Techie times

A decade ago, advisers filled in application forms by hand, chased case progress over the phone and huge chunks of the day were swallowed up underneath mountains of paperwork. While this is still reality for a minority, technology now plays a significant part in the process of conducting protection business.

Taking the electronic plunge has allowed providers to harness the power of the internet to help advisers e-enable their businesses, automate procedures and processes while enhancing personal service. Advanced websites offer end-to-end online business processing where advisers can quote, submit and track new and existing business in a few clicks and clients meaning can be on risk in a matter of minutes.

These online services have dramatically cut the time and effort expended by all from proposal to policy, improving the efficiency and cost-effectiveness of an adviser's working day. Spending less time on administration means being able to spend more time with clients. Furthermore, some online systems save and store all permanently so there is no need for paper records. These systems offer the adviser outstanding access as cases can be submitted online on most systems, 24 hours a day, seven days a week with no need to contact the provider which means the intermediary has complete flexibility and control.

Stuck in a rut

Most protection business is conducted online; (about 89%) and this number is rising. It is debatable whether this figure will ever reach 100% as there will always be a minority of advisers who continue to use the paper process because it is what they know inside out and some are uncomfortable with technological change.

One of the differences between a paper process and an online one is the requirement of a client signature. When buying protection online, a signature is not always required; in this case providers have different procedures. Some strongly believe this is the way forward as policies are put on risk immediately and any perceived problems are outweighed by the benefits of saved time and reduced paperwork. Providers that require a wet signature may allow policies to be placed on risk and request signatures after. If the wet signature is not received, the policy will be cancelled which is a hassle to advisers and customers. Neither procedure is right or wrong due to there being is no legal requirement. Some say however the simpler the better.

Step up the pace

Other technological advances such as tele-interviewing can be beneficial. This evolution in processing underwriting offers many advantages to advisers and clients. It can reduce the risk of non-disclosure as customers provide more accurate and complete information for smoking status, occupation information and medical history. By gathering more detailed information, a better-informed underwriting decision can be implemented to ensure the customer pays a premium that accurately reflects their circumstances. Furthermore, tele-interviews provide fast turnaround from proposal to acceptance as the underwriter is no longer waiting on a GP's report.

However, the internet generation wants things immediately rather than waiting for the post. As a result many provider systems are becoming akin to order takers and, unless the case is clean, it will not go through. Some are keen however to ensure the underwriter is present to offer an immediate decision. Relevant additional questions may be asked in response to client disclosures which means for many medical conditions, sports, pastimes or occupations, specific information can be gathered to make that decision.

With the Retail Distribution Review (RDR) on the horizon and Treating Customers Fairly (TCF), advisers and providers have a responsibility to ensure service excellence and correct data management. Having accurate client information is invaluable for this.

Clients expect advisers to have the same up-to-date records that banks, home broadband providers and electricity suppliers keep. Two pieces of regulatory change have highlighted the importance of accurate data and reporting methods.

Firstly, a likely impact of the RDR is that service excellence will become a differentiator for advisers wishing to position themselves at the upper end of the intermediary model. Knowing clients inside-out is key to this move as is having the appropriate business back-end systems in place.

Secondly, TCF is becoming core to financial services' strategies and business processes. The management and handling of data is key to the fair treatment of consumers and being able to evidence this to the FSA. The regulator's paper on the subject stresses the importance of keeping customers informed throughout the sales and aftercare process so they are aware of their choices at various points during the product lifecycle.

At your fingertips

This is where client records play a vital role. Having the correct building blocks in place enables advisers to react more flexibly to the demands made of them, which also include compliance requirements and auditing processes. With so many advisers now using either a bespoke or off-the-shelf back office system, it is even easier to make use of technology to achieve accuracy and regulatory compliance.

Historically, the provision of bulk customer data from provider to adviser has been patchy and draining on resources. The introduction of e-data services, where providers create a 'link' between their systems and advisers, has eliminated these problems and paved the way for efficient data handling and transmission. Today, bulk data download services enable the brokers to quickly and accurately receive a full set of records or, if they prefer, a sub-set of the ones providers hold for their clients.

Importing this data into a back office system will ensure providers hold current information on clients and their policies. Once in place, intermediaries can use this to confidently give clients an accurate picture of their portfolio. It also allows real-time valuations which can be imported straight into the adviser's own records, helping keep data up-to-date.

Although technology will never replace the need for face-to-face advice for complicated product sales, it has and will continue to revolutionise the way the protection industry does business, how it meets regulatory demands and most importantly how it manages client relationships.

- Ed Stuart-Brown is head of protection sales at Friends Provident

WHAT TO CONSIDER WHEN HANDLING CUSTOMER DATA

Physical security over customer data

- Are your premises vulnerable to a break-in?

- Is physical access to your premises and restricted areas such as computer servers properly controlled?

- Do you maintain a clear desk policy to reduce the risk of customer data being lost, stolen, or being accessible to unauthorised persons?

- Do you keep your filing cabinets locked when not in use?

Governance

- Is there a specific focus on data security in your firm?

- Do you have any written policies or procedures covering data security and are they proportionate and relevant to your day to day business?

- Do you have an open culture that encourages staff to report data security concerns?

Taking customer data offsite

- Do any of your staff work from home or take customer data offsite on laptops, memory sticks or CDs? If so, are the files encrypted?

- Would you know if one of your staff's laptops, memory sticks or CDs was lost or stolen?

- Do you make regular checks of what customer data is being stored on laptops and other portable devices?

- If staff use home computers for business purposes, how securely is customer data held?

- Do you understand the threats posed by increasingly sophisticated and mobile technology?

Backing up customer data

- Do you have agreed and consistent procedures for the back up of customer data?

- Are your storage facilities sufficiently secure to minimise the risks to customer data?

- Do you encrypt your backed up data?

- Have you carried out adequate due diligence on any third party that is entrusted with the storage of your back up data?

- If you rely on a staff member to hold backed up data overnight, do they hold it securely?

Internet and Email availability

- Do all of your staff really need internet and external email access?

- Can your staff access web-based communication facilities such as Hotmail and Facebook?

- Do any of your staff use file sharing software to listen to music while they are working?

- Do you need to get software to block your staff accessing websites that pose a risk to your customer data?

Source FSA.