Consolidation has been happening at pace in the insurance industry but regardless of merger and acquisition activity, companies are still failing to provide top-class service and to promote the value of having cover.
This was the view of three speakers and a panel session at the Protection Review conference today (December 6) in London.
In a session titled 'How many insurers is enough', chaired by Jo Miller, director of operations at Protection Review, delegates heard just how many life and protection providers have come and gone over the past 20 to 30 years.
While consolidation in itself is not a bad thing, speakers such as Catherine Thirlaway, associate director at consultancy Alpha FMC, said there were glaring issues that needed to be addressed.
These included a need for better service, and meeting obligations under consumer duty.
Thirlaway said: "Consumer duty has shifted the dynamic in terms of regulation.
"Protection products are still predominantly sold rather than bought, and advisers do have a duty with their clients to explain the value of these products to their clients.
"But the industry still has a significant job to do to show advisers and their customers the value of the protection products and services that are available.
"Providers need to think more about how they can help equip advisers to have these conversations with their clients."
According to Thirlaway, there is an equilibrium between the advantages of consolidation and the advantages of diversification, and while these are in the balance, there are factors that will affect the balance, such as regulation, technology and the economic environment.
"On the positive side, fewer insurers lead to better compliance, oversight and operational efficiencies. From a regulatory supervision perspective, it is easier to keep an eye on fewer, rather than more, participants", she said.
But she added: "However, business model diversity is vital.
"We all appreciate that different consumer needs can be met by different solutions. And competition naturally is the driver of innovation and pricing policies, so maintaining competition in the marketplace is core to a functioning free market."
Changing marketplace
Also speaking in this session was Paul Yates, product strategy director for iPipeline, who showed how the marketplace had changed over the years.
Answering a question posed by Miller - "does an abundance of choice lead to better outcomes, or to overwhelm for advisers and consumers", Yates said: "We have seen a lot of charges and retreats since the 1990s."
Big changes to protection in the UK included the loss of the direct, door-to-door salesforce and the retreat of banks from direct-to-consumer insurance products.
Yet even though big names such as Equitable Life have disappeared, newer entrants have come into the market recently, taking advantage of new technologies and an emerging tech-savvy younger generation.
While a gap of nearly half a million no-longer-insured people has emerged, which Yates said needed to be addressed, he showed data from iPipeline that indicated while providers may have changed over the years, the number of products has risen - by 80 per cent since the launch of iPipeline.
