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Battle of the Sexes to end in 2012
I think it’s fair to say that, with the exception perhaps of those who have been living in a cave, everyone in the industry now knows that 21st December 2012 is an important day as far as sex goes. It’s the date by when all insurance must be priced on a unisex basis following the EU ruling on gender neutrality. For protection providers that focus only on price it means they will need to rethink their approach before then.
In the run up to the deadline insurance companies across the UK need to gear up and prepare properly for such a major regulatory change that will impact the entire protection industry. Focusing on quality instead of price could be a better strategy with such a significant shift in pricing imminent.
It is vital make the change as seamless as possible for customers and advisers. So work has been ongoing since March last year when the ruling was made to ensure that appropriate strategies are in place. But when should these changes actually be implemented and who will be first to do so?
21 December is non-negotiable and all providers will have to offer gender neutral terms by then. Some may introduce rates sooner or at least announce what their rates will be after the deadline date. As well as competitive pressures the issue of selection will be a key consideration for those who change rates before 21 December.
Broadly speaking, women will pay more for life insurance, while pension annuities for men will cost more when unisex pricing comes into force. Obviously once gender is no longer used as a rating factor, there will be costs associated. These costs are most significant where gender is highly correlated with risk, and it is important that the industry is ready for the change.
It is important that advisers fully understand what the changes will be in detail in order that they are well prepared to take advantage of the opportunities the ruling will bring to the industry. With any change as large as this there are likely to be pitfalls, so it is equally important that advisers are clued-up on what the possible complications may be, so that they’re on hand to iron out any teething problems.
If you think that gender neutral pricing is a big enough minefield there are also changes in the way that Life Companies are taxed looming on the horizon. In a nutshell this means that for life and critical illness products premiums may increase by around10%, while income protection products will be unaffected. So gender neutral pricing and these proposed tax changes mean we all face a very turbulent time for the foreseeable future.
Steve Casey, Head of Marketing and Intermediary Proposition Development, Friends Life