Few insurance companies have become as adept at picking up prizes for their products as Friends Provident for its individual income protection (IP) plan. For example, it has been voted best individual IP provider for the last three years by Health Insurance readers, and has won awards for product excellence each of the last eight years from Planned Savings magazine.
However, protection product manager Mike Turner says: “There is no point winning awards if you are not also winning the business. Fortunately, we have been the biggest writer of IP through independent financial advisers (IFAs) for the last few years.”
A key reason for Friends Provident’s success in recent years is that it stuck to offering guaranteed premiums when market fashion stormed off in the direction of renewable contracts. “Despite the proliferation of renewable contracts, this has proved the right strategy,” says Turner. “ In 1998 and 1999, some 70 per cent of business from IFAs went to insurers offering guaranteed IP.
“Intermediaries like the cast-iron guarantee that their client’s premium will not change whatever the insurer’s claims experience, and whatever happens to their client in terms of occupation and pastimes.”
Another key benefit of the Friends Provident plan is “a clear own occupation definition, which applies at the time of claim, rather than time of application”. Turner explains that some products switch definition after two years of a claim, changing it to any occupation suited by education and training, but Friends Provident does not “because that is a totally subjective judgment”.
Friends Provident’s third advantage is its approach to claims. “We are the only company that publishes its claims paying ratio,” says Turner. “Some 95 per cent of new claims are paid, with the remainder either fraudulent or incorrect. IFAs trust we will pay valid claims quickly and efficiently, and won’t hide behind the small print. That sort of trust is only built up over a number of years.”
This steady approach belies Friends Provident’s approach to innovation. In autumn 1999, it revamped its products to include fringe benefits such as career break and house persons’ cover. And in March, it launched a new menu-based protection package called Select Protection, which combines IP with other forms of cover, such as life and critical illness. And further developments are planned.
The recent launch is partly aimed at protecting the insurer’s market position in the face of the growing popularity of plans combining different forms of health protection. At the end of 1999, Scottish Provident blazed the trail with its Self Assurance plan, and others, such as Scottish Equitable, have followed. “There is no room for complacency, we cannot close our eyes to what is going on in the market, and need to get involved in this area,” says Turner.
Dale Tranter, the protection researcher at Countrywide Independent Advisers, believes Friends Provident deserves its reputation as a market leader in individual IP insurance because of its administrative systems, which are swift and efficient, and its attitude towards claims.
“Over the last six years, it has been the biggest provider of IP to this network, and I have never had a single problem with a claim raised by a member, which is not the case with other insurers. I think that is a pretty good endorsement,” he says.
However, Tranter believes the Friends Provident contract and rates do not particularly stand out. “If it was launching for the first time, I would not necessarily say it was better than others. I like it because it has established a strong reputation, and would use it even if others are cheaper.
“Swiss Life and Canada Life have been getting a bit cheaper, but I am often happier to pay more for Friends Provident, because I know I am getting a very good product.”
Bhavesh Amlani, the director of IFAs Simple Savings, also speaks warmly of Friends Provident.
He says: “Its fantastic selling point is that it offers guaranteed premiums. With renewable premiums, you have no idea what your client will be paying in ten years, and sometimes they even double at review. Guaranteed premiums may be more expensive at first, but they really make much more sense.”
However, his comments also show why no company can afford to rest easy on its reputation.
“I don’t use it as much now because its premiums are not so competitive, and sometimes prefer to use Swiss Life,” he says.