Financial services sectors have largely embraced technology but the PMI industry is still lagging behind, says Stephen Wynne-Jones
Having invigorated many market sectors, technology has become a valuable tool for many advisers. There is still a degree of stigma attached to technology, however, and for this reason the providers of technology solutions need to develop solutions that complement rather than reinvent existing processes while educating advisers about the benefits that they can provide.
The importance of technology was highlighted by the latest findings from the annual Assureweb Tech Index study of 300 financial advisers. Almost three-quarters of respondents (74%) claimed technology is a fundamental part of business functionality - in turn justifying investment.
However, despite the fact that technology is increasingly being championed industry-wide, some sectors are missing out on the benefits that it can offer - most notably the healthcare industry.
While its counterparts in commercial insurance services take full advantage of online functionality for conducting small corporate business, private medical insurance (PMI) brokers remain tangled in a laborious web of faxes, phone calls, letters and emails.
In fact, most PMI specialists often have to wait days or even weeks for quotes, in contrast to those who can access automated quotes for clients at the click of a button.
Although the application of technology in the individual PMI market is being developed by a small number of providers, notably Legal & General and Standard Life Healthcare, consumers fare little better than their adviser counterparts in terms of being able to apply online. Only very few PMI providers currently enable advisers to conduct their business online.
This general lack of penetration and consumer usability is not because PMI is any more complicated in terms of application than other products - applying for protection products also requires extensive medical questionnaires, especially critical illness (CI), waiver of premium, and total and permanent disability cover - it is just that the PMI industry has not witnessed a dramatic change in the way that other financial services sectors have.
Barriers
The healthcare industry has never experienced a catalyst that has driven change for PMI like the rate wars did for protection in the 1990s; nor has Financial Services Authority (FSA) regulation directly and significantly impacted PMI to the same extent that it has in the protection sector.
In addition, there has always been a far higher volume of applications for life and CI protection products, which consequently enables advisers to justify investment in technology.
The fact that PMI generally attracts fewer applicants means that there is insufficient demand for advisers to move towards e-business, in contrast to the increasing demand for technology that other sectors are experiencing. There is no doubt that it would be easier for brokers if PMI could be bought online, but there are some barriers that must be overcome first.
PMI has received some bad press in recent years as a result of being too expensive, not least since tax relief was abolished. In order for PMI to move into the mainstream some commentators argue that it needs to become cheaper to market, sell and administer. Technology could enable PMI to become more widespread, as it could increase the accessibility of the product across mass intermediary markets - a fact that needs to be successfully communicated to potential users.
Some product providers and technology companies are making headway in terms of working towards pioneering a slick enough e-service to become the accepted standard for service delivery. Intermediary portal Assureweb, for example, recently led the charge by launching a free PMI comparison service. This was in response to an online survey that found that 60% of users considered PMI to be of high or very high importance.
With the help of eight providers - including Bupa, Legal & General, Norwich Union and Standard Life - users are able to access information about group and individual PMI products at no extra cost. Over a very short space of time, hundreds of intermediaries are already generating close to 10,000 quotes each month, consequently dropping the alternative manual process.
However, technology companies cannot initiate momentous changes on their own, and some product providers appear less keen to help move the market forward into a new technology era. For this change to happen, product providers, portals and providers of back-office systems need to work together instead of developing services that are not joined up.
More often than not, product providers' desire to reduce their costs and technology providers' keenness to differentiate their propositions diverts focus away from providing intuitive, front-to-back processes for the users themselves.
This emphasis on promoting one particular part of the electronic process should convince technology providers of the need to co-operate to show how systems join together to create the final integrated product - advisers could, otherwise, miss out on the time-saving benefits of being able to transfer client and product data between back-office administration systems, portals and provider extranets. All components need to 'speak the same language' if advisers are to buy into the concept of conducting all transactions online.
Change of pace
Changing advisers' perceptions of technology is, however, one of many issues facing the healthcare industry. The change of pace certainly needs to accelerate if PMI is to finally reach the type of standardisation that the banking sector has benefited from for years. This should, in turn, encourage the product sector to grow.
Standardisation is, after all, the only way that an e-service offering intermediaries access to a range of insurance products and services can be developed. Such a service will mean that product quotation, application and claims tracking could be accessed via a single sign-on.
The benefits of e-business are perhaps not as well documented in the PMI sector as they are in other markets. The time-savings that e-business is already bringing to intermediaries' new business processes in the life and pensions sectors are huge, particularly when they link to a client administration system, product research tool, quotation engine and provider extranet for applying for business. This level of efficiency is paramount in the highly competitive world of finance.
In order for intermediaries to avoid re-keying clients' data, for example, there is no practical reason it cannot be carried over and reused on the provider extranet site; therefore reducing the potential for errors and consequently speeding up the process.
This means that there is one gateway to the best-in-breed of provider extranets, rather than having to access each one separately. Data is checked as it is entered, further removing any delays that may be caused by incomplete forms, mistakes or confusion caused by poor handwriting.
In fact, the stigma that has been historically attached to anything vaguely technological is ebbing away. Unlike traditional cumbersome paper-based systems, technology can be rolled out and adjusted in accordance with FSA regulation and the business processes of users. Yet with some advisers still needing to be convinced, providers of technology solutions need to invest even more effort and creativity in training initiatives and ongoing help. This is supported by 90% of Assureweb users who believe that technology must be quick and easy to use, otherwise it would be more efficient for their businesses to deal with paper.
Those advisers who have chosen to become technologically proficient should be able to dedicate more time to face-to-face contact. This will, in turn, enable advisers to maximise their earning potentials, as they will no longer be spreading themselves too thinly.
Tech savvy advisers should also be able to shift their focus onto providing improved client services and generating new business, effectively improving their own financial position over time.
Support
It is only with the active supportof providers, advisers, portals and back-office systems that PMI will be able to move into the mainstream and consequently reap the financial rewards that will benefit the entire market.
The key to this support is communication, especially when it comes to dispelling myths about the complexities of technology.
Knowledge and education are the best tools to use in order to overcome such perceptions - tools that the PMI industry should employ more often to help its employees maximise their earning potentials while at the same time alleviating the strain of their administration-dominated workloads.
Stephen Wynne-Jones is director of sales and marketing at Assureweb
