Just how insurance companies like to dress their products in marketing to persuade customers with new and exciting ways to part with their money was revealed in a keynote speech at an industry conference.
One of the worries of insurers is they are not making enough money from protection – a new-fangled name for life insurance.
Insurance companies want customers to buy more life cover – and not just ordinary life insurance but income protection and critical illness policies as well.
They note the reason customers are buying less is because cover is too expensive and often fails to pay out when a consumer experiences a problem that was the exact reason why they bought the policy.
Critical illness cover is a good example. Several insurance companies have recently trotted out figures to show that they pay out claims in the high 90 per cents of incidents.
That’s not good enough for the considerable number of people who make up that unpaid three or four per cent who have suffered the ‘wrong sort of breast cancer’ or heart problems that are not serious enough.
Rather than address this, the Association of British Insurer’s assistant director Nick Kirwan told the Future of Critical Illness conference that the ABI is considering a protection website that points consumers towards buying insurance by offering Amazon style recommendations.
Like a consumer who had cancer was paid out by a policy that offered these features for £x a month.
“What we are thinking is that we might be able to use industry data and not give a recommendation but say to people: ‘Other people that are like you bought this’. We’re not saying what is right or wrong, but it’s sort of like using the Amazon proposition. That is where our debate is going,” he said.
Kirwan disclosed the insurance industry is already spending £35 million a year on the Money Advice Service web site.
The Insurance Blogger thinks that there’s a possibility the ABI have got their thinking the wrong way round.
If they spent that £35 million a year settling claims for people who really need the money but have their claims turned down and concentrated on offering value-for-money protection, customers would buy the products anyway.
No one at the debate raised this issue.
Another life assurance advice web site is just what someone suffering from the wrong sort of breast cancer wants in their hour of need.