Our product performance.

Product performance

Group Protection

Our Group Protection business works with 3,500 employers, with over 600,000 employees, insuring their workforces:

• In 2010 we have helped 800 people back to work with our rehabilitation and early intervention practices.
• We have also engaged with the coalition Government and Rethink on the issue of Mental Health services as an ever increasing issue for our clients.
  Read our public comments here

2008		2009	2010
Number of lives insured by employees across the UK	2,082,497	2,337,537	2,350,115
Percentage of new claims paid out.	n/a	95.3%	97%

Life assurance and Critical Illness

Individuals also rely upon us for peace of mind when they get critically ill, are unable to work or die. Our performance in this marketplace is judged on our ability to pay out valid claims in a timely manner. Our performance over time can be seen here:

2009		2010
Number of critical illness claims paid out	93.6%	91.8%
Amount paid out for CIC	£152m	£147m
Amount we have paid on death claims	£217m	£226m
Percentage of claims paid	98.2%	97.8%

Income Protection

We also provide income protection products which are designed to pay an income if they are too ill to work.

2009		2010
Percentage of notified claims paid	77%	82%
Total paid out to supplement incomes whilst clients are too ill to work.	£1.34m	£1.57m

So what has changed in terms of what is affecting our clients’ health?

Critical Illness Claims

On the whole the areas of importance to us remained the same. Cancer claims paid decreased 2.3% compared to 2009 and terminal illness claims increased by 0.9%. The largest increase for a critical illness claim condition was permanent and total disability where a 0.7% increase was recorded.

Finally, a number of conditions not previously considered for critical illness claims were paid in 2010. These were traumatic head injury, encephalitis and aplastic anemia.

Death Claims

2009		2010
Amount paid out on behalf of deceased customers	£217m	£226m
Percentage of claims paid	97.6%	98%

The incidence of suicide claims has increased by 6% on the 2009 total. However, we have seen a 3% decrease in accidental deaths.

The most significant of all of the figures is those where the primary cause of death directly relates to alcohol. In 2010, this has increased by 60% and directly accounted for 152 deaths in 2010.

It is this sort of information that causes us to reach out to the Third Sector and understand these emerging issues of health to deliver a better service to our clients.

Improving communication

We are aware that financial services can sometimes be confusing for our customers. The turbulent markets of previous years meant that it was increasingly important to keep our customers informed about the performance of their products. This was particularly important for our investment and pension customers whose products are impacted by underlying investment performance.

In 2010 we worked hard to improve the documents our customers use when deciding whether to buy our products. We undertook research with customers to improve our Key Features documents:

• “It uses plain language. They keep it simple so people can understand what is being said. There are not many companies that do that” (Key Features Document research, December 2010).

We also launched a large initiative across our Savings business to improve our Bond, ISA and Unit Trust statements. Our customers have responded very positively and we will continue to roll-out these changes to our other savings products in 2011:

• “By far the best financial statement I have ever had. Thank you.”
• “Thank you. The presentation of the document was clear and easy to understand. I inherited these bonds and I had no idea what it was all about – now I do.”

(Bond Statement research, September 2010)

See an example of the new Bond Statements here

Governing our Product Performance

In 2010 we improved our handling of complaints in line with the public targets we set in 2009. We have a complaints rate of 0.47% for our eight million customer policies.

For the fifth year running, we were one of the members of the ABI Customer Impact Scheme and took part in the Customer Impact Survey. Our results for 2010/2011 are as follows:

ABI Customer Impact Commitments	Legal & General score 2010/2011 % of customers rating us as 'very good' or 'good'
Developing and promoting products and services, which meet the needs of customers	71%
Providing consumers with clear information and good service when they buy products. (Asked of recent customers)	90%
Maintaining appropriate and effective relationships with customers. Providing them with a good service after they have bought a product.	82%

Complaints are a key way of getting feedback from our customers. Complaint trends are monitored, reviewed and acted upon in a monthly Complaints Committee chaired by our Group Regulatory Risk & Compliance Director. We also publish the number of complaints we receive and uphold them every six months here.

We have various checks and balances in place to monitor whether we are delivering what our customers need from us:

• Our Groupwide Ethics Committee governs policy across Legal & General to ensure that our staff adhere to our Ethics Policy.
• Our Group Advertising Standards Function ensures that we are compliant with FSA codes, and our own stringent guidelines when we communicate about our products.
• ABI (Association of British Insurers) Customer Impact scheme – we've taken part in this programme since its inception, and even help to set it up. This is an industry-wide study looking at customers' attitudes to their products and the providers of these products. We track what our customers think of us against compared to other companies' customers. The scheme aims to raise the standards of customer experience across the whole industry. Each year we take steps to address any issues arising from the study and aim to improve our performance in the eyes of our customers. Our performance can be found here.
• The Financial Ombudsman also publishes industry data on how many clients ask for an independent review of a complaint decision made by financial services organisations. Performance is also published online.

Responding to Customer Needs

There are various influences and developments we need to take into account in the development and distribution of our products. These include work with our regulator External Checks and Balances on our performance

the FSA, to follow the Treating Customers Fairly (TCF) principles laid out for our sector and consumer groups

Highlights include:

• From the end of 2012, the FSA’s Retail Distribution Review means that customers will have a greater say in how they pay for financial advice. In this environment, it is even more important that we remain focused on what′s important to our customers.
• We are the only Financial Services provider who support and fund the National Consumer Federation (NCF) conferences. The NCF represents consumer interests and aims to make the financial services industry more transparent. We attach the resulting papers from the last NCF Conference and look forward to working with them again in 2011.

“Legal & General is proud to sponsor and be actively involved in the 2nd National Consumer Federation Conference. Our business helps to provide financial security for millions of people. Our products help to protect individuals and businesses against a wide range of risks – everything from poor health and natural disasters to the risk of outliving savings in old age. Therefore, it seems only natural that we are continuing to support consumer movements in having a louder voice at a critical time in their evolution.” – Philippa Scott – Group Compliance Director, Legal & General Group Plc.

Improving access to our products

It′s important to us that our products are made more accessible to socially-excluded or fringe markets. This can involve changing the way we distribute, underwrite or price our products.

We have conducted research into how our products reflect the financial needs of the UK population and in certain consumer groups our products are underrepresented.

Fresco Customer Segment	Percentage of UK population	Percentage of L&G’s business
Green Shoots Young, students/first jobs and newcomers to financial services (Average Savings and Investments of £4,000)	25%	14%
Grey Days Low earners and only likely to use very basic banking and insurance services (Average Savings and Investments = £7,300)
Pink Fizz Mainly young singles, busy lives, private renting or mortgaged and credit users (Average Savings and investments = £9,300)

As a business we monitor ways in which we can create products that are more inclusive whilst remaining commercially viable.

• We offer an Over 50′s plan that provides Funeral expenses, which is not assessed on the health of the individual and therefore provides an affordable product. We also offer Postcode Annuities – which enable customers living in areas with higher mortality rates to benefit from higher pension payments.
• We have recently improved our five star Defaqto rated Critical Illness Cover. These changes reflect the changing lifestyles of our customers, who are living longer, working longer and may wish to insure themselves for larger amounts.
• In 2010 we have introduced a more flexible home insurance product to make home insurance more accessible particularly to low-income groups. We have recently launched Home Insurance Extra and Home Insurance Essentials.

Better informed decision-making

Many of our major partnerships with Third Sector organisations such as Shelter, Credit Unions, A4e, Macmillan and Age UK are designed to challenge the way that we design and provide services and products to markets that are commercially prohibitive. For example:

• AGE UK have trained our annuities call centre staff to better deal with older people over the phone and to bridge the age gap between our employees and customers.
• Legal & General have contracted Macmillan Cancer Support to provide cancer education to 80 customer facing claims employees dealing with the sensitive issue of cancer with customers who have Critical Illness or a life assurance claim with the aim of delivering a better service to their customers.

Looking Forward

We believe that saving and insurance can benefit everyone. For our business there is a clear relationship between our products, State provision and the need for individuals to plan for their future and protect their families. We are continually challenging ourselves on the performance of those products.

Legal & General is supportive of financial health checks, money guidance, CFEB and the Government’s Simple Financial Products consultation. Our work with Credit Unions and A4e is challenging the way we distribute and design financial solutions.