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Profile: Stuart Tragheim, intermediary director of LV=

CV: Mr Tragheim was appointed to the new role of director of intermediary sales in January 2006. He was formerly head of member relations and industry affairs for Liverpool Victoria. Before joining the friendly society he was HR director of the Association of British Insurers, where he also ran the raising standards quality mark scheme. Prior to this he was director of affinity relations for Teachers Provident Society and held previous roles in intermediary marketing and sales with Schroders, TSB and Skandia Life.

Mortgage Adviser: How did you move into your current role?

Stuart Tragheim: Going back to the beginning of 2006 I was director of intermediary business. Since then LV= has gone through a programme of massive change. The long and the short of it is we structured the sales and support functions differently. We have boosted the marketing capability and improved our presence in the market.

At the same time we undertook a strategic review of the long-term approach to the life business. Those talks resulted in the purchase of GE's life business called Tomorrow. That acquisition brought us loads of new capabilities outside the protection arena - annuities, income drawdown, equity release and self-invested personal pensions.

MA: What were you tasked with doing?

ST: In my role I look at four things. First, I have direct responsibility for building relationships with the distribution partners we have. The second part is marketing and communications. All of our visibility in the intermediary market is done through my team.

Third, I have taken on e-commerce development for the intermediary division across all product lines. Finally, the thing that is most challenging is the distribution strategy - considering how LV= might respond to the retail distribution review and any other changes in the market.

MA: What would you say were mortgage advisers current perceptions of LV=?

ST: At the start of 2008 mortgage advisers did not have much of a perception of us at all. We did get some business from mortgage advisers on the protection side but it was us in the melting pot with every other product provider. We were competing on rate, service and all the other things you would compete on. LV= is known as a niche player in the protection world rather than a wholesale player. One of the things I wanted to do was work out how we could play more in the mortgage market both for new customers and, with the current credit crunch, existing customers by developing propositions that were sufficiently different from the way the market operated to enable us to get significant market share.

MA: At the end of last year there were 11.82m mortgages outstanding, against 2.09m mortgage payment protection insurance policies in force. Therefore over 80 per cent of homeowners may not have adequate protection in place to cover their mortgage payments. What has been a barrier to greater take up of MPPI?

ST: MPPI has not had a strong press for quite some time. A lot of this is based on perception rather than reality. Certainly in the early days there was a strong perception the policies were not good value for money and were expensive. There was a fair amount of uncertainty as to whether claims would be met. Most providers have changed their terms and their internal processes over the years to reflect those views and improved the proposition enormously. A lot of it though is probably down to consumer apathy.

They do not really see the need for a product that only pays out for a year and only if they are unemployed or have a long-term illness. Most products seem to have a lot of exclusions and small print and generally there has been a lack of consumer confidence that the products will deliver what they expected. But, is there a need for MPPI? If somebody takes out a mortgage of course they should make sure it is protected. The need has been identified quite clearly. When we developed Mortgage & Lifestyle Protection we understood if people died they wanted their mortgage to be paid off but they also realised they were more likely to suffer a long-term illness.

MA: In May LV= launched its Mortgage & Lifestyle Protection policy. What was the thinking behind the launch of this product? How does Mortgage & Lifestyle Protection differ from regular MPPI products?

ST: Mortgage & Lifestyle Protection is designed to address some of the shortcomings of MPPI and also to build a proposition that is fundamentally built on Treating Customers Fairly principles. This product recognises it is not just the mortgage that people need to cover. There are living expenses as well. We looked at what the long-term needs of a consumer were and then built the proposition in a way that enabled an easy sales process with a really high quality product at the end of it.

MA: What kind of reception has there been for Mortgage & Lifestyle Protection?

ST: We are doing extensive roadshows for key distribution partners we have, and the reception has been first class. CBK Chadbourn and Lifesearch have been positive about seeing something innovative in the protection market, as that had not happened for a while. They also appreciate that we have done our research properly, both with intermediaries and with customers. Everyone we have presented this to has said the product is fantastic and the application process is great. We have turned a potentially complicated application process for an income protection product into the process for an MPPI product. We have designed the application process to fit in around advisers' processes and that is why there has been such a great response from the market.

MA: What is the level of remuneration available for mortgage advisers who recommend Mortgage & Lifestyle Protection?

ST: The remuneration available to intermediaries is based on normal long-term savings protection commission scales. It does not have the same commission structure as an MPPI product that would pay a regular amount during the term of the product. It pays a minimum of 135 per cent Lautro on an upward scale upfront. For some of the larger firms we do pay more, as do most of our competitors. It can pay three of four-times the amount normally received for MPPI upfront but it does not have long-term renewal, which exists in the MPPI market. We do not think that is a problem. In five or seven years a lot of MPPI payments lapse so we feel we will pay more.

MA: LV= publishes its claims history. Why did you decide to publicise these figures?

ST: We are very supportive of improving the transparency of how we operate as an industry. There are a number of key distributors who want firms to publish their claims data and many now do but only for critical illness. There are not many firms that also publish their claims data for income protection. Publishing these statistics helps improve market confidence about the cases we decline and the reasons for it. The decline rates are low and as long as we continue to develop propositions like Mortgage & Lifestyle Protection and continue to offer tele-underwriting we see these rates improving even further.

MA: How core is tele-underwriting to your proposition?

ST: It is absolutely core from a client's perspective. Do consumers really want to be talking about their medical history to a mortgage adviser at the end of the sale? Mortgage advisers specialise in mortgages and are probably not experts in health issues. Tele-underwriting is just a better process for them to go through. From our perspective if we have done tele-underwriting there is much less chance of us declining a claim at a later stage unless the client has clearly lied. That can happen but it is rare. It is good for the client and adviser as it makes the process quicker and it protects them at the back end because the likelihood of non-disclosure is far less.

MA: In March LV= took another step towards reducing the risk of non-disclosure on protection applications, and reducing the workload for advisers, by offering an extra 10 per cent commission to advisers using its express route to apply for an LV= Flexible Protection Plan. Is this feature offered with Mortgage & Lifestyle Protection?

ST: It is built into Mortgage & Lifestyle Protection. The Flexible Protection Plan was the first time we had offered this. Mortgage & Lifestyle Protection is only available online so we want as much tele-underwriting to happen as possible on that. Outside the Flexible Protection plan our other core product is our whole of life plan called Lifetime Plus. We will be looking at using tele-underwriting on that.

MA: Do you think mortgage advisers will arrange more protection policies for their clients in 2008?

ST: Mortgage advisers will do more protection business but it may not always be off the back of new mortgage business. One of the things we have seen is advisers looking to use Mortgage & Lifestyle Protection as a hook to speak to existing mortgage clients and improve the proposition they have got, perhaps by replacing existing MPPI sales. There will be a lot of that and we are only too happy to speak to distributors about direct marketing initiatives.

MA: What is LV= doing to help mortgage advisers who have fallen out of practice of arranging protection policies for their clients?

ST: Part of the core proposition we developed is downloadable training modules on the website. If they want to look at any training module for Mortgage & Lifestyle Protection there is a lot of information there. Also, our key accounts managers can give refresher training face-to-face if that is preferable. We have online, face-to-face and telephone support if they want it.

WIN A HOLIDAY IN PARIS

LV= is offering Mortgage Adviser readers a monthly prize of a luxury break for two, in a city destination that has a revolutionary connection.

The competition will run until the end of 2008 with a £1500 holiday at a different revolutionary location available each month.

At the end of August the first winner will get to go to Paris. Subsequent winners will get a break to destinations such as Moscow, Cuba, Boston and Berlin.

The prize draw is open to Mortgage Adviser readers who visit LV='s Mortgage & Lifestyle Protection microsite www.LVmlp.co.uk, complete a simple survey question and register their details, including their name, email address and registered agency number.

You can only enter once for each monthly prize, but you can enter each of the monthly promotions offering holidays to different revolutionary destinations.

You do not need to have submitted a Mortgage & Lifestyle Protection application to enter the competition. A winner will be drawn at random from the eligible entries submitted.

To win just go to www.lvmlp.co.uk.