Tales of the unexpected in the protection market

Is the protection market developing in unexpected ways? G-day has hogged all the headlines, which is understandable and it is true that some lessons need to be learned about communication between providers, advisers and customers. But on balance the industry has coped with the change reasonably well and the established fundamentals still apply even if the pricing regime has had to change.

However a couple of other developments are worth noting, because they show the market can change, though perhaps not in the way we might have expected.

There has been a lot of conjecture about the emergence of new protection specialists and questions asked about whether some IFAs faced with a cash flow challenge on investment and pension business might reignite their interest in protection.

But what is arguably more unexpected is that someone has devised a cutting edge life product aimed at the group of advisers generally described as being on a new model.

The product, discussed here on the Ftadviser website, is now offered on the Nucleus platform and provides single life cover adjusted to the value of a client’s investment portfolio from Swiss Life-backed firm Elips Life.

It shows there are clever ways to reach a different part of the market and it certainly sounds like a significant value adding idea for clients. Elips Life may well have found a convenient route to a mass affluent and even high net worth part of the market.

The second development which may also be a little surprising is the news that some of the advisers who are embracing execution-only sales are trying out the strategy with protection products, certainly according to Tenet director Keith Richards whose comments were reported in Cover magazine recently.

Many people would have assumed that it would have been mutual funds, structured products or, just maybe, pensions that would have featured because these were the product areas directly affected by the Retail Distribution Review.

Of course, these developments may ultimately prove to be relatively marginal. In the article, Keith Richards also expressed the view that execution-only would take a long time to get right and involve only a small percentage of adviser firms.

However both developments should give protection providers food for thought when they next consider their approach, because one day, innovation of this nature could seriously shake up the market.