06 AUTUMN PROTECT NEWSLETTER 1. Look beyond the specific point in time when a product review is conducted: With pure protection policies being longterm products, firms will need to ensure they provide fair value over the entire period rather than at one moment in time. 2. Utilise a range of key data points to continuously monitor whether customers are achieving the expected good outcomes: To have an accurate, wellrounded picture of whether they are offering fair value, firms should look at a variety of data points, including claims rates or product usage and cost; rejected claims rates and the reasons for these rejections; customer journey drop-off rates; and customer sentiment analysis. Ultimately, firms should use these data points to evidence that customers are receiving good, fair service and that the product's pricing remains consistent with the initial analysis used to determine its fair value, as well as its alignment with the associated costs and risks. 3. Consider the product lifecycle across the distribution chain: As third parties are often used to either manufacture or distribute products, insurers will need to ensure that key data points provided by third parties are of sufficient quality to enable decision making. Equally, firms will need to be open to sharing information that is required by third parties to enable assessments of good customer outcomes. Firms should focus on embedding the governance and oversight of these metrics and the ongoing monitoring into business-asusual processes and forums. This will allow continued identification of any potential areas of concern and drive any required actions. The FCA's 2023 introduction of Consumer Duty has had a groundbreaking impact on the financial services industry and has truly shown that firms now have nowhere to hide when it comes to providing fair value for customers. This is only the first stage – firms should act now to avoid being caught out later. Market Focus Income Protection Sales forge ahead again The number of protection policies sold in 2024 has increased by 1,303 from the same period in 2023, according to Gen Re’s Protection Pulse update. Protection sales hit 492,428 in Q2 2024 compared to 491,125 in Q2 2023. However, sales were down from 510,141 in 2024 when there were was a decline of around 40,000 protection policies sold compared to Q1 2023. There was also a decline in premiums in 2024, on an annual premium equivalent (APE) basis, as premiums decreased by £13 million to £384m in the first half of 2024. Compared to £397m in the same period in 2023, representing a 3.3% decline. Meanwhile, premiums increased for income protection by 8%. Whilst the market for Protection in general in H1 seemed to be somewhat flat again, there were brighter highlights yet again in the area of Income Protection (IP). Gen Re statistics highlight a positive trend for the IP market, with an encouraging growth of 8%, perhaps indicating a greater focus on the product by advisers and CONSUMERS alike with the latter keen on securing their income against unforeseen circumstances, which is a positive sign for both the industry and policyholders. Healthcare The private healthcare market in the UK in 2024 is experiencing notable growth, driven by increasing pressures on the NHS. The combination of long waiting times, workforce shortages, and financial constraints within the NHS has contributed to a surge in demand for private healthcare services. Paradigm Protect is experiencing significant growth in the Sector with more and more firms wanting to access the growing market. Already Paradigm have written significantly more individual policies than we did in the whole of 2023 by some margin.
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