Justin Taurog: "Our industry needs to challenge the status quo"

Against a backdrop of changing consumer needs and wider trends impacting our world, genuine product innovation is what’s needed to move the protection industry forward, writes Justin Taurog, VitalityLife Managing Director.

In recent years, the protection landscape has fundamentally shifted. The pandemic followed by an economic crisis have presented both challenges and opportunities for our industry.

A lack of financial resilience for many households has heighted the need for protection, while there are growing numbers of people living with long-term illness.

Meanwhile, medical advancements alongside pressures on the NHS and changes in the way we live and work are all impacting products we offer.

However, despite the obvious need for protection and health challenges we face, there’s still a significant protection gap in the UK.

Positive signs

There are plenty reasons to be positive. Our own sales experience over the last 12 months fared well despite economic headwinds, with a 10% increase in protection business over that period.

Income protection is seeing significant growth in the market and the outlook from advisers for the year ahead is favourable.

At the same time, Consumer Duty has the heightened focus on delivering ‘good’ client outcomes and avoiding foreseeable harm, which places a renewed emphasis on the importance of protection advice alongside other areas of financial planning.

We also see the growing need for advice to be consultative, with more focus on addressing client needs holistically to properly evidence quality and value, not just make recommendations based on price.

Meanwhile, options like our Dementia and FrailCare Cover – which now insures over 100,000 members – and LifestyleCare Cover provide a unique solution to the growing problem of later life care funding.

With Income Protection Cover, we can not only ensure cover is relevant to changing ways of working. Through more flexibility and greater levels of cover certainty, we also play a proactive role in keeping clients fit and healthy in the workplace, as well as getting them back to work when they are not with PMI-powered pathways.

More than just peace of mind

Customers these days also expect much more from products than the intangible peace of mind that life insurance offers, which isn’t always enough to make people want to take out cover.

Traditional protection still treats risk as static – with cover serving as little more than the promise of a pay-out in exchange for a set monthly premium.

This approach is also contrary to the nature of non-communicable illnesses – such as heart disease, stroke, cancer and diabetes – which are determined largely by modifiable behavioural choices that we make over our lifetime.  

Instead, through Optimiser, which is unique to us, members get significant upfront savings - £43m in 2023 – while trebling their level of engagement in healthy behaviours, because it directly impacts the premium they pay each year – generating significant savings over the duration of their plan.

While paying claims remains at the heart of what we do – totalling as much as £117m in 2023 – we also see the opportunity to prevent them too, while also delivering more immediate value in a way that clearly resonates with clients.

This isn’t just good for them and us, but it also benefits advisers who have more engaged clients that are more likely to take out higher amounts of cover and less likely to lapse their plan.

1. VitalityLife Claims and Benefits Report, 2024
2. Based on engaged members who earn 21+ activity points a week throughout their lifetime