Why we’re launching income protection

Finally, we can talk about the worst-kept secret in the Protection world! Advisers have been asking us for Income Protection for some time, and I’m delighted we’re now able to support this essential part of a holistic protection review. Guardian’s aim is to grow to support all individual protection needs and this is the next big step on that journey.

As you would expect from us, we’ve focused on building an offer that gives the client and adviser confidence through more certainty at point of claim, just like our Life and Critical Illness products. Crystal clear definitions are as important in Income Protection as they are in Critical Illness, and it’s been great to see the positive responses from the market so far to what we’ve done.

We know that for many clients establishing peace of mind and ensuring financial resilience can be best addressed with Income Protection.

Our journey has been based on listening

Since our launch back in 2018, we’ve evolved not just our products, but also our service offer including our supporting technology. Most of the lessons that have informed this evolution have come from working closely with financial advisers and mortgage intermediaries to better understand clients’ needs and demands. Listening has also helped us understand what works in terms of advice and business processes, where intermediaries want support and even where they want us to get out of the way!

We also believe that our approach – around prioritising clarity and customer understanding and of working closely with advisers to deliver good customer outcomes – anticipated some of the consumer duty requirements due to come into force at the end of July. And of course, we applied this approach to developing income protection as well.

Why not before now?

We have occasionally been asked why we had not expanded our product range before now, as it’s always clearly been our intention to offer Income Protection. There are a couple of reasons.

Firstly, we wanted to make sure our quote and apply systems were serving intermediaries well before adding new products. As many of you will know, we invested heavily in our systems last year to make sure we were delivering the right options for advisers, and the feedback has been very good.

Secondly, during Covid, and its immediate aftermath, launching an Income Protection product would have been challenging. There was a lot of uncertainty, which would have meant having to be very cautious with product design and pricing. This wasn’t necessarily going to give the best long-term outcome for clients and their advisers.

The pandemic has now receded, but it leaves us with useful lessons. I have written in the past about just how well the protection industry has coped with the pandemic and resulting restrictions in terms of continuing to support and reassure clients since 2020. At the same time, I noted that some kinds of general insurance had not performed as their customers had expected. It is important that the protection sector keeps emphasising that it can be relied upon to deliver when needed. That means being intuitive for customers and feeling “fair”.

When we brought that into our Income Protection design, we looked at the typical way claims are defined in the market and didn’t feel this passed our intuitive test. So, when clients cannot work and come to their insurer for the support they expect, we felt it was important that they weren’t confronted with confusing discussions about the activities they can perform or baffling debates about whether job and occupation mean the same thing for the purposes of insurance.

The current social and economic context for Income Protection.

We feel now’s a good time to enter the Income Protection market. The various crises have demonstrated strong public demand for insurance with many giving their health a much higher priority. Advisers have told us that their clients have been much more open to protection conversations since the pandemic, although with cost concerns coming to the fore in recent months. We know that for many clients establishing peace of mind and ensuring financial resilience can be best addressed with Income Protection.

We are also aware of the changing economic and social context for consumers. Clients of both financial advisers and mortgage intermediaries have seen extraordinary challenges in their everyday lives from the pandemic and most recently in surging prices, which is why it’s important that there are protection options which are flexible and affordable.
Staying relevant

We do think that the protection sector needs to keep thinking about ways to adapt and continue to be relevant, partly because of the extraordinary challenges we face as a society and an economy. We have just seen the Chancellor of the Exchequer looking for ways to encourage people back into the workforce with incentives and tax reliefs in the most recent Budget.

While the media focus has mainly been around pensions reform and early retirement by choice, it’s clear that the majority of those who have stopped working have done so for other reasons including health-related challenges.

I strongly believe the protection sector and intermediaries have a part to play in rebuilding resilience for individuals and families, including working out how to support those who may, in the short or medium term, need to stop working or reduce hours but would be happiest being able to return to work later.

We will be using our strengthened Halo service to support Income Protection customers through rehabilitation, including help before they even get to point of claim. With our embedded waiver of premium kicking in at 28 days, we can work with clients from very early on in their illness to offer them support.

There is also more work for the industry to do to help clients to have the appropriate amount and type of cover throughout their lives, and we look forward to working with intermediaries and other providers to continue to improve this.

In addition, the regulator is setting new expectations through its consumer duty requirements. Much of this is of relevance for protection around communications, price and value and foreseeable harm, to mention just a few of the outcomes and cross-cutting rules. We are fully supportive of the consumer duty initiative and see it as the embedding of best practice behaviour that was already happening in many areas.

What next for Guardian?

As you will see throughout this year, we’re in expansion mode. We’ll continue to work with advisers to develop solutions that deliver good customer outcomes with a focus on today’s cost challenges. We’ve evolved our business in the last few years by working closely with advisers, Income Protection being a good example of how we created this new product in close consultation with them.

But the big test comes once the products are launched. We want to hear as much as we can from those who recommend our products so we can continue to evolve and better serve advisers and their clients in the years to come.