HSBC Life’s closure to new protection business leaves the market bereft of a strong brand which offered instant underwriting decisions and a “market leading” critical illness plan, advisers told Health & Protection.
Chesnara today announced it has closed the HSBC Life (UK) protection arm to new business due to the market’s “competitive nature” and strategic objectives, following completion of its £260m purchase today.
While the HSBC Life offshore bonds business also bought in the transaction will remain open to new customers, today’s news regarding its protection business has left advisers reeling.
Emma Thomson, chairwoman of the Protection Distributors Group (PDG) told Health & Protection that HSBC was a very well known brand now leaving the industry.
“Every consumer will have heard of HSBC,” Thomson said
“So to lose a very well known company from the list of insurance providers is a shame.
“Not everyone focuses on brand names, but certainly it helps when talking to some customers.”
Instant decisions
For Marta Scott-Manuszewska, director of Five Star Mortgages, the provider’s instant underwriting decisions are what she will miss most.
“There are a lot of options on the market, but if someone is interested in getting an instant decision, there isn’t any other firm that would offer that without the need for a GP report,” Scott-Manuszewska said.
“I would rather put it with HSBC and if they say, no, then you can tell the client that we’ll just have to go somewhere else and it’s very likely that we will need a GP report.
“However, some will say, yes with the loading and you can put the policy on risk straight away.
“But for some customers, knowing they are exchanging on a property in a week’s time, they’ve left it last minute and you’ve got a provider who can offer them cover even if it’s at a higher premium, they would go for it.
“So I’m going to miss them.”
Covering diabetics
Alan Knowles, co-managing director of Cura Financial Services, maintained that HSBC Life’s offering came into its own for people with high BMI (body mass index).
“They were the best at offering critical illness cover to type 2 diabetics,” Knowles said.
“And that we will miss them for.
“While we didn’t do a lot with them, unfortunately there are only a couple of companies who can consider critical illness for diabetics and they’ve got to be older clients.
“So by HSBC going, it has left a gap for certain people with health conditions.”
Market leading plan
Alan Lakey, director of CIExpert and Highclere Financial Services, revealed he had known about the provider’s exit since last December, adding today’s development was bad news all round.
“It’s been bad news because we need more protection companies. It’s bad news because HSBC’s critical illness plan was a market leading plan and it had been improved over the years,” Lakey continued.
“This is their third variation since about 2018 when they entered the market and each time it’s got progressively better and more suitable for consumers.
“It’s just a shame that companies can’t get sufficient traction in the market and part of that comes down to networks having panels.
“Because if you can’t get on one of the five or six on a panel that a large network offers, then you’re not going to get that critical mass of clients and you might not be able to continue.
“So it’s a real problem.”
Disappointing news
Providing a network perspective, Jo Pawson, head of protection at New Leaf Distribution, added: “Although it’s disappointing that HSBC has exited the UK protection market for new business, as a whole-of-market independent network New Leaf is confident our advisers retain a strong and diverse panel of providers.
“This allows them to continue recommending appropriate solutions for clients, firmly in line with the principles of Consumer Duty.”
