The advice market for group protection products is changing rapidly. But are providers a help or a hindrance, asks Nigel Hartley.
“The competitive nature of this market and the resource being taken up on other projects, such as auto-enrolment, mean that we do not wish to spend time chasing up providers or waiting for revised quotes from those insurers that can miraculously cull their rates from their initial offering.”
This view is consistent with the opinions of a very large number of intermediaries who simply want group life insurers to provide a good service, in a consistent manner, with some stability on pricing. Moreover, they want access to knowledgeable, yet approachable, individuals with whom they can discuss their questions, be they of a technical or underwriting nature.
Pricing stability
Much has been written over the past few years on the competitive state of the Group Death in Service market, so there is little merit in reviewing that again here. However, it is interesting to note the efforts of some providers to restore some longer-term pricing stability to the market over recent months.
Ultimately, pricing stability has to be of benefit to providers, intermediaries and their clients, as Ian Burrows, director and chartered financial planner at Waveney McKenna comments. He says: “In an environment where the number of insurers seems to be consolidating, providers need to differentiate, not just on setting sensible long-term rates but also in service and relationship building.
“From an advisory perspective, it is unhelpful when companies offer artificially low rates that set unrealistic long-term expectations for clients. Insurers looking to establish long-term relationships with advisers and the clients, by offering sustainable and hopefully competitive premium terms, is welcome.”
This demonstrates the importance of premium terms being not only competitive, as is clearly a reasonable expectation, but also, more importantly, consistent and sustainable.
Perhaps it is this latter element that certain providers in the Group Life market are missing? Is the desire to achieve ever greater market share proving an altar on which to sacrifice underwriting sense and sustainable pricing?
Optimal service levels
Perhaps those providers that appear so desperate to grow their group life books quickly should also consider the impact this has on their ability to provide timely service to intermediaries.
It is interesting to note in Burrows’ comment the reference to service and relationship building, which most providers appear to pay only lip service to at best but which other, more recent entrants to the market, are putting at the heart of their proposition.
Indeed, some are going even further to ensure that they can deliver optimal levels of service to their supporting intermediaries by deliberately limiting the number of intermediaries that they wish to trade with. This not only provides an element of ‘exclusivity’ for their partner IFAs, but it means the provider can deliver market-leading servicing standards.
Ultimately, irrespective of pricing, if intermediaries do not have confidence in the provider’s ability to provide an appropriate level of service, they will not recommend that provider.
Perhaps the final word should go to Gary Allchin, Group Risk Consultant at Cartlidge Morland. He says: “Service and relationship with the broking consultant are, I have found, key to placing of business and resolving issues. Where insurers do not have a reliable contact to help in resolving issues, or he/she simply defers to the administration teams, there is far less confidence in the insurer’s propositions.”
Nigel Hartley is managing director of Optimal Protection
