Scottish Widows reported a significant increase in new protection applications from advisers and higher take-up from its mortgage customer base in 2024.
However, it also increased provision for potential motor finance commission compensation to £1.2bn – in a case which has raised the possibility of action in other insurance markets including protection.
The insurer said it had seen a near 50% rise in intermediary protection applications in the second half of the year following the launch of its new adviser platform.
Scottish Widows re-entered the income protection (IP) market in October but told Health & Protection while there had been some resulting uplift from IP on the figures this had not had a material effect.
The figures were released as part of Lloyds Banking Group’s (LBG) annual results and show the focus on increasing cross-selling across its customer base has seen greater take-up.
Through its direct-to-consumer retail channel protection take-up on mortgage completions rose six percentage points from 9.1% in 2023 to 15.2% last year.
“We are driving cross-group collaboration by connecting customers with offerings across our franchise for example increased protection penetration in mortgage new business,” LBG said.
The insurer also reiterated its aim to be a top three protection provider by 2025 in the results.
Motor insurance commission remediation
LBG also noted that it had added a further £700m to its provision for potential remediation costs relating to motor finance commission arrangements, taking the total to £1.2bn.
“This is in light of the Court of Appeal judgment on Wrench, Johnson and Hopcraft that goes beyond the scope of the original FCA motor finance commissions review,” the bank said.
“Clearly significant uncertainty remains around the final financial impact. In this context we welcome the expedited Supreme Court hearing at the beginning of April.”
In November then-chief executive of the Association of Mortgage Intermediaries (AMI) Robert Sinclair warned the protection sector needed to focus its attention on the Court of Appeal ruling.
Sinclair added the decision threatened to drive a “coach and horses” through every part of commission in financial services.
Overall, Lloyds Banking Group reported a 19% dip in post-tax profits but still earned £4.48bn, down from £5.52bn in 2024.
‘Taken some big steps’
Scottish Widows protection director Rose St Louis (pictured) told Health & Protection: “We’ve been working towards our bold ambition to be a top three provider, and over the past year we’ve taken some big steps in this direction while continuing to listen to intermediaries and help make it easier for them to support their clients.
“We’ve kept the momentum up by investing in digital capability, launching our new platform and adviser dashboard.
“Meanwhile, we’ve grown our product range with income protection and are always looking at ways to add value and ensure our products are relevant to customers.
“Our plans in the pipeline for 2025 will continue to focus on helping advisers and customers build greater financial resilience as this is at the heart of what we do.”
