Leading income protection insurer Unum has criticised Defaqto’s recent report on the product
An unhappy insurer says the report ignores the hard work insurers have been putting in to improve the product and boost sales.
In the report, Income Protection Insurance 2007 – A time for action not words, Defaqto urges insurers to take definite action to innovate and simplify their products to widen the product's appeal.
Unum corporate services director Joanne Hindle says the report does not adequately reflect the progress the income protection industry has made and adds that radical change is unnecessary.
She says revised application processes, online submission facilities and tele-underwriting have cut processing times significantly and rates are extremely competitive.
She says: "What we recommend is clear consumer education, so businesses and consumers can understand the benefits of income protection and make an informed decision based on this information."
Unum’s criticism itself ignores the falling sales and repeats the tired insurance industry whinge that if customers understood the product they would buy it.
Defaqto have hit the nail on the head. Most products are confusing, difficult to compare, full of technical complexities and jargon. Many insurance intermediaries are put off from selling the product as it is often unclear what amount a customer would be paid out on a claim, paperwork is confusing, and they have trouble understanding the individual products.
Tinkering with processing times and methods is akin to rearranging deckchairs on the Titanic. A clue to problems is that prices have been falling but still sales have fallen. The report writers have come to the conclusion that if you were launching income protection insurance from scratch you would not come up with the products that insurers now offer.