Monday, September 20, 2021

Is Excess Protection the next must have add on?

Most people buy insurance with either a voluntary or mandatory excess or indeed both.  Yet traditionally very little excess protection is sold, when compared to Motor Legal Protection for example.   Excess Protection Insurance can create a compelling insurance choice for customers and can also be a great source of differentiation.

Excess Protection is our focus for the start of a series looking at some of our hero products in the ancillary insurance world; from innovative new products to a fresh thinking in established markets. Julian Welch, Head of Account Management and Peter Simmons, Head of New Business, share their experience of working with our clients to shape their excess protection propositions to achieve different business objectives.

Straightforward cover and a variety of applications

Excess Protection is familiar and straightforward; covering up to the limit of indemnity where a customer has paid out excess on another policy. However, it’s the simplicity which makes it a great way to unlock value added benefits for policyholders. Julian explains, “Excess protection can work alongside pretty much any main insurance policy and because of its simplicity is really straightforward to sell or include, even within a web only buying journey.

“Motor and home of course are obvious choices and can turn making a claim into a pain free experience. Lifestyle excess products can cover a range of insurances like travel and pet insurance claims as well as home and motor. More niche insured risks are also suitable markets for excess protection - hobbies and leisure such as touring and static caravans, marine craft, equestrian even equipment for specialist pursuits like scuba diving or military service.”

Reducing excess to attract and retain motor business

Motor Excess is our most popular cover” says Peter, “However within this sector alone there is so much scope. We supply cover for taxis, motorhomes, motor bikes and light commercial vehicles. Our average claims pay-out is around £600 so you can see it’s really beneficial for customers to have. Whilst most claims are because of fault accidents around 15% are not accident related e.g. fire and theft. ”

Excess protection can be used to reduce the amount of excess a customer pays in a claim rather than pay out for all of it, typically for motor insurance excess reduction. Peter continues “Excess reduction is essentially the same policy but doesn’t pay the whole excess – it’s a useful way to reduce a large excess, more likely in motor for a young driver or non-standard risk situation, this can be just as relevant for home insurance, subsidence or flood risk for example where excesses can be quite large.”

Higher risk drivers tend to attract a higher excess so supplying an excess product alongside the main policy makes a much more attractive insurance proposition. Julian continues, “It’s also a way for a broker to give protection to their insurer’s book. The main policy being sold with a higher excess which that insurer doesn’t need to cover, whilst the excess protection policy can be used by the customer if needed.”

The rise of short-term insurance

The motor market is seeing a large uptick in short term motor insurance as the pandemic driven change in driving habits continues. “Excess reduction or protection works well in short term insurance too.” says Julian. “We can handle short term cover without issue. Whether it’s insurance for an hour, a day, a week, or a month, excess protection can be included or added on. We know competition is fierce so giving the customer choice of insurance with greater protection against the cost of an accident is a significant benefit in what is becoming a crowded new market.”

Excess protection as an incentive

“As a tool for incentivising renewals or new business excess protection is a good offering” says Peter. “We are seeing more brokers providing a lower level of excess protection inclusive within the policy price, with the option to upsell to a higher limit if needed. Net rates for Excess Protection are comparable in price to other common ancillaries like Key insurance, so it can be a good commercial choice and something very valuable to customers. Offers which include Excess Protection are good for grabbing attention as its relevant to everyone, even on policies with a relatively low excess and can be applied to so many different types of policy. That makes it a good marketing tool.”

The Coplus difference

Of course a great insurance offer is only as good as its claims handling. We can’t highlight the benefits of using Excess Protection without backing it up with first class claims. Julian summarises “Excess Protection claims are handled by our in house team in Norwich. As a reimbursement product we settle the claim after the event on proof of the deducted excess. It’s a straightforward process with a very good customer experience as claims are settled very quickly once evidence of loss is received.”

As well as good outcomes for policyholders on Excess Protection claims we take good care of you too, with detailed and timely management information to evaluate performance and oversight of compliance and value reporting.

Get in touch today

Contact us for more information about Excess Protection opportunities. Julian and Peter will be happy to share our learnings on ancillary insurance propositions and how we can meet your business objectives.