The industry’s ability to deliver an effective open market option service to annuitants has long been an area where there is huge scope for innovation. Whilst the ABI and Origo have achieved admirable and much needed reductions in the processing time, once an application is submitted the quotation and application process has been ripe for overhaul for many years.
The introduction some years ago of the paper Common Quotation Form using both paper and downloadable formats (see http://www.commonquotation.co.uk/) was welcomed because of the consistency it delivered but equally made it obvious how technology could transform this process.
I have long been waiting to see someone truly capitalise on the opportunity an electronic CQF could deliver and I’m delighted to report that such a service is now available.
In September Avelo rolled out its new annuity comparison service. This allows advisers to enter a limited amount of information about a client into Avelo Exchange and email a link to a consumer facing website which can be branded in the adviser’s colour scheme, with their logo and use a URL including their business name.
From this the client can complete the full CQF online. This version of the CQF includes comprehensive automated underwriting links enabling the user to provide full details of any medical conditions so as to achieve an exhaustive disclosure of all relevant factors which in the annuity market could result in significantly improved terms. Or if preferred the adviser can complete the CQF for themselves in discussion with the client. Personally I think there is an opportunity here for a further enhancement by using a call centre based specialist underwriting resource; I hope Avelo will explore this option in the near future.
Having completed the CQF the adviser then reverts to the Avelo Exchange annuity quotation service which can now generate guaranteed annuity quotations thus radically reducing the time taken. Avelo has reduced what can be two weeks of pain to quite literally an instant reply in seconds.
Advisers have the option to choose to prohibit follow up calls from providers to discuss quotations thus avoiding the frustration and time consuming process where some annuity providers put forward an initial rate and follow up by telephone offering an improved rate. Where the adviser has opted not to accept follow up calls the insurer had better put up its best offer in order to secure the business.
The service is available covering standard, impaired, fixed term and with profits annuities and the providers presently participating in the service presently are Aegon, Aviva, Canada Life, Hodge Lifetime, Just Retirement, Legal & General, LV=, MGM Advantage, Partnership, Primetime, Prudential, Reliance Mutual and Standard Life although I understand that at this time Legal & General and Prudential have yet to implement the guaranteed quotation capability.
In the new year the service will be further enhanced to deliver an electronic new business application service. The Annuities Plus service described above is available for an additional payment of £7 pounds per month on top of the standard £18 per month charge for the Exchange Annuity service. For any adviser firm that wants to carry out even a modest amount of annuity business this seems to be £25 per month extremely well spent.
Alternatively advisers can take a pay as you go approach at a cost of £2.50 per client.
In the run up to RDR this service shows an excellent way in which advisers can harness technology to deliver a really valuable service to consumers.
There is perhaps a strong case for advisers adding their own charge for such a comparative analysis which should enable consumers to get a far better understanding of the income options available to them at a crucial stage of their lives.
I do have a slight reservation over the extent to which retiring people will be prepared to complete a long online form or really want to have an exhaustive medical dialogue with an adviser. Clearly the financial benefits should outweigh any short-term reticence, however, having a call centre service with professionals to hand could enhance this process even further.
Whilst this service is undoubtedly a major step forward for the annuity market what I am most impressed by is the potential Avelo has delivered for long overdue innovation in the protection market.
For almost 20 years there has been a demand amongst sections of the adviser community for a common protection application. All too often this has been dismissed by underwriters as “impossible”, ironically their colleagues in the annuity market have now proved that such a common form is not just possible but entirely achievable and can deliver enormous efficiencies of process.
When considering a common protection application it is important to recognise that a common form will not necessarily mean lower prices, indeed arguably if a more limited question set is used this might result in higher prices where the underwriters are receiving less information to base quotation decision upon.
In delivering a single common application for annuities, Avelo has proved that it is possible not just to deliver one common application but many. In just a few years we might see both a common short form application and a common full underwriting questionnaire.
The service is a classic example of new technology delivering opportunities for innovation, and enhanced customer service. It should not just be warmly applauded by the entire industry but also seen for what it is, an enormous opportunity to deliver better consumer outcomes. Avelo and all the insurers supporting the project deserve considerable credit for delivering innovation where it is sorely needed.
Ian McKenna is director of Finance & Technology Research Centre