Change can be either a threat or an opportunity to demonstrate how agile businesses can adapt and thrive. In 2012, we are being forced to manage significant legislative change with the RDR, protection tax and the gender directive.
Distributors will need different information in making insurer recommendations and market-leading insurers will find pragmatic and flexible ways to proactively support their partners. In addition, all insurers have a duty of care to ensure advisers have the right information to make reasoned recommendations.
The key to success will be communication. The protection changes provide a one-off opportunity for intermediaries to grow their customer base and develop deeper value- added relations. This year could provide a solid foundation for intermediaries to prosper beyond the RDR.
On December 21, term and critical-illness premiums should rise by 15 per cent to 20 per cent for females and by 2 per cent to 5 per cent for males. To secure the lower rates, the policy must start by midnight on December 20. This means all outstanding pipeline applications will switch to the higher terms.
F&TRC adviser members have agreed a number of issues for providers to consider here.
The best insurers should help maximise sales and minimise operational delays.
Many insurers are supporting distributors with their marketing but insurers should also be communicating additional contractual information to help advisers with their provider recommendations. Factors that have become more important are the scope and flexibility of indexation and guaranteed insurability options, in particular whether these extend an existing contract on pre-gender-neutral and protection tax changed terms, or require a new contract.
It would be beneficial for a female if plans had wide-ranging options available on existing contractual terms.
We will face a late surge in applications so we need to develop resilient operational plans. Insurers will be reviewing their operational processes with their reinsurers to see how they could reduce unnecessary delays.
In their recommendation, advisers take reasonable care to ensure their selected insurer does not delay an application beyond December 20, when it could have been processed faster by another insurer. A small premium advantage before December 21 will be a significant disadvantage if the cheaper insurer cannot process the application in time.
From October, insurers must start informing advisers of cases requiring general practitioners’ reports. For these cases, prior to proceeding, the adviser should call other insurers to determine whether they would also require a GPR.
From November, insurers should use their automated systems to control their non-STP paramed and underwriter workflows. The pipeline must be managed to ensure resources are sufficient to complete cases before the cut-off. Where this is not possible, the insurer should decline non-STP terms.
From December, insurers should ensure their go-live processes do not inadvertently cause delays.
For non-STP cases, the adviser may have to accept the terms, which adds another step and risk of delay. Insurers should consider automatically starting the contract, even for rated cases. Where this is not required, the customer can still cancel within the cooling-off period.
Two-way communication will be essential in avoiding unexpected delays or duplicated work from unnecessary multi-app contract races.
Martin Werth is managing director of Living Benefits