Sally-Anne Etienne, Swiss Re’s market head for life and health for UK & Ireland, tells Ronan McCaughey why she expects a rise in mortgage-related protection cover, her view on new entrants coming into the market and ways to boost income protection sales.
Life Insurance International (LII): What’s your outlook for the UK and Irish life insurance market in 2016?
Sally-Anne Etienne (SAE): We might gradually start to see new products emerge and possibly there might be a comeback for annuities, albeit modest with interest rates as they are.
I think we will see resources focused on capitalising on the pension freedoms. I also think we might see an upturn in mortgage-related protection cover.
Mortgages are tending to increase currently and I think we will start to see more medium-term mortgage income protection-style policies to cover mortgage repayments. I think there also will be more of an opportunity to link income protection with mortgage cover.
There is discussion I’m seeing in this area. I don’t think there will be a significant change in the amount of mortgage income protection cover being offered, but I think it will be a step forward.
With auto-enrolment being implemented, we might also see employers becoming good facilitators for insurance. Hopefully, employers can be conduits to point employees in the right direction.
I would like to think 2016 focuses on growing the market. In terms of pension tax reforms, whatever the outcome of the UK Budget, I think that will mean massive IT implications, which keeps us an industry quite introverted.
LII: With so much on their plate, is there room for life and health insurers to innovate?
SAE: I think there is. We are united as an industry to help society become more financially inclusive and resilient. Technology is the key aspect to insurance innovation and customer engagement.
LII: Will we see new entrants coming into the protection insurance market?
SAE: I do think we will see new entrants coming into the marketplace. I think we will see insurers partnering with non-traditional players. These new players have a strong technological background and want to partner with insurers. I understand that a number of insurers out there are investigating a number of different partnerships.
LII: What’s the reason for low income protection sales in the UK?
SAE: The first thing is awareness and access. Our research shows that individuals do not really understand what income protection is. If you ask consumers a direct question about income protection, they may call it critical illness cover.
Therefore, I think there is much to be said for us as a marketplace to make our language much simpler and clearer. In addition, there is a need to make the customer journey much more straightforward.
For example, in the underwriting process, I think that is where we will see technology and big data become more appropriate.
The 7-families initiative has also been a great awareness campaign for income protection.
As we are all being encouraged to save for our retirement. For me, the key is if you are encouraging individuals to save for their retirement, you have to protect income in order to do so.
LII – Are protection insurers making enough traction on the opportunity presented by auto-enrolment?
SAE: There has been some progress. We estimate that around 150,000 people now enjoy membership of employer group life schemes as a result of being auto-enrolled into a pension plan. If we as an industry can work with government, other insurers and bodies, to promote the benefits of income protection, and work closely with employers [that would be helpful]. There should also be a great opportunity longer term to focus on the risks faced by smaller businesses as they reach their staging dates and beyond.
However, I think there is plenty being done, and over 2016-2020, I see insurers working with the government to ensure auto-enrolment is beneficial.