Data protection exists to protect the client's interests but are we reaching a point in the protection industry where it is in danger of becoming an over-zealous practice?
Before making a recommendation to a client, an adviser raises the issue of underwriting – health, hobbies and occupation – to see if there are any circumstances to be taken into account. The client mentions a couple of perceived minor health issues, say, mild hypertension and diet-controlled diabetes. The adviser will ask basic questions which should be taken into account before a recommendation as providers can vary greatly on the terms they offer.
The adviser then needs to position the underwriting requirements so the client is not shocked when it takes a month or so to get their cover. In these circumstances, a report from their doctor or perhaps a tele-underwriting conversation, should do the job sufficiently.
There is one more vital step – speaking to an underwriter before a recommendation is made – which allows clients and intermediaries to have a clear idea about what will be required and what the likely premium. Access to underwriters is so important for protection specialists. This quick chat allows a realistic and informed decision about their budget and how to progress and, as the ultimate result is not going to come as a shock to the client, they are far more likely to accept the terms.
The insurer and intermediary ensure the time and effort they have gone to in arranging and underwriting the policy is not wasted. It also overcomes the many drawbacks of multi-proposing, which grinds insurers down and increases turn-round times for all clients.
However, this part of the intermediary's service can be undermined if the final decision differs significantly from the expectation at outset. This can happen for a number of reasons, for example, incomplete information from the client comes to light as a result of the full underwriting process.
But if the information at the outset was accurate, yet the final underwriting decision remains different (usually for the worse), then the intermediary is left up in the air. Data protection threatens to prevent life offices from discussing the case further, including issues discussed where all parties concerned know the information has been willingly provided by the client. Does this bureaucracy and red tape help protect the consumer?
This can become a protracted issue, with insurers writing to GPs, who then have to communicate with clients. Being able to eliminate issues that the adviser, client and insurer all know about can speed this process. Some life offices are excellent but others err on caution and refuse to discuss any underwriting aspect. We owe it to clients to take a more sensible and uniform approach that allows all parties to communicate where all agree, without compromising anybody's right to privacy.
Life offices loathe multi-proposing, missed questions and spending time on cases that never proceed and often blame the IFA but life offices, cannot have it both ways. Be open. They need to work with the intermediary and their client, not against them.
Kevin Carr is head of strategic relations at LifeSearch