Think Tank

Alex Broad: How significant has the impact of technology been on the protection market?

Richard Davies: We recently conducted our annual survey which investigates how IFAs use technology. This survey has shown quite a significant increase in the use of internet technology by IFAs. One of the key questions is whether IFAs use email to communicate with their clients and the proportion saying that happens often or usually has increased from 32% to 42% in one year. Another indicator is how IFAs are connecting to the internet themselves. A few years ago you would expect few people to know how to get online. This year 99% of respondents know the connection they have and nearly 50% of the respondents have some form of high-speed connection. We know speed is one of the critical issues advisers prefer in terms of being prepared to use e-commerce functionality.

Peter Hamilton: I think we have concentrated heavily on new business perhaps at the expense of existing business. If you can get those kind of services more widely used, it will encourage people to program in the development on the business side.

Paul Hately: Budgets for the development by the provider come from business generated.

Rachel Williams: So should providers be trying to incentivise IFAs?

Richard Leadbeater: It depends on how effective the technology is at shifting the cost of work that is done and where.

Richard Verdin: A good example is Legal & General's online term. It has taken over processes which were undertaken by employed staff and passed a part of that cost-saving to the IFA.

Paul Measures: One could responsibly say life assurance should be the easiest commodity to buy online.

Richard Verdin: I would argue against that and say it was one of the hardest. It needs some form of medical analysis ' investment contracts aren't underwritten like protection.

Richard Leadbeater: The fundamental question we have to consider is 'term assurance is bought or sold?' Look at motor insurance. It has worked as an online and call centre-based operation effectively because it is something you have to buy every year. Life assurance is a more occasional purchase.

Richard Verdin: If we can't build advice into technology somehow, then how much waiver is going to be bought? How much indexation of benefit is going to be bought? How much critical illness is going to be bought because these elements are largely sold and advised on.

I think providers are going to come up with solutions that allow customers to make informed decisions without looking at brochure-ware onsite. There have been some good examples of 60-second advice processes which some insurers have launched into their sites to allow people to assess what they have.

Rachel Williams: How much of a significant investment does an IFA need to make for a decent online presence ' is it achievable for the average IFA?

Richard Davies: I think it is for the IFA to look at their business register and technology has to follow the business energy.

Paul Measures: It can probably be broken down into costs. You can spend anything from £20 up to £50,000 on the development cost of the site. I think the overall costs are marketing that brand, which is where the real costs come through. So if you are looking for brand awareness and the cost of marketing it, that is when you are going into the millions and is what we have seen over the past few years.

Ian Noble: Some of our customers build their own websites and once they have an online presence they think, 'now I have my website, I can sit back and wait for the money to roll in.' The distinction between a successful and an unsuccessful website is the way they market it. The most successful market is existing customers. Would you direct your customer to buy that term assurance through your website, or get in your car and drive to their house to sign them up? In the 1% world, you want your supermarket business to go through your website, and you have to find a way of marketing that business as cost effectively as possible.

Paul Hately: That doesn't stop you giving face-to-face advice ' there is a range of activities for customers under one brand. It all depends whether your customers want your supermarket service, or your boutique service where you have your estate planning and so on. But IFAs must also recognise that customers who have the boutique service may also just want simple term assurance at some stage. Those same customers might buy through the so-called supermarket channels. So it is not just one channel, it is providing a range of channels for customers to choose from. People require less advice about, for example, mortgage protection than complicated investments, but they are the same customers.

Peter Hamilton: There has probably been a sense of build it and they will come. But if you can have something competitive online that existing customers will come for, then it will be easier to sell them something new. If there is no reason for them to come in the first place, they won't ' it comes back to looking after the customers you have got.

Ian Noble: Has anyone here bought life cover online?

Paul Hately: I have investigated a lot of sites and tried to buy some from Tesco, but ended up phoning them as it was easier.

Nick Martin: That is one of the major problems. One feels the telephone base is going to be a lot easier ' people like to talk to someone.

Rachel Williams: Surely there is a big danger too many are promoting the easy term assurance online, but will be getting the wrong benefits. Just getting headline rates, standard level, or decreasing term. They are not getting the indexation, or many things an adviser would suggest.

Paul Hately: Lots of people buy the standard, cheapest through an adviser as well.

Rachel Williams: Yes, but without the adviser having the duty to say this isn't really the right product for you. There are other things you might need to protect, protection beyond a mortgage, for example, and that's not going to come through on the website.

Richard Verdin: Our experience is that customers who are buying products online are confident in what they are buying. They know what they are asking for, even when you present them with options. For people that are less confident we must start to build in some sort of advice mechanism they appreciate. I am not sure anybody has got the right answer ' some providers have had a stab at it and I have seen a lot of people copying brochure-ware from providers themselves. But I've not seen any company have a good crack.

Rachel Williams: Are IFAs using technology to access information?

Richard Davies: Some figures I have from the survey show how advisers prefer to obtain single company information for protection products. Four times as many prefer to use portals than telephone which suggests online quotes are the most established use for obtaining quotes.

Peter Hamilton: It is difficult to understand what the motivation would be to use the phone if you have got access to the net. There is inevitably a delay if you use the telephone if they have to send something to you there will be a delay of a couple of days. It is a complete waste of time.

Paul Measures: I think if you take the supply chain from start to finish you want to go through one portal and have business supply, quote and put everything within supplied on the web at once and migrate along that supply chain. It would be simple to navigate from one site to another without remembering IDs and passwords. If you can track the business electronically you can do it for 12 clients at once without having to re-dial.

Paul Hately: It is going beyond just waiting for the IFA to wonder where his piece of business is. It is about being more proactive in managing the pipeline business rather than reacting to enquiries.

Richard Verdin: I can see that has some value, but I would have thought most IFAs have a number of clients on the go at any one time and they don't want to turn their PC on to find they have 70 emails from six different life offices.

Paul Hately: This is probably a case of asking the IFAs how often do you want to be told. They don't want to be bombarded with too much information. Something which reduces the need for pipeline in the first place would be enormously helpful.

Ian Noble: We need to find out what IFAs value ' ask them what would be useful for them to know about a protection plan that could be utilised with technology? There is a lot of research to be done otherwise we are always in danger of making a big assumptions as to what they want.

Rachel Williams: Are these developments compatible with the way IFAs work?

Richard Leadbeater: Online underwriting relies on having the client there to answer the questions. If you don't have the client with you or the client has not got the answer to the question, at what point is the cut off do you think? Would it be more effective to do this down a different route?

Paul Hately: I believe IFAs tend not to talk to customers at the same time as they are typing on their computers, whereas direct sales people perhaps do and there is more opportunity for it in that area.

Richard Verdin: But there has been a significant shift from direct sales forces into the IFA community. You can say there are more IFAs using technology face to face.

Richard Davies: This is not necessarily the case. The issue was addressed in our research about what ways IFAs are using technology when dealing with their clients and it found only a minority uses mobile technology at the client's address.

Alex Broad: How successful has the industry been in promoting technology?

Richard Verdin: If you look at other industries, look at either retailers or manufacturers of products, how organised are they in coming together and providing services to their customers? I would have thought this industry is pretty impressive in what it has achieved.

Paul Measures: I think we have to be together as an industry. It is not one life office driving the business, it is being driven by the industry in association with IFAs and that is the only way I can see technology developing successfully.

Rachel Williams is editor