Berkeley Alexander has launched a new policy called SafeGuard Protect, developed in partnership with Canopius. This modular policy offers personal accident, income protection, and mortgage or rent protection in the event of an accident, illness, or job loss.
Jessica Bird sat down with chairman Geoff Hall to discuss how – and why – this product is right for the current and future market.
What is it that led to the launch of SafeGuard Protect?
We’ve had accident, sickness and unemployment (ASU) products for many years. They were withdrawn around the time of Covid-19 for obvious reasons, because insurers didn’t want to do unemployment insurance during that period.
This is our return to that market, and we’ve got 25 plus years of experience of selling ASU policies in the market. We’ve gone through all the cycles, during the good times, during the payment protection insurance (PPI) miss-selling scandals, the economic downturns and Credit Crunches, everything.
We always wanted to bring the product back once Covid-19 was out of the way. Insurers were obviously reticent about doing unemployment cover too soon, but we started conversations with Canopius, our main carrier, a couple of years ago about whether it was the right time to be able to do that.
They decided it was the right time, but we also felt that because of the gap, it would be a good idea to just completely revisit the product, and look at what the market needed.
There’s nothing wrong with the ASU policies that were sold pre-Covid. We’ve still got thousands of them on our books, and they’re still running quite happily – they’re still good quality products. There was nothing intrinsically nothing wrong with the core product, but we felt that it needed updating and refreshing.
Can you talk us through the SafeGuard Protect product – how does it work?
Historically, you could always buy mortgage protection, income protection, personal accident (PA) insurance, but there was nobody doing all of them combined in one process. We felt that there was an opportunity there for us to produce this modular process.
Because of some technicalities on wordings, each of those modules is a separate policy. There’s three separate policies we’re offering – three policy wordings, three schedules but the whole process is a linked process, so there’s one quote process and one application process that ends up with three policy documents being issued.
It’s a very straightforward process for the adviser and for the customer. They see all the options that are available to that customer, based on their individual circumstance –mortgage, rent, salary, age, family circumstances.
They only get to see what that person is eligible for, and then they can mix and match the cover against the premium – because, obviously, it’s about finding the right balance between what cover the client needs, and what is affordable to the client.
We felt that bringing it together was the right way of doing it, because lots of people have a mortgage or indeed rent, but they can actually qualify for more protection. They can qualify for income protection, or they might want PA.
Rather than having three separate sales processes to go through, where the adviser has to say ‘I’ve done your mortgage, I’m now going to go and find you an income protection policy, and I’m now going to go and find you a PA policy…’, by combining it all into one process, it makes life a lot easier for the adviser.
It also gives the client that ease and flexibility to have everything in one place – one provider, one direct debit provider, one claim service.
I’m not aware of anybody else doing this sort of thing. I’m also not aware of that many that are doing an unemployment mortgage protection or income protection product, so I think we’re quite early to the market with a full ASU policy.
We’re launching this with 25% commission paid monthly on the drip, but we have a launch incentive so that any policy incepted this year up until the end of December, we’re going to pay 30% for the first 12 months of each policy, after which it will revert to 25% from renewal.
Is making the process easy a reaction to customer reticence around protection?
I actually don’t think that there is much customer reticence around this sort of cover. I think there’s adviser reticence, or resistance.
A lot of advisers were around during the PPI scandal, and a lot of advisers are still slightly scared of the product.
Before Covid-19, we found a lot of advisers would say to me ‘I don’t really sell that because I’m worried if I talk about PPI with my client, am I going to lose my client for the mortgage, because they think I’m trying to sell them a policy that isn’t fit for purpose’. Actually, mortgage protection, ASU, income protection was a very valid policy at that point, and it’s just as valid now.
So, it’s adviser reticence rather than customer reticence. There’s a demand from customers out there.
This is particularly important now, with Consumer Duty, which is as much about what you can do to protect your client moving forward, against things that might happen. You’re selling them a mortgage, but what are you doing to protect them? Yes, you’re doing life insurance, but what about the unforeseen circumstances? What happens if they’re off sick for six months? What happens if they lose their job?
There is pressure from Consumer Duty on the advisers to have those conversations with customers.
This product is giving them that opportunity to have that conversation and to be able to offer them a product that strikes the right balance between coverage and price, based on the what the client needs and is prepared to pay.
That’s where a good adviser really is worth their weight in gold. And now they have everything all in one spot.
Why is now the right time for this type of product?
There are lots of statistics around at the moment that suggest the economy is getting worse – companies in financial difficulty, going into receivership and liquidation, or entering voluntary arrangements. Look at the vacancy situation, the unemployment rates, all of those indicators suggest that confidence in the economy is lower than it has been for a while.
So, there will be more demand, particularly for unemployment insurance.
It has been a number of years since Covid-19, when – understandably – insurers just pulled out of the market because they didn’t know how to deal with what might happen when furlough ended, because they’d never seen anything like it before. They simply couldn’t calculate the rates.
But we are through that now, and we’re back to dealing with normal economic drivers.
Confidence is lower than it has been, but that is predictable, that’s ratable – underwriters have experience of that. Before Covid-19, there were fluctuations – good times, bad times, the Credit Crunch – and they have that experience to draw on, and they can rate accordingly.
So, now is a good time to be having those conversations again, because there’s a demand, there’s a need, and now, there’s a solution.
This product was, in the end, two years in the making – why was that?
These things take time, and rightly so. There’s discussions, rating, policy wordings, research, designing IT. You can’t launch one of these schemes in the space of a few weeks. It takes a long time to design it, build out the market research and get everything right.
It also has to be right for the customers. There’s no point producing a product that, in the end, cannot be sold to customers because it’s not suitable. So, we’ve tried to make sure that it’s suitable for as many customers as possible.
It can offer job loss cover for the self-employed and contract workers, as well as the employed market, for example.
We’ve tried to make it all-encompassing as far as possible, to make sure that the policy terms and conditions are fair, reasonable and understandable.
We’ve also tried to make sure that the sales process is flexible, intuitive and simple for the adviser, because there is no point producing something really complicated, really technical, that nobody can get their head around, because then nobody will ever sell it.
We can’t produce a product that isn’t fit for purpose for the end customer.
We also have had to think carefully about commissions, making it worth the agent’s while, while not pushing the price up too much for the customers. There’s all sorts of these conversations.
It takes a long time, but the most important thing was to get the product right, get the pricing right, and get the process right, so that it gave the adviser as much flexibility as we could, without making it too confusing. We believe we’ve done that.
How does this product help tackle the current environment and its challenges?
There’s longevity there, and the policy can evolve with the customer. So, the mortgage/rent module has the same rating, so for a renter who intends to buy, the policy can move with them and continue to provide them with cover.
It can move with them when they change jobs, it can be added to if they end up in a couple or if they have children, they can add a spouse or partner. They can add children to the coverage.
It’s a product that hopefully will serve them well for many years to come. It can evolve with them to meet their demands and their needs, and it can move with them as their lifestyle changes.
For advisers, it gives them the flexibility to talk to more clients, and then they can solve a range of insurance needs through one process, rather than having to go through different processes with different providers. It gives them the ability to have a more straightforward conversation with the customer, and the confidence to talk to more customers.
It’s also annually reviewable, so if they choose to, the adviser can have an annual conversation with their customer. If not, we can do the renewal remotely for them.
What would you like advisers to know about the product, and about Berkeley Alexander in general?
Advisers can have confidence in the ASU product in general, and should have confidence in having the conversation with their clients.
Then, if we’re their chosen partner to provide that solution, they can have the confidence that we have 25 years’ worth of experience in this market, and that we understand the product.
They can have confidence that the product has been designed very carefully, with a great deal of thought, and with that knowledge and experience.
