---

We’ve all returned to our summer holidays and the new school year is in full swing.  So what better time than now to reflect on the predictions we made in January this year for the LP&I industry in 2018? Were we on target? What’s changed since then? And what should we expect next?

Just to recap the predictions we made in January, we said then that ‘The New’ would be a recurring theme. New market entrants, new employee expectations and new customer propositions. And that’s certainly been the case. Let’s take a look at how this has played out for each of our three predictions.

Prediction 1: Winning providers

A new winning provider will emerge to crack the nut of providing a startup-style, slick, user-centric digital proposition – with the scale to make it commercially viable. In our prediction, we left the door wide open as to who this might be: a bold incumbent partnering with a startup? A GAFA player? Or a business to another industry altogether?

Mid-year reflection:

We’ve yet to see the emergence of a winning provider. But there’s every sign that the risk of new competition is growing, fast. The ominous shadow of risk posed by a GAFA is becoming increasingly pronounced. But it’s yet to reveal either its full force, or the exact shape of the competitive threat. That said, there’s no shortage of rumours, including recent market news about Amazon’s interest in the UK insurance market via a comparison site. Whilst most of the rumours relate to the disruption of the GI sector and (publicly) there are no imminent launch plans, you can make a safe bet that the roll-out will be swift, the customer experience will be outstanding, and the LP&I market will be next.

Meanwhile, although the majority of startup activity has been focused on offering capabilities to support specific components of the value chain, a few providers have been making successful inroads with end-to-end direct-to-customer offerings. These include Anorak (which recently partnered with Starling) and Gryphon (which now owns Guardian Assurance) in the protection sector. Meanwhile, Penfold is making waves with its app-based offering to facilitate long-term savings and Moneybox has launched its Lifetime ISA.

Prediction 2: Employees want change too

Employees will become increasingly vocal about their expectations of the workplace (where they spend a large part of their waking lives). They already see a stark contrast between their digital experience ‘outside’ of work versus their moribund 1990s time-trap office experience. And until something changes their frustration is just going to increase.

Mid-year reflection:

Employees are beginning to vote with their feet and the industry’s facing a looming talent crisis. It’s clear that LP&I employers really do need to act now to attract and retain talent for the future. Our other blog series, Attracting Fresh Talent to the LP&I industry, shares our thoughts in this area, including:

• There’s a big image problem to address: Just 12 percent of university students think the LP&I industry welcomes young people. Within the IFA market, the average age of an advisor is 50, and approximately 80 percent are older than 40. This is a real challenge for the industry.
• There are also pressing talent issues brewing across the wider LP&I workforce, with 40 percent of firms already reporting talent shortages in several technology and business functions.
• The industry needs to take steps now to attract the next generation of smart, future-looking talent across all capabilities – both industry-specific and generic (e.g. branding, marketing, HR etc.).
• The practical steps that LP&I companies can take to modernise their workforce with new talent and achieve associated benefits include reimagining the work, the workforce and the enablers.

Companies are starting to recognise the importance that employees are placing on their workplace and are starting to adapt working practices to better fit their wishes. A well-publicised example of this is PwC’s Flexible Talent Network, where new recruits can list their skills and preferred work pattern and be matched to suitable projects (almost reflecting a gig economy structure). This flexibility is exactly what the new wave of talent desires.

Prediction 3: Evolving propositions

There will be a dramatic evolution in product propositions. This will be driven by an increasing need to become truly customer-centric and not think in traditional product silos. In particular, we predicted an upsurge in interconnected propositions.

 Mid-year reflection:

We’re seeing the green shoots of this prediction start to emerge. As yet, however, no one provider has demonstrated that they’ve completely cracked it.

In January, we referenced Vitality as an interesting example. It brings together the IoT, health insurance, gym and healthcare provider partnerships and an integrated rewards ecosystem under one offering. Since then, it has announced that it has also started to offer investments, with the ability to use rewards to staying healthy to obtain discounts on annual management charges.

The LP&I industry is still largely restricted by legacy technology; however, we’ve seen an uptick in providers developing new technologies that would, in effect, remove this barrier in the future.

Within the GI market, several providers such as Admiral and Aviva have started to offer single-policies across multiple lines that include multi-line discounts. This has helped to create more value for the customer and build a more trusted relationship with the provider.

Designing new propositions

As you can see, the need to transform on multiple fronts continues to be a priority theme for the LP&I market. We’re supporting several clients in designing new propositions and working practices, leveraging our design and innovation agency Fjord and our creative agency Karmarama to co-create by utilising human-orientated design and design thinking workshops. We are offering free taster workshops to demonstrate this service, so please email me if you’d be interested in us running one for you and your organisation.