2013 has been largely free of regulatory change. So what should the protection sector be building on? Emma Thomson investigates.
Making it easy for intermediaries to submit business is vital, and sophisticated underwriting systems that enable a large proportion of customers to be accepted immediately is what most will want. But not all.
The key advice for every provider is that systems should reflect that there are many different ways intermediaries do business, so must offer a variety of options to ensure firms are not alienated.
Currently, systems are primarily designed for intermediaries to key the applications. But why not give intermediaries the option to get their customers to do it, by giving them a client-specific link to access the underwriting questions? It saves time, will help customers who might be reluctant to share health issues with their adviser, and it reduces the risk of intermediaries accidentally mis-keying details.
Integrated pipeline management systems, which link in to the application where the intermediary can find all information in one place, where they can update the application during the underwriting process, and which send messages when there has been a development is much better than the current, largely ineffective tracking systems. Ageas positively stands out here.
It is the Existing Business side that needs some real development. Let’s have systems that help intermediaries manage their existing book, showing policy details, claims, which send out notifications about missed premiums and changes to contact details. It can also be used to update customer details for the provider’s benefit, too. This will help intermediaries improve retention rates.
On the IT side, we have seen a focus on simplicity from firms that work alongside intermediaries and insurers. Avelo has been developing a means to obtain multi-benefit quotations that will save time for intermediaries.
There is also growing belief that the underwriting process could be improved by moving some of the underwriting questions to the quote stage to give clients and intermediaries more accurate quotations, and systems have been developed by UnderwriteMe, Direct Life and iPipeline to achieve this.
It is too early to tell whether the protection industry will fully embrace this route, but hopefully it will, because consumers are frustrated that they cannot get accurate upfront pricing and acceptance in the same way they can for their car and home insurance. It is of course a different area of risk, but there needs to be some change to encourage more plans to be taken out.
So, we have seen some encouraging product and system developments, but many firms have still reported a drop in business. The price rises caused by G-Day have particularly affected those intermediaries that churned business on price alone, which is not a bad thing, although insurers will have experienced a drop in new business sales as a result. The key problem we are experiencing in 2013 is not enough people buy our products.
One key issue is lack of trust and lack of awareness of why protection products are needed. A recent survey conducted by The Protection Review showed that consumers believed on average only 38% of claims are paid, highlighting a huge issue of mistrust, given the actual figure is in excess of 90%.
This year there have been some initiatives to raise awareness of the value of protection. One is F&TRC’s excellent Claims Comparison guide, which provides intermediaries with data they can share with clients (payout rates, common claims and ages of claimants). Another adviser tool to come out soon will highlight the probability of clients suffering a critical illness, long period of sickness or dying before retirement. Powerful stuff.
The biggest issue, though, is we are an industry that does not publicise. We fail to market properly what we offer.
Aviva has led the way in recent years, with their innovative TV campaign featuring Paul Whitehouse and now their brand new radio adverts. Aviva’s brave step into a world its competitors largely ignore is to be applauded.
But we need much more. In the absence of any government education or honesty on the need for self provision, or certainly the lack of any tax incentives for those who self insure, we need to take the lead ourselves to raise awareness, and we’re failing to do so.
Improving current products or embracing the Simple Products initiative will not get more people to buy on any large scale, because they usually don’t know what we offer or why they need it.
So, fortunately, 2013 has seen some welcome developments and despite many fears about the aftermath of G-Day, heads have been kept above water and some have even swum pretty successfully.
However, we must tackle this issue of consumer awareness if we are to ever grow our market properly and ensure as many people as possible have the protection they and their families need.
Emma Thomson is life office relationship director at Lifesearch