HSBC hopes its new flexible insurance package will redefine the way people buy insurance, but is it trying to do too much? Simoney Kyriakou reports
Select and Cover is the name of the new flexible insurance product from banking giant HSBC UK. The package offers seven switchable types of cover for one monthly subscription.
According to the product specification, Select and Cover means customers can choose a minimum of three types of insurance from £19.50 a month and, if their circumstances change, they can add and remove one option during the year without penalty.
When the policy is up for its annual renewal, customers can change all their options and, because it is a pay-monthly service, HSBC is also giving people the ability to cancel without penalty at any time.
WHAT'S IN THE BOX?
This might already sound too good to be true, given the various headlines in recent years about banking insurance add-ons, but HSBC UK is assuring the six million target individuals (those registered to use HSBC UK's online banking service) that the product really is flexible.
The bank is not yet including pet, health, income or critical illness cover, but each of the seven types offered covers the policyholder, their spouse, domestic or civil partner and their children.
According to Mark Hussein, chief executive of HSBC Insurance UK, the package was created after market research carried out by the bank showed convenience and flexibility were the two main drivers for insurance customers.
"Select and Cover aims to redefine the way our customers buy insurance. Its subscription-based model reflects our aspiration to provide customers with innovative ways to both buy and use our products."
So, do convenience and flexibility really override price when it comes to insurance? Brokers and insurance specialists alike think so -- and agree with HSBC UK that this is where protection needs to go in the next decade.
According to Emma Walker, chief marketing officer of insurance broker Lifesearch: "The new HSBC Select and Cover offers a level of convenience for customers to have all their insurances in one pot. How often do people look at their bank statement and wonder: 'What am I paying for? Which provider is my car insurance with and which one is my home insurance?'"
She says other providers have not yet progressed as far with similar flexibility, although many do promote the purchase of other plans by offering discounts for their home or car insurance if the customer is a policyholder elsewhere.
Similarly, Adam Higgs, head of research at product analysis website Protection Guru, believes providing the consumer with one place for all types of insurance "really makes sense in today's markets".
He points out that this sort of flexibility is already happening in other industries -- consider the likes of Amazon, where individuals can get everything from groceries to subscription TV packages, household goods, gift vouchers and maybe even insurance in the not-too-distant future.
Mr Higgs adds: "Providing the ability to pick and choose the types of cover required based on their current circumstances will hopefully lead to more engagement."
However, while Ms Walker believes Select and Cover-style packages can be convenient and provide cost savings, she is concerned this could limit choice.
She explains: "You might have a brilliant home insurance provider, but that doesn't mean the same company will have the best life or critical illness policy. While the offering from HSBC is innovative and forward thinking -- which is what we want to see from providers -- I just don't think the benefits outweigh the loss of choice."
Roy McLoughlin, associate director at financial consultant Cavendish Ware, agrees: "HSBC UK is to be applauded for giving people a product that can serve as a useful first foray into protection, but they should always take full and comprehensive advice, especially when it comes to life cover."
For Mr Higgs, the addition of life insurance to Select and Cover is "really positive", as being mixed in with other general insurance products will give the insurance product more visibility, but he believes it needs an extra push from HSBC UK, or people may not understand how important it could be to their dependents.
He says: "HSBC will have to work hard to highlight the importance of this as part of the proposition, to ensure that consumers see it as at least as important as the other covers available."
Even with these few natural caveats, however, the reaction from the insurance profession has been broadly positive.
Creating a flexible, cost-efficient product that gives people more options and more control over their financial wellbeing has to be applauded, especially as the impact of not having adequate (or any) insurance can be catastrophic. And it can only be a matter of time before other similar products come onto the market to challenge HSBC UK's proposition.
Simoney Kyriakou is editor of the FT's Financial Advisor newspaper
Picture Credit | Getty