LV= has pledged to permanently maintain its payment holiday for struggling and vulnerable protection policyholders.
The insurer is also planning a simplification of its critical illness (CI) product line which will allow a more flexible approach to the cover for advisers and their clients.
Justin Harper, protection proposition and marketing director at LV=, told Health & Protection the payment holiday had been so well received the mutual believed it was the right thing to do.
Harper (pictured) noted that it would be almost impossible to write the clause into its contractual agreements but vowed that LV= would maintain the offer as part of its wider support.
“The industry did a good job to protect those more vulnerable customers,” he said.
“We supported more than 300 people on premium holidays and 90% of them kept their policy after completing their payment break.
“It was originally available for three months, then we extended it to six months and announced it would be open for new claims until the end of 2021.
“But we now intend to continue that permanently, we want to protect it and make it part of our support for vulnerable customers,” he added.
Harper noted LV= also offers a financial support fund for members in need and it too has seen around 200 people use it, adding that such measures do make a difference.
Overall, he said the insurer had not seen a significant increase in policy lapses and cancellations since the pandemic hit.
“We feared a massive exit of people lapsing and cancelling, but we have only seen a slight increase, nothing significant,” he said. “And at the end of last year lapses and cancellations dropped.”
Harper believed this was a positive sign for two reasons – that payment holidays and other assistance schemes were working and helped people stay insured, and that other members realised the value of their cover and were more likely to hold onto it.
He said this was illustrated by the higher uptake of additional services offered by the insurer.
Flexible CI options
Harper also discussed changes to the insurer’s proposition made during the last 18 months and those it has on the horizon.
Most notably, an overhaul of the critical illness product is expected to make it more flexible and open to the lower cost end of the market.
“Historically we’ve offered everything as standard, but increasingly we recognise the need to breakdown the proposition to allow advisers to pick and choose cover and term,” he said.
“And I think we’ve improved the term product and now pricing that better,” he added.
Harper also noted the amendments to the income protection (IP) proposition including the mortgage and rent cover product had been well received since launching in July.
Market share up
As far as sales are concerned, Harper was upbeat for LV=, saying the insurer’s market share was up and that he was optimistic for next 12 to 24 months.
“We are definitely positive [this year] and quarter one was very strong for the whole industry,” he said.
The second three months of the year seem to be more mixed, while Harper noted August was especially quiet this year, perhaps as the nation took a collective summer holiday from the pandemic.
“Everyone took time off in August and so that will make the usual big summer dip more extreme than usual,” he added.
Harper also suggested LV=’s critical illness sales increased more than the market, and he is hopeful that income protection new business across the market will get close to pre-pandemic levels in the fourth quarter of 2019.
“I think we have done well in Q2 and Q3, we’re ahead of where we planned to be and are up around 25% to 30% year-on-year, and we’re higher than 2019 too,” he continued.
Management switch and takeover scrutiny
The last year been a period of upheaval for the insurer, with one of the more significant changes being the departure of protection director Debbie Kennedy to takeover as CEO of LifeSearch next month.
“Debbie will be a big loss,” he admits, but LV= managing director of life and pensions Clive Bolton is overseeing the protection business temporarily, with a formal appointment likely in the New Year.
This is presumably tied to the outcome of the potential demutualisation and takeover of LV= by Bain Capital which members will have the chance to vote on by the end of the year.
The deal has sparked much ire from MPs and some other interested parties, with pointed questions being asked about how the arrangements were made and who will benefit.
While the completion of the deal hinges on the key vote by members, Harper confirmed the insurer is planning with the expectation that it will complete.
“We welcome the scrutiny but we think this offer is the greatest offer for LV going forward,” Harper said.
“There were other options but this offer is best for LV=, it gives independence and a capital injection. They have bought into our strategic plan and management team.”