One of the most frequent questions asked by life insurers is, why do advisers not sell more protection cover? For a long time, a valid answer was that the industry did not make it easy for them. However, a number of recent developments provide clear evidence that has changed.
Traditionally, advisers providing protection advice have had to compare complex products, undergo a cumbersome and time-consuming application process and then, for as many as one in three clients, wait weeks for the underwriting decision.
In the last four years the protection industry has moved away from price being the sole differentiator, with more insurers focusing on innovating policy wordings, and additional benefits and support services. This has made policies more sophisticated but they are also more complex for the adviser to compare.
While there were lots of price comparison services, such as Direct Life & Pensions, iPipeline and The Exchange, the industry did not deliver the same level of product comparison services to guide the adviser. The emergence of research tools such as Alan Lakey’s CI Expert and F&TRC’s AdviserSoftware.com make it easy for advisers to access such services at low cost or even for free.
One of the big drawbacks of the historic process has been the inability for advisers to give customers a clear indication of what the final premium might be. Approximately two in three protection proposals will get accepted at ordinary rates via an online underwriting process but not being able to give an indication of the likely premium to the remaining third is not a good customer experience. Indeed, there is a strong argument it breaches treating customers fairly requirements.
Specialist protection advisers may be able to give an indication of terms based on their previous experience but, for others, not being able to do so is a real constraint and will certainly make them less likely to engage in protection advice.
An increasing number of services, such as iPipeline’s XRAE and Direct Life & Pensions Quote+, enable advisers to give an indication of the likely premium from insurers. UnderwriteMe takes the process a stage further by aiming to provide “buy now” prices. This means that, in perhaps 80 per cent of cases, the policy can be in force before the adviser leaves the client meeting. I understand iPipeline is exploring how it can add “buy now” capabilities based on a wider range of measures such as BMI without using a full reflective online underwriting engine.
Early practical experiences are positive. The Exeter, for example, is reporting significant improvements in its immediate acceptance rates since it implemented the UnderwriteMe technology.
I have also seen examples of other insurers’ new services, which will enable advisers to undertake the full underwriting journey on an iPad using responsive technology. This capability, which is far easier to use than a conventional provider’s online services, will be released to adviser firms in the near future, although the best way to use UnderwriteMe is via its comparison portal, which is currently being piloted by Lifesearch advisers. It has already announced that this will be extended to London & Country in the new year and a wider release to advisers is scheduled for the spring.
Making it easier for advisers to research and compare complex product wordings based on individual client requirements is a really important step forward. Add to this the ability for advisers to use a streamlined, customer-friendly process and get the vast majority of cases on risk immediately and we are really beginning to reinvent life insurance delivery.
Regrettably, not all insurers are embracing the “buy now” approach yet but failing to do so is constraining their market share.
Against the background of these significant improvements there is a strong case for wealth managers, financial planners and mortgage advisers to revisit the extent to which they engage in protection advice. They might be surprised just how much easier the process is.
Ian McKenna is director of the Finance & Technology Research Centre