Five years on from launching into the UK protection market, Guardian CEO Katya MacLean explains the insurer’s journey through Covid, a cost-of-living crisis and its aims to be a top five provider in five years.
At the time, the summer of 2018 seemed a perfectly sensible time to launch a new protection insurer into the UK market.
Just 18 months later the UK was thrown into turmoil as the full force of the global Covid-19 pandemic took hold, with more than 200,000 people dying in the UK alone.
As a result the economy has since been in a state of upheaval dealing with the Covid aftermath along with Brexit, major political instability and the cost of living crisis.
So as Guardian Financial Services chief executive officer Katya MacLean tells Health & Protection it has been an “amazing” first five years for the insurer, that is no understatement.
“If you think about what the world has been up to, as a time to launch and build a life insurance business, it’s been pretty interesting doing that in the context of global pandemics and the economy,” she says.
Despite the obvious difficulties of these early years, MacLean notes the experience of building a new life insurance business has been “fantastically enjoyable”.
MacLean started with Guardian as proposition director as the team began formulating the new Scottish Life-backed business and its launch into the market.
After piloting with four major intermediary firms in July 2018, the insurer went live to the whole market a month later.
Meanwhile in February 2019 MacLean advanced to chief operating officer, before taking over the CEO position five months later and has thus led the organisation for the last four years.
That period has covered some history-making events but MacLean believes the firm has survived well.
“Starting with such a strong purpose which still drives us today and which is just as relevant as it was back in 2017 when we were putting together the idea for the business, is really testament to the fact it’s been worth doing,” she continues.
“The thing we got right is that we knew why we were here. We had that strength because the original team that came together had all worked in the industry for a long time.
“We had ideas that we’d not been able to implement elsewhere and we had frustrations that we knew could be fixed and we really focused totally at all times.”
Listening and learning
As MacLean explains, the key point driving decisions then and now remains what is ultimately most important to protection customers, the point of claim.
“That meant all the decisions we made along the way, the big decisions, the design decisions, have been hung off a principle which has worked well and which has resonated well in the market,” she adds.
However, that does not mean it has all been plain sailing.
MacLean agrees that pre-launch research helped make many right decisions but the importance of listening and taking on feedback was paramount when considering those areas which were not quite right, and as a result not all the original ideas lasted.
“But we’re more powerful because of it,” she says.
For example, when Guardian launched the team took the bold and deliberate move to buck the market trend and have separate life and critical illness (CI) policies, rather than accelerated critical illness which pays out on either event.
“We thought we could do it better than that and so we launched a product where you bought them separately and then received a discount for buying together,” she says.
“We still have that and some advisers absolutely love that and for some of their customers it’s absolutely the right thing.
“However, it wasn’t the right thing for everyone or for enough of the market, so we’d brought out something that was different and useful, but which wasn’t going to meet the needs of the bulk of customers and their advisers.
“So we added to our product suite in 2019 to meet that gap, and now we sell both.”
No plans for D2C
That focus on the intermediary channel is an important one with the expectation that the vast majority of people will need someone to hold their hand when buying protection.
For a purchase conducted perhaps just a handful of times in a life, but yet so crucial when needed, the reassurance and support an intermediary provides is vital, and MacLean is quick to rule out a direct offering.
“Will we be going pure direct to consumer? No, not anytime soon, not unless the world changes quite dramatically, and I can’t see how that fundamental human need is going to change particularly,” she says.
However, the method and type of human interaction is seen as less critical, with the priority being to support distribution that’s able to appropriately reach as wide a population as possible.
“Whether that is strictly advice or whether that is guidance, whether that is a person sitting in front of you having a conversation face-to-face, or on the phone, or some kind of hybrid technology and person combination, it matters less,” she continues.
“It’s obviously very important, but the key thing is that there is a human being in all of that who is going to say, this is okay.”
But MacLean emphasises that the evolution of the intermediated process and its interaction with technology will be of keen interest.
“We absolutely will be watching and being involved at the relevant time,” she continues.
“It’s interesting, in fact, to look at what advisers themselves are doing now.
“Some of the big distribution firms are starting to think about almost hybrid models themselves, where they’re using technology to enable the process, so the adviser is giving the bit where it really matters to have a human being involved.”
‘Transparency is good even when uncomfortable’
One of the main building blocks of the newly introduced Consumer Duty is greater interaction between providers and intermediaries, even if breaking down some of the traditional boundaries can be uncomfortable.
As part of this push towards greater co-operation and interaction MacLean acknowledges it has been very interesting working with distributors to understand their needs.
“The bit where we and other providers have done the most is to think what it is that distribution needs from us to be able to meet their requirements as well,” she says.
“And there’s a little bit of extra transparency from provider to distributor, which we’ve all had to give as part of this, which is useful.
“Transparency is a good thing even when it’s uncomfortable,” she adds.
Opinion and countless surveys suggest the Consumer Duty should benefit the protection industry and financial services customers by making them more secure.
But one of the more high-profile subjects has been around monitoring the price and value of products and services, which raised the issue of loaded premiums charged by some advice firms.
Calls were made across the industry to end the practice, but MacLean noted the insurer had not chosen to end any relationships with its distribution network for this reason.
“We did not come off any panels and we didn’t step away from any distribution as a result of that,” she says.
“And it’s interesting to see there’s some changes in the investment side of the market around fees, so watch that development with interest.”
And as for Guardian, MacLean adds the price and value discussion has been a key one for the insurer itself.
“We’ve never pitched ourselves as being the cheapest products on the market because what we’re about is value, we’re about getting it right for the customer,” she says.
“And if that comes at a little bit of extra cost, then we think that is a good choice for the customer to have.
“So we’re strongly supportive of advisers being able to look at both price and value when they’re making decisions on what to recommend.”
Sights on top five providers
Now with those first five years under the belt how is Guardian going to look forward to the next five.
Given the preceding period it would be understandable if there was a desire to just cement its position in the market and establish name and reputation.
But the insurer and MacLean are more ambitious than that with a goal to be challenging the biggest players in the market.
“We do intend to grow fast. I’ve talked about us coming to make a difference; you only make a difference if people actually have your product,” MacLean says.
“It’s all very nice to sit and have a good idea, but if it’s not making a difference to anyone’s life, then there’s not a lot of point, so growth is important to us.
“Our longer-term ambitions, over that five-year period, we are looking at being a top five protection player and certainly aiming to trouble those who are currently top five.”
MacLean acknowledges that “nobody thinks this is easy” but she believes the focus on claim outcomes and listening to and improving access for distribution partners will prove a strong driver.
“We know there are parts of the market we’re not active in today, we know there are bits of distribution that we are not yet fully giving all of the service and capability that they would like,” she continues.
“Yet as we build all of those components out, that gives us a really natural growth path which gets us to where we’d like to get to.
“And our other strength which is not often talked about is we only do protection, which means that 100% of the time we are focused on doing protection well, which is a strength because we don’t get distracted by what’s going on in any other product lines,” she adds.
Not an insurer defining occupation
Speaking of product lines, Guardian launched its income protection (IP) offering earlier this year, delayed in large part by the pandemic, finally giving it the full suite of three traditional protection products.
A notable development in that product was introducing the own job category of cover.
“The own job definition at the centre of it was really important to us because coming back to our purpose, taking away uncertainty at point of claim is the most useful thing we can do,” MacLean says.
“In the industry we are all used to own occupation and think we know what it means, but if you sit in a client’s shoes listening to an adviser, what you’re really hearing is ‘the insurer will define whether I can do my job or not because it has this thing called occupation that’s up to them to define’.
“So for us to say it’s about whether you can do your own job or not brought a lot of clarity and that’s gone down really well.
“We’re very pleased with the market reaction, how advisers are picking that up and we are selling in line with our expectations and overall we’re really pleased.”
While Maclean is proud of the own job innovation, she is realistic and accepts that in a competitive market others will likely adopt it, but believes that it should help to benefit more customers across the sector.
More education on underwriting
On critical illness (CI) MacLean is hesitant to reveal the insurer’s development path, but she highlights medical advances as being a key step for the product as a whole.
“Whether that is screening, catching things earlier or fewer people having really severe illnesses but more people having early stages,” she says.
“Or if we look at the world as it is today, probably an increase in cardiac type events post-Covid.
“It’s the product most bound up with medical advances and therefore is going to need continuous work on it by the industry as medicine accelerates.”
This interaction with medicine also triggers another important debate around coverage for those with pre-existing conditions.
Mental health is one of the most high-profile subjects in this regard but other conditions have also come to the fore where customers and advisers are looking for insurers to step forward.
Where mental health is concerned, MacLean notes insurers have been focused on improvements and believes underwriting is “quite fair” where many people are no-longer penalised for their conditions.
But despite many advisers doing fine work in the area, more needs to be done in educating advisers and consumers about this.
“That would be where I would focus first, we are all already looking at our underwriting to make sure we’re reflecting the latest understanding of where risks really are,” she says.
“Just because we know that our underwriting questions are maybe more advanced than people realise, you still have to get that message out because you don’t want anyone to be afraid to come and talk about what their medical history actually is.”
But the potential for more tailored products, deliberately addressing people from communities with specific conditions that at present are largely not covered, seems low, and that is generally down to one vital aspect – being able to successfully claim.
“The thing I hear back from my claims team is you don’t want to sell someone a product that excludes all the things that they’re likely to claim on.
“Obviously sometimes we do have exclusions on policies, but you have to think so carefully about whether you’re building something that is of value to the consumer when you do that,” she concludes.