L&G is the latest group risk provider to accelerate its adoption of e-commerce, says Ian McKenna, director of the Finance & Technology Research Centre
Fix for the future
The words ’group risk’ and ’e-commerce’ have been strangers in our industry for a long time. But in recent months there appears to have been a major transformation taking place. These days barely a month goes by without me receiving a call from a provider wanting to show me their new proposition, designed to radically reduce the administration times taken placing new business and renewing existing arrangements.
New entrants, unencumbered with legacy systems, can move quickly to deliver leading edge, best of breed systems, allowing a range of new services such as accelerated quotations, automated scheme establishment and, where necessary, specialist underwriting services for high earners. But an existing player inevitably faces hard decisions when prioritising systems upgrades.
Do you build a complete new front end system and focus on offering an enhanced level of service to new customers, at the same time hoping the old ones will continue to accept the shortcomings of systems and processes, some of which date back several decades? Or do you focus on fixing everything behind the scenes, so you can deliver significant improvements to advisers and employers across your book of business, even if it means that you will be without some of the flashier components of current leading edge systems, at least initially?
As a committed player with a significant number of longstanding policyholders, accounting for a market share, this was exactly the challenge facing Legal & General when it decided to carry out a complete overhaul of its group risk systems two and a half years ago. The company has a policy of rewarding long term clients with preferential terms, as demonstrated by their early notification discount, a process to provide a return of previous premiums, for employers who have put in place processes to support early notification of potential income protection claims. Against this background it is hardly surprising they opted for what is commercially the more difficult decision, of addressing the heart of the issue rather than going for the short term front end fix.
The new system has been quietly rolled out over the last month or so, and while advisers will not have seen their consultants calling to demonstrate slick new systems, they should be beginning to see a drastic reduction in the time taken to process new quotations, put contracts in force and process renewals. The primary goal was for 95 per cent of all quotations to be generated automatically. In doing this the company has embraced working practices that have been standard within the group pension market for some time but that until now, with one or two notable exceptions, have been ignored by most group risk providers.
Behind the scenes at L&G the Elixir system is enabling significant improvements in efficiency; information is now being processed on spreadsheets that previously would have been manually entered on no less than three occasions. This will not only accelerate processing times but also, by removing the human data entry, significantly reduce the inevitable errors that take place when people process data.
Although the new system may lack a detailed interface to put the adviser in control of the process L&G claims it enables advisers to process cases by clicking just three buttons. One to get the data into Elixir, one to get the case underwritten, and a third to send the information out. Whilst the process seems to me to involve a little more work than that I can certainly see it is a vast improvement and some advisers may actually prefer the lack of self service functionality, with the insurer carrying out the bulk of the processing activity for them.
It is great to see so many group risk insurers finally pressing ahead with e-commerce and system changes to remove the long delays that have plagued this sector for years. Many argue that with the emergence of adviser charging, the group risk market will be an important way for advisers and consultants to maintain commission-based earnings. This opportunity can only be maximised if the sector delivers the improvements that are now taking place.
Whilst they still have further to go it seems to me that Legal & General have made great strides forward. In bullish mood, customer services director Steve Ellis challenges: “How long does it take other insurers to confirm a policy is on risk and issue documents, and how quickly does the adviser receive the renewal account once the adviser has set the renewal data in?”