With the sector littered with such precedents, health and protection insurers could be forgiven for wondering whether it is worth investing heavily in product development, especially as you cannot patent financial products to prevent competitors from stealing your ideas if you do in fact come up with a winning formula. Although it would mean sacrificing first-mover advantage, would it not make more sense to simply watch what others were doing and copy anything that works?
On the protection side in particular there have been few highly-innovative product launches that have proved successful in recent years. The menu concept, launched by Scottish Provident in 1996, was undoubtedly one and PruProtect’s severity-based serious illness cover, launched in 2007, was arguably another.
Peter Chadborn, director of specialist intermediary Plan Money, said: “PruProtect accounts for around 15 per cent of our CI-related sales and is definitely a success as it is still growing its market share at a time when many other providers are experiencing declining sales. The fact that partial payment facilities have caught on industry-wide has been a great development.”
There have also been some successful niche developments such as LV=’s mortgage and lifestyle protection plan, launched in 2008, which combined full income protection with guaranteed-rate unemployment cover, and Skandia’s rolling-term life cover, launched in 2001, which provided a halfway house between whole-of-life and term cover. The latter accounted for more than one-third of Skandia’s new protection business and is being sold by more than 300 intermediaries.
But most of the greatest success stories have involved mere product tweaks or process innovation, such as the development of tele-underwriting, using technology to get customers on risk more quickly and offering premium discounts for exclusions.
Examples of successful product innovation have, however, been more common on the PMI side. PruHealth, despite having to significantly dilute the attractiveness of its original offering launched in 2004, has established its Vitality concept as a mainstream option and smaller players such as WPA and Exeter Family Friendly have impressed with a range of ideas.
WPA’s ‘shared responsibility’, which provided an innovative alternative to an excess, was made compulsory on all its individual products in 2004, after its launch in 2002, and was heralded by the company as an “unmitigated success”.
The firm said that its mycancerdrugs concept, launched in 2007 to cover life-saving cancer drugs not available from the National Health Service and incorporated into the NHS top-up cash plan in 2010, has also done well. Also WPA’s corporate deductible scheme, which enables corporates to minimise insurance premium tax, is showing promise after a slow start following its launch in 2010.
