Recently I wrote about the need for insurers to be braver, more radical and to take significant steps to deal with consumer apathy and lack of trust in order to properly grow our market.
Swiss Re’s 2014 Term and Health Watch Report showed that rather than the market remaining steady, it unfortunately fell in 2013. I hope this data will spur insurers on to take the action needed to attract more customers. But is it just new customers we need to focus on?
Who remembers that rather irritating but effective Nationwide advert from years back with the phrase ‘Brand New Customer’s Only!’?
The point obviously was Nationwide was in the business of looking after its existing customers, not just new customers. Well, we are in danger of becoming a market where that infamous slogan can apply to us. In fact, we are pretty much there already.
We have seen significant improvements to critical illness and income protection propositions within the last year, particularly concerning heart attack and stroke definitions, and the move to assess more customers on an own occupation basis. These changes will ultimately help more customers claim when the worst happens and are certainly good news.
However, nearly all enhancements are for brand new customers only. This means to treat existing customers fairly, giving them the best chance of being able to claim, policies should be re-broked. But if it’s critical illness cover, because of the sheer number of changes we see now, they’ll probably have to be re-broked again at some point. And again. This is just not practical for either intermediary or client.
We have seen insurers such as Ageas, PruProtect and Aviva apply improvements retrospectively, but this is rare. Pricing, systems and re-insurance treaties are often the stumbling blocks, but if it’s happened before, why can’t we see more insurers do it?
And if retrospection cannot happen, why can’t there be a way for clients to add on the improvements to their cover, at extra cost, without having to fully re-apply? It would reduce churning, help insurers keep business, and make things much better for customers.
Unfortunately, pipeline customers miss out too. Because of system restrictions, clients who have already applied but have not been underwritten cannot benefit either from the improvements unless they re-submit a new application. This is madness. IFAs do not have the resources to re-key all these applications, and given the understandable lack of notice about improvements for confidentiality reasons, IFAs can’t even plan for this extra work.
Insurers do not take this into consideration, even though it is their actions and system issues that put advisers in an awkward position.
So, to the insurers reading this, when you next plan to improve your products (and your systems as it is often system restrictions that contribute to the problem), I implore you please to think beyond the ‘Brand New Customers Only’ philosophy and consider what can be done to help existing and pipeline customers benefit from your improvements.
Emma Thomson is life office relationship director at Lifesearch