HSBC Life UK questioned using intermediaries with loaded premium companies and decided against working with them amid concerns around adding value for customers, the insurer’s CEO Mark Hussein revealed.
Hussein (pictured), who was speaking at Health & Protection’s Protection Forum last week, added that some of those firms had since returned asking for lower amounts.
“Loaded panels only make up about 15% of the business in the market,” Hussein told delegates.
“Part of our big business case internally when we went out into this market and then loaded premiums came up as an option was for us to look at it and say, we want to start and work with one or two of these firms.
“This is what it is, this is how it works, but we would have to load our premiums.”
What value is added?
Hussein said it was at this point that he questioned the use of loaded premiums and what additional value they provide to customers.
“We asked that of the company we were talking to and it didn’t stack up,” he continued.
Consequently, Hussein added the decision was taken to not use these firms with loaded premiums.
“I took a decision to say no. I get there is a lot of business within that area but actually as an industry do we say, we’re not going to do that anymore?” he continued.
“What we have seen is loaded premium companies coming back to us and saying, ‘instead of a 15% surcharge, we’re going to work with 5%,’ and they want to talk to us.”
“It’s only if you can demonstrate the added value you’re adding makes sense from our customer perspective. That is the key,” he added.
Commission on slim margins
Hussein maintained that demand for commission was great as margins get slimmer amid consolidation as life insurers leave the sector.
“You have to recognise there comes a point that it can’t just all be about commission,” he said.
“It’s important to recognise when you put commissions up, the margins get smaller and as a result some of it has to be passed onto the customer.
“You’ve got Consumer Duty, value for money and making sure that value for money is right.”
Hussein added that while HSBC was relatively new to the open proteection market, it had aspirations to grow the market.
“We’ve only been there five years, we have aspirations to grow in the market. We need to grow the market which is important, not just take market share,” he continued.
“We have to grow the market, with all the things we’re talking about, it’s really, really important.”