Publishing the loading rates, product by product (2008)

The side that can disclose, and the side that cannot

Hiring not a single salesperson was what made it possible to reveal the cost. For incumbents, where some 60% of the fees a policyholder pays was said to vanish into distribution, publishing the breakdown would have amounted to setting out their own weakness in figures. Only a company with no riders, a line-up narrowed to two products and no face-to-face network could use those same figures as proof of cheapness. The November 2008 disclosure was at once a step into industry convention and a move available only to the side whose cost structure was favourable.

The convention itself did not move. Twelve years later, in 2020, Lifenet was still the only life insurer disclosing expense amounts by product; no one followed. And Lifenet itself was not explaining the mortality margin that sits outside the loading rate, which put the company on the receiving end of the same question about incomplete disclosure. Where the disclosure demonstrably worked was in one respect only: it filled the new entrant’s weakness of 6.7% brand awareness. The information asymmetry of the industry was left untouched.