I am often asked about the state of the industry when I joined it (back in the days of black and white television and flared trousers!) compared with the industry now.
This happens, no doubt, because I am one of the oldest people left to ask rather than because I have anything enlightening to say. If you look at the industry then I’m not sure we’ve made too much progress. Let me illustrate this.
First, let’s look at products. When I joined the industry we had a lot more sales of family income benefits, whole of life plans and, of course, endowments. Business was not differentiated between smokers and non-smokers in pricing terms. Nobody had ever heard of critical illness (CI), income protection (IP) was called permanent health insurance and, from memory, sold a bit better. Also, while we had much less technology, I can remember policies being completed in a week from application to going on risk with underwriting taking place in between.
I will avoid the temptation to sound like one of the Four Yorkshiremen out of Monty Python but I’m not sure if I didn’t prefer the industry then.
For one thing there was a real desire to try to deal with risk. I can remember spending time with chief underwriters and chief medical officers trying to find ways to give cover (some of which was experimental and none of which was automatically ceded to a reinsurer). Maybe I was in the minority but I remember feeling a sense of pride when I came out of some of those underwriting sessions. Some medical techniques were in their infancy but people with serious illnesses seemed to get a better shake then even though life expectancy was lower. Some of the underwriting exercises I saw were more geared to treating customers fairly than anything I see nowadays. It’s illusory to think that we’ve progressed to a better model.
I have a friend who had a coronary thrombosis five years ago. Subsequently he had a three vessel bypass with a very good result. He has lost weight and controls his blood pressure. Nobody in the industry will look at him now, whereas twenty years ago they might have done. Yet I bet he couldn’t get enhanced annuity terms.
I noted we sell four times as much CI as we do IP in Swiss Re’s recent analysis. Is this a satisfactory state of affairs? Is there really a need for capital that is four times the need for income or is it just easier to sell?
I could probably drive a coach and horses through the ethics found in some parts of the industry twenty years ago but I’m really not sure deep down there is a real recognition of the need to change throughout all parts of the industry.
If it’s harder to get appropriate cover especially if you’re remotely rateable and it takes a lot longer not to get it, then I don’t see a lot of progress – or am I missing something?