The insurer is offering the equivalent of 10 per cent of the first year’s premiums, up to a maximum of 10,000, for any totally new group income protection scheme that is placed with it and is quoted between now and June 30, 2008.
To qualify for the bonus payment, which L&G is naming a ‘market support allowance’, the policyholder must not have had an insured group income protection scheme for any of their staff in the previous 12 months, including management buy-outs.
L&G says the bonus payments are needed to stimulate genuine new business to grow the market and are designed to reflect the extra work that advisers need to do to convert prospects who have never had the product before.
Glenn Laming, sales director, group protection at Legal & General says: “We recognise that promoting the benefits of group income protection to new companies involves time and effort not only to generate leads but also to close the business. This is why we have introduced a new incentive to reward and compensate those advisers that can deliver results.”
Andrew Phillips, group risk consultant at Johnson Fleming says: “It is true that the market has been stagnant and flatlining for the last seven or eight years and growing the market is a massive project. But for our firm I doubt this initiative will work as our focus istargeting larger companies who already have group income protection.”
Matthew Lawrence, practice head for risk at Aon Consulting says: “I agree with the philosophy of what L&G are trying to do to grow the market, but I think there needs to be a wider debate had as to whether employers understand what group income protection can do for them and whether they can afford it. Traditional GIP is expensive and a lot of finance directors will question the value of it because the benefit is only realised when they make a claim.
“Simply buying an income protection product for the sake if it is unlikely to support any sustainable growth in the market and with cost containment very much on the agenda for most employers it is unlikely that they will buy a new scheme unless they recognise that it has a real financial value.”