and lots more, so it really shouldn’t be a surprise that those outside the industry perhaps don’t understand what we are offering. Whilst in depth discussions about deferred periods, escalation rates, terminal ages, limited benefit terms, state benefit deductibles, definitions of incapacity, etcetera might be second nature within group risk circles, it’s worth taking a step back and thinking about the masses that sit outside of our segment of the industry and considering what all of this might mean to them. A quick discussion about this terminology with your partner or a mate when you next have a beer with them might provide a quick reality check.
So, with this in mind, perhaps we should understand why the Government is suggesting we should develop simpler and cheaper products. In reality I would suggest we already have most of what we need – in fact rather than developing products we frankly need to “undevelop” or simplify the myriad of options that we currently offer. Alongside this some simplification of language and terminology might be helpful. Of course, this is not the first time we have considered ‘simple products’ – I’m sure many remember the Government led initiative under this heading from a few years back which ultimately……came to nothing (as an aside, why was that?!).
The good news is that in anticipation of the simple concept extending to group products in due course, Grid, with the support of providers, actually did quite a bit of work to simplify both product design and the language, so perhaps a good starting point might be to dust the cobwebs off this work to see how it might work in the context of the follow up dialogue on the Improving Lives Roadmap.
Of course, the Roadmap document is a comprehensive plan with the details spanning some 90+ pages of text and setting out a 10-year vision. Within this I recall group IP is maybe mentioned twice in the whole document. At the same time we have a Government with other more pressing priorities and so it would be totally unrealistic to think that we will rapidly advance to a position where group IP is formally endorsed – and possibly incentivised – by the Government.
However, all of this dialogue does perhaps provide a timely reminder of some of the key challenges that the industry might need to tackle if we are going to expand the reach of our excellent products and services to a whole new audience, potentially with the support of a new breed of adviser.
If we pursue this type of initiative now we might just put ourselves in a far better position when the Government eventually returns its focus to matters at home and is ready to give this whole subject some serious consideration.