Sam Barr-Worsfold, Drewberry Insurance.
2020 has been a year of both progress and setbacks for the protection industry. The first and most obvious setback is COVID-19.
Although illness and death from coronavirus remained covered for policyholders who bought Income Protection or Life Insurance pre-pandemic, it rapidly became apparent that we were facing a coronavirus-induced economic tailspin. Many existing clients who had coverage for coronavirus under existing policies lost their jobs and therefore struggled to make ends meet.
Fortunately, the industry came through by introducing payment holidays etc. As insurers rolled these out, Drewberry communicated this to our clients. I was, therefore, able to transition many policies to payment holidays for those who had lost their jobs or were facing a reduced income.
This helped stem a wave of policy cancellations that would have left clients vulnerable without any cover at all.
Another big challenge I’ve faced so far this year has been changes to the IR35 rules. Pushed back a year in the spring due to the outbreak of COVID-19, the changes are nonetheless due at the start of the new tax year.
Many of my clients therefore moved from a limited company set up to become PAYE employees. This has thrown up many challenges around their long-term protection and its suitability going forward. Insurers have been quite slow to accommodate this — for example, not every provider makes it easy to transfer a policy such as Relevant Life Insurance to a personal plan for such clients. I hope to see further flexibility within business protection to move policies between companies and for policies held by limited companies to be transferred to personal policies.
Within the industry, we’re talking a lot more about mental health and insurers taking a different stance on client disclosures of mental ill-health. However, I’m yet to see much of a change in this direction with underwriters.
This said, what I have noticed is progress in that more insurers are willing to review exclusions, a particular bone of contention with clients, who understandably do not want a minor back issue or a one-off episode of low mood to be held against them on a policy which might last for decades.
What has been well-received has been industry changes to simplify policies and policy wording. Regarding Critical Illness Cover, the move towards clearer and straightforward medical conditions/definitions has been very positive. Moreover, I’ve noticed that insurers which perhaps offered particularly complex policies are now looking to simplify their offerings. This makes it easier to explain and the client is more likely to understand the benefit.
Going forward, I hope to see clearer underwriting outcomes and potentially terms specific to the medical condition in question rather than a one-size-fits-all approach. I’d also like to see addressed the industry’s stance towards medical screenings and medical evidence, especially for younger clients. Onerous medical requirements often put clients off or encourage them to apply within the limits to avoid triggering them, which can lead to worrying cases of underinsurance.