Now is the time for the insurance industry to get into gear and deliver on service. Lucy Quinton reports on why providers should be bending over backwards to offer IFAs good service
In the 21st century, society has increasingly placed a greater emphasis on the importance of good service. In an age when time is literally of the essence - and people's demands are increasing in size and urgency - the insurance industry often appears to lag behind.
But while the need for good service has never been so high, the insurance industry is outdated in its approach to such an important issue.
Andy Milburn, IFA market manager at Royal Liver, likens the concept of service in the industry to a deflating balloon. "Have you ever squeezed a balloon that's not quite burst yet but that's going down? You squeeze the air in one end, and it pops down into the other end," he explains.
Better or worse?
Milburn says that some adviser firms are getting worse at service, and some are getting better by having dedicated teams.
The teams he refers to exist because providers have limited resources, and are focusing on giving higher volume - or higher profile distributors - a better deal on the new business side of their operation. Meanwhile, their administration teams in other areas get stretched and, as a result, service levels in these areas suffer.
Milburn believes that some providers are on the right track because they have looked at the way they service distributors, and have given the job to just one of their administration teams. This helps advisers because they can talk to the same people, whether they have a query about a client's pension, investment or protection plan. This builds a rapport and a feeling of trust.
Adrian Clark, chief operating officer of protection at Legal & General, says that service levels have improved during the past year - specifically with providers - due to several factors, including interactive online underwriting, tele-medical interviews and new improved literature explaining the process for IFAs and customers. The latter results in a better understanding of the product benefits and the processes required, so customers know what is happening and why.
However, Clark acknowledges that, following in-house research by Legal & General, advisers admit that not being kept informed with how their cases are progressing is a regular frustration.
"We also find advisers are looking for advice on growing their business and working in new areas. However, the majority of providers seem to be content to 'product bash', which advisers can find patronising and time-wasting," he adds.
At a time when size is not meant to matter, this clearly does not hold true in the protection market. From an adviser's perspective, there should not be a difference in how IFAs are treated depending on the size of their company but this is deemed a naïve view by the market.
In truth, if a provider cannot give every distributor the service they and their customers want, then most end-up prioritising. Distributors that are either high profile or have high volumes of business end up reaping the rewards, while - in the majority of cases - others tend to suffer further as a result, according to Milburn.
Roy McLoughlin, senior partner at Master Adviser, agrees, saying that poor service towards smaller IFAs is considered the norm. They seem to be totally ignored in certain circumstances, which he explains "is very short-sighted, as they still make up the majority of IFAs".
McLoughlin says that one issue surrounding service levels is resources but adds: "It is not definitely the case that the nationals do relatively more protection than their smaller cousins. This attitude by certain insurers is naïve and they could be accused of snobbery, which may bring in to question the principles of Treating Customers Fairly."
Gary Price, director of customer services at Norwich Union, explains that size is not the reason why some IFAs are given greater priority over others. It is, he says, based on how strong the relationship between a provider and its adviser is, regardless of the size of the adviser and "the onus is mutual on building that relationship".
However, the commercial reality is that the more business that is done between an adviser and a provider, the stronger the relationship between the two of them will be.
Although, interestingly, Price believes that it is also important to mix with advisers that do not conduct too much business with providers, in the hope that more work will result in the future.
Despite lagging behind in treating the adviser market equally, service is taken incredibly seriously by the industry. This is why Norwich Union received such a beating last year, when it was revealed that its service levels were so poor.
Demonstrating the power that lies at the feet of the adviser community, and showing that the adviser market is a force that providers have to reckon with, is the fact that one in four IFAs that previously recommended Norwich Union turned their backs on the provider due to its poor service levels.
However, the insurer has worked hard to rectify this, and as Price says, it is working hard to ensure that it listens to its advisers.
"We are trying to think end-to-end rather than just internally. We are working on responding to comments that we receive and focusing on getting things right first time. Essentially, we are trying to see through the eyes of customers and advisers," he adds.
Despite this criticism last year from the adviser market, Price says its lowest point was approximately two years ago, and it has been trying to improve its service levels ever since.
Widespread
Also jumping in to defend Norwich Union to a certain degree, McLoughlin admits the provider had experienced problems but there were few companies that had escaped overall.
"Ironically, Norwich Union became an easy target due to its size. It has improved but again, in our case, this is down to obtaining a very diligent broker consultant," he adds.
However, according to McLoughlin, there has not been any real significant improvement in service levels over this past year. "This only seems to happen when significant badgering of a particular company occurs but unfortunately is often only temporary," he says.
He explains that providers that listen to advisers are the ones that are obtaining increased levels of business: "Some have forgotten how powerful live contact can be."
Price says that, generically speaking, providers have failed in the service area in the past because they have attempted to get advisers to fit in with providers, as opposed to the other way around, which is vital.
From a provider's perspective, Clark believes that good service is delivering what is needed for advisers and their clients across a range of services, from ease of initial submission right through to confidence in paying out benefits.
To up the service level game, providers should continue to work on making it a priority. Milburn believes that if they wish to continue to resource everything in-house, then they have to make sure they have enough people to deal with all of the tasks that they are asked to undertake.
Furthermore, Clark says the key to upping the ante is to improve communication, such as keeping advisers updated about the progress of their business.
In addition, they should continue to improve the consistency of underwriting decisions, and provide greater ability for advisers to self-service.
It is also important to convey a sense of immediacy because the market is changing to meet customers' needs, Price says. Therefore, online business and having knowledgeable staff is fundamental to the success and longevity of a company.
Next step
Clearly, there is a long way to go on this particular segment of the market. However, on a positive note, the tide may have turned.
The biggest step for advisers has been to get the insurance industry to realise that this is an important bugbear for them. The next step is to gain a sense of momentum now that the industry is finally off the starting block.
In a world where customers, or advisers, should always be right, it is very much up to providers to realise that if the business service level to an IFA is below standard, the IFA is well within their rights to move its loyalties to another provider altogether.
Providers only have to look at the beating Norwich Union experienced last year to realise the effects of failing to act. If a provider in this market wants to be king pin, it needs to wake up and smell its advisers' frustration.
