Time may well have run out for old school life offices
The life company is a dead company. As I write this, the funereal music is swelling to a crescendo. The lessons concentrate on the good while avoiding the bad epitomised in the M word (mis-selling, if you haven't guessed). It was a life longer than any policyholder – in many ways starting and ending with Equitable Life.
Maybe my funeral vision is a little extreme or more probably a few years premature. But the life company as we have known it is very much on life support.
Not long ago – maybe 15 to 20 years – there were scores of lookalike UK life companies. They were cradle to grave providing everything from protection to pensions, from help with home buying to investments. For many customers, they provided a total package – and were trusted brands, epitomised in the Man from the Pru.
These days, those mutuals, providents and “lifes” are largely history. To be charitable to their memory, they were geared for immobile people trusting in decades long products while not questioning the charges. That world no longer exists – the writing was on the wall 40 years ago but it only became neon-lit in the early 1990s.
Most have left little trace other than a mention on a zombie website to show they are in run-off. Coloured by scandals such as endowment mortgages or pensions mis-selling, and by top of the market errors such as estate agencies, or banks (Prudential, Standard Life, Scottish Widows), most brand values are around zero.
Those whose names still decorate landmark buildings – the Prudential, the Pearl, Liverpool Victoria, Royal Liver, are at best a shadow of former selves.
The once-dominant Prudential has little real long-term interest in the UK, limited by a business model stressing consolidation and further diminished by recent Asian adventures and misadventures. PruHealth is a healthy exception to this – but only thanks to a massive expertise injection from South Africa.
Aviva, the expensive rebranding of Norwich Union, has just lost UK chief executive Mark Hodges, off to the smaller, nimbler and non-life intermediary Towergate, replaced by former Friends Life (formerly Provident) boss Trevor Matthews. Matthews, once with Standard Life, said on his Aviva appointment after two years at Friends: “This is a big job. I am passionate about our products.” What else could he say? Certainly not, “it's a small job and I don't care about the products”!
Besides shuffling the executive pack, when did the UK life industry last have an original idea? Critical illness (CI), a generation ago, perhaps but this was a South African import.
So where do we go from here? Life companies have no sustainable future in investment (mostly third and fourth quartiles) or pensions (replaced by Sipps at the higher end). That only leaves protection.
But as far as the individual policy buyer is concerned, the word “protection” has become tarnished by association with payment protection insurance, that once golden cash machine for banks and building societies which has now crumbled to humiliating and very costly ashes.