A review of the cancellation and retention processes used by different insurers
Attention to detail is often the very thing that separates the good from the brilliant. The award winners from the runners up, if you like. The 1% that seem so small we often don't pay them attention amongst the noise of shiny new products and clever marketing.
I find it astonishing that we work so hard on the hardest part of protection - getting people to buy the appropriate cover they need - but make an utter mess of helping them to keep the cover in place once they have it.
Early cancellations of protection policies are a challenge across the industry. Consumer behaviour is changing, expectations of flexibility and service are rising, and distrust remains uncomfortably high.
In what market does it make sense for the person with the best relationship with the client to be the last to know there is a problem?
As advisers, we're all too familiar with counterproductive insurance processes and we felt it was time to stop accepting the status quo.
Cancellation and retention
Over the summer we carried out a uniquely extensive and comprehensive review into the cancellation and retention processes used by different insurers across different markets.
The research included a vast number of life, health and general insurers, and we worked alongside London & Country, Cura and the Protection Distributor's Group (PDG) to understand how insurers handle the detail around cancellations, missed payments and reinstatements - and whether they help or hinder the process.
The first thing you realise is that the protection adviser is not in control of the process (unlike general insurance where the broker often collects the premiums) and is often the last person to find out something has gone wrong. In what market does it make sense for the person with the best relationship with the client to be the last to know there is a problem?
Having completed the project we now have clear views on what best practice looks likes, which includes addressing some of the following key findings:
- When letters are sent to the client the quality of writing is low, with poor explanations of options; little empathy and understanding; few clear calls to action and the intermediary is rarely mentioned. On the plus side Shepherds Friendly's more human touch and style is commended, as is LV='s inclusion of the brokers contact details, and Holloway's 'how would you cope without your cover?' is a great attempt at challenging a client's reasons for cancelling.
- The better the contact strategy in the first four weeks, the better the results. For example, Bupa writes to clients every seven days, for four weeks and then for two subsequent months to allow reinstatement, and has some of the best results.
- Very few insurers utilise text messaging whereas distributors like L&C Mortgages and Vast Visibility (GI aggregator) often use this to good effect with high response rates.
- Aviva car insurance texts every payment failure with a notification and easy to access phone number to get in touch.
- A consistent feature of good performance is that the earlier the insurer informs the intermediary, the better the retention. Legal & General's ‘early warning system' allows the broker to make personal contact with the client and check the reasons for failed payments/cancellations, often resulting in many saved clients.
- Multiple communication methods are preferable - some people don't read emails, some people don't open the post, some people won't bother to log in to a portal etc.
- We need to make it easier for policyholders to reinstate direct debits, change bank details or approve payments to be retaken. Some insurers still require a signed mandate, although a few accept verbal instruction from the broker, which is far quicker and easier for all concerned. If the adviser can tell an insurer to start a policy, we should also be able to restart a policy.
So far, we've held more than 20 meetings with insurers. We've talked them through our findings, highlighting examples of good practice and counterproductive practice.
Some insurers continue to defend what they're already doing, regardless of the negative consequences. Scottish Widows and Vitality have actively made changes as a result of this work, and others indicate that they have taken the feedback on board, but we have yet to see changes. The proof, as the saying goes, is in the pudding.
Meanwhile, we've also taken all our learnings and translated them into an example client renewals letter, which removes all the usual blurb on terms and conditions and injects a large dose of humanity. We're also sharing this with providers and brokers alike and you can see it here.
Most of all, the process needs modernising and humanising.
Ian Sawyer is commercial director of Assured Futures
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