Protection Re-View
Simplicity isn’t everything
Do we want simple financial services products or do we want products that won’t harm us?
You will probably answer that we want both, but there is a worrying view that the charge towards simplified products means we won’t get that. The accepted view is that if, for example, we offer simplified underwriting and make products easy to buy, we must also accept poor value products as well. Or they will include terms (as PPI did for many people) that make them rather toxic. Or they will simply become commodities, with a handful of providers keeping out competition and slowly driving prices up and value down.
Simplified products that are easy to compare can help create strong marketplaces in the short term, but are they necessarily good for our customers?
Take the iphone, Kindle and your car’s electronic fuel injection system as examples. Each of those is hugely complex if you ask what’s inside and how it works. But how many of us are even interested to know?
What we do know is that what’s inside, complex or not, won’t harm us and that its very complexity is probably the thing that will help it work better for us. The key is the interface with the user and the trust that the brand has earned. And it has earned that because it has delivered what it promised – or more.
My fear is that we move to simple products that are all the same, where innovation is stifled (or even outlawed) and where the only comparator for consumers is cost.
That may make the task of regulation simpler but it is also a retrograde move. I want products that work better now that they did in the past and where they provide good value but not necessarily the cheapest price.
So, IP policies that help people get back to work, PMI policies that help people live better lifestyles and term policies that include bereavement and other services are all on my wish list for what a good product should do. And I want to see those benefits get better, not stay as they are.
There’s a balance to be struck and the last thing we want is products that are toxic to our customers or where it is impossible to assess value or where the drive to commoditisation results in less choice, less value and ultimately less worth to our customers. But let’s not view innovation as part of the problem when it can actually be part of the solution. If we did that we wouldn’t have our iphones, Kindles and more efficient cars. And I, for one, would not see that as a ‘good thing’.