Duncan Finch, executive managing director of Legal & General’s insurance business, tells Ronan McCaughey why product simplification is so important to for engaging consumers with life insurance, and the achievements the insurer has made in this area. He also discusses the growing role of the online channel
Life Insurance International (LII): What is Legal & General’s business strategy for the UK life insurance market in 2015?
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Duncan Finch (DF): We are a major player in the UK protection market and remain com¬mitted to the sector. I think all of us in the market need to increase its size and that’s a key strategic aim for us.
If you look at the protection market in the UK over the last 10 years, the volume of new business has been decreasing and the UK industry needs to get out there and talk about the value that our products bring, and try and engage people more.
We have done a little of that this year. We had two campaigns. For example, one was ‘What would you say to your younger self? that addressed the value of term assurance. The second was Deadline to the Breadline, which aims to heighten awareness for many people with financial commitments of the need for insurance and savings.
Another important issue linked to engag¬ing consumers is trying to simplify products. For example, critical illness can be a complex product. People want to understand what the product is and when it will pay out, and that is why simplification and trust is so important.
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By GlobalDataHowever, we (L&G) do have a fantastic record in this regard and do pay out the vast majority of claims, which is over 98% of term assurance claims we receive.
LII: How does L&G plan to market life products in 2015 to further engage consumers?
DF: In the direct to consumer space, we have gradually shifted away from pure direct mar¬keting to a broader engagement with customers through to billboards, radio advertising and our ‘What you would say to your young¬er self?’ campaign.
In 2015, we will do more of that engagement activity, rather than direct marketing.
We have also done quite a lot of online activity already, such as affiliate and search engine optimisation and banner activity. We are at the very early stages of that we will become more active there.
As the online channel becomes more acceptable and people are happier to search for solutions online, that market will grow, and this is probably good overall for the life insurance market because it starts to reach to some of the people who perhaps would not have thought of insurance in the first place.
I think the online market begins to create demand that wasn’t there initially and we should all embrace it.
Nevertheless, I also think the IFA market is still an incredibly important channel in dis¬tributing life products.
Making products available to consum¬ers through the channels they choose is very important. Online is a growing channel, but we have to recognise that, no matter what happens, intermediaries will remain extreme¬ly important in this market.
LII: How is L&G seeking to improve its online protection offering?
DF: We are always looking at the online offering and through 2014 we have been developing it. For example, our applica¬tion process is very intuitive and relatively straightforward.
However, we are looking to improve our online capability in 2015 by making it easier to transact through a range of devices and making the journey through various ques¬tions and screens much more intuitive.
LII: Life insurers globally appear well aware of the need to simplify their products. How has L&G simplified its insurance products?
DF: In terms of where we are today, our term insurance product is relatively simple as it stands. Critical illness is an interesting product as there is currently a race to get more and more products covered by the product.
What we are trying to do on critical illness is much more focused.
We pay out approximately 80-90% of criti¬cal illness claims. What we are concentrating on is focusing on the principal conditions that people are likely to claims on, and enhancing the cover for these conditions. This is instead of covering 75 conditions when people have never heard of the 75th.
Thinking of a product, I would like to get more consumer engagement and knowledge of is income protection.
For many people, it is the answer to their requirements, but there are a number of com¬plexities with it.
If we can make products like income pro¬tection simpler, then I think there should be some real demand for products like that. We already offer a very simple term product where the only built in features are an option around flexibility and an early payment on a terminal diagnosis.
We have not followed the industry in load¬ing our critical illness cover product with con¬ditions that are rarely claimed on and numerous additional payment options. We have focused on the top four conditions (cancer, heart attack, MS, stroke) and enhanced these where appropriate.
We reviewed our income protection prod¬uct recently and actually removed a feature that we felt may be seen as complex by customers.
In our literature we constantly strive to reduce the amount and complexity of our material. We continue to look at other options to simplify products where this is helpful to customers.
LII: What is L&G’s life insurance distribution strategy?
DF: We are, and intend to remain, a multi-distribution provider. Probably, on balance we have a higher weighting to IFAs than any other channel. And that’s been fairly steady over the past few years. IFAs are an extremely important distribution channel and will be for the foreseeable future
