No 'sex' please – LV= reviews the Gender Directive
28 May 2012 | Mark Jones explores matters of size, timing and stimulation and choosing an ideal partner.
When it comes to matters of sex, some of our European partners are renowned for their more liberal approach, romanticism, guile and prowess. Yet, interestingly, the forthcoming EU Gender Directive flies in the face of individuality and sexual expression.
From 21 December – now commonly termed ‘G Day’ – men and women have to be treated the same when it comes to insurance premiums. The Directive (and the I-E taxation changes) has significant repercussions for life and health protection business. There will be winners and many losers. For most, premiums will go up. With I-E taxation changes likely to be implemented at the same time, most ‘wins’ from gender are likely to be offset. Income protection for women will be the exception with premiums expected to reduce.
Even after HMT delivers its guidance for translating the EU directive into UK law (which we can expect before the end of May), I anticipate there will still be areas for interpretation when it comes to matters of detail. You can expect more guidance from providers as the weeks pass by. These will address the important issues for you and your clients, including those in a recent ‘good practice guide’ for providers from an adviser forum.
What is clear is that there will be no transitional period at G Day. All business ‘completed’ after midnight 20 December will need to be on gender neutral terms. So premiums will change for those client applications that are still in pipeline at that point.
Even though there are some grey areas, as an adviser you can start making preparations for G Day now. What can you do make life easier for you and your clients?
Questions of size
Generally speaking, larger cases are more difficult to administer and get on the books. We’re talking about cases with monthly premiums of £500 or more or sums assured over £500k. Most providers offer some form of large case handling service. On average end to end times for larger cases can run to a couple of months. However, to have a high degree of confidence that a case will complete, you should allow up to six months. Working back from G Day, this would suggest a target deadline for submitting larger cases of 21 June.
Questions of timing
For more normal cases, the average end to end times for the better performing providers are in the region of 15-20 calendar days. Most business is on the books within three months. To increase the likelihood of beating the G Day hard stop, we should have in mind a target 21 September deadline for submitting protection cases. As we near G Day, the probability of beating the hard stop will decrease. When you submit an application, it’s well worth preparing your client for the prospect that their quoted premium might change.
An ideal partner
When selecting your provider in the run up to G Day, their service credentials will come to the fore.
Take advantage of online business systems. Most providers have ‘intelligent’ underwriting systems that can risk assess applications without the need for human intervention. Quick tip: When using online systems, avoid using free text boxes where you can – these usually result in a case popping out of an automatic process and involving people… which will cause delay.
Take advantage of tele-underwriting services. Evidence shows that in it can speed up applications, reduce the need for extra medical evidence and increases the quality/depth of information from the client. And it removes the non-disclosure risk from you! Quick tip: Provide your client’s mobile number too and take advantage of TI booking services.
Check out non medical underwriting limits and GPR ratios. If a provider requires a GPR, than we are all in the hands of the doctor. Quick tip: Prep your client for the likelihood for a GPR, and if one is needed, enlist their help to chase the Doctor.
Questions of stimulation
Over 90% of our purchasing decisions are driven by emotion. Certainly, successful protection advisers say that client emotional buy in for protection is absolutely key.
The Gender Directive will raise important questions about price, but it won’t in itself motivate clients to buy. However the changes brought about by Gender do provide a great opportunity to introduce or revisit the subject of protection with your clients. In these times of austerity, the chance of getting a good bargain is an idea that will grab peoples’ attention. So, why not make Gender work to your advantage and use it to help open discussions or set up a timely review meeting. And with pressing deadlines, you have an extra incentive to persuade clients to take prompt action.
Mark Jones is Head of Protection at LV=. If you want to share your views on size, timing or stimulation, email him at Mark.Jones@LV.com.