The industry seems to have reached a position where there are a number of competing IFA portals all seeking to attract you away from the traditional dominance of The Exchange.
As comparison quotation services start to mature, particularly in the term insurance market, it seems increasingly likely that IFAs will try out these new services. Provided that the basic function req uirements are met, there will be movement towards the newer players. From a pro vider perspective, tariffs are starting to settle down along the lines of industry-driven principles, which simply ask that charges are based on the real value of business written rather than the notional value of appearances in comparative tables.
Online new business submission is also fast becoming a reality, largely because over the past couple of years several organisations have wor ked to define the standards and pro cesses to support this service.
All that is required now is for IFAs to take up this new process and to reach a critical mass of business handled in this way. This will hopefully bring about the long awaited benefits derived from re-engineering of existing paper-based practices.
A catalyst for this change is clearly the fact that the new entrant portals have based their business plans on inc ome from charges made per application submitted to pro viders. In other words, if the change does not take place, portals will find survival difficult on this basis.
Equally, the provider community must promote new business services as, given the investment in time and effort in delivering the infrastructure, it is time to put a similar effort into encouraging take-up by the IFA community.
So everything is looking positive but this is no reason to sit back. Certainly, the delivery of new business volumes will not be easy but, beyond this particular service, where should the industry and its partners be looking now to generate additional benefits from the deployment of e-commerce?
Portals themselves are unlikely to be satisfied with revenue streams generated from new business alone and need to take a wider view of the opportunities on offer.
An area that has long been touted as being potentially much bigger than new business in terms of benefit is what has become known as policy servicing. There is no clear definition of exactly what this means or of what policies it may cover but the focus is certainly on existing books of business and associated tasks.
It could include a basic enquiry on policy information, valuations and changes to policy information ranging from a simple address alteration to premium value.
There are differing opinions throughout the industry about the value of online policy servicing, people are eit her uninterested or think it is the Holy Grail and that there is huge potential for savings across the industry through this automation.
However, there is no real analysis to support this and it is unclear where these savings are likely to be made, what processes would be involved and, indeed, what the role of a portal should be with respect to this activity.
It is perhaps worth looking first at where the real value may reside. Servicing of existing policies is largely driven these days through call centres, which handle initial req uests from policyholders and IFAs. Not all servicing is initiated and completed by IFAs.
Online services will be developed for consumers along side services for IFAs but it would be naive to imagine that, even over time, all consumers will handle their servicing requests either through the internet or digital TV. Online services will be very much complementary to traditional communications such as phone and mail.
It is also worth noting that providers across the board have invested heavily in the development of IFA extranet services. Perhaps most not ably around the corporate pension market where online services for the IFA and the employer have become alm ost a hygiene factor for new schemes. These extranets are now applying similar principles to personal business and most providers would view their extranet as a key differentiating factor to support their product propositions. It is also the most appropriate way to link a user to the back-office systems and services for that particular provider and leverages the in-house expertise rather than that of a third party.
So where do portals fit in the provision of servicing applications? It would be easy to surmise that portals can only introduce unnecessary duplication to services already in existence and under development.
This too would be a naïve view, but by taking the needs of the IFA as the core starting point for the thinking, two clear areas for portal participation start to emerge.
The first is the obvious value which can be derived from aggregation techniques, which are already very mature around price-driven products, where considerable time and effort is saved by bringing together a comparative table.
The same principle can be applied to aggregation of client holdings. The way this might be deployed is based on an assumption that the industry could agree a common client identifier – difficult, but National Insurance numbers look likely.
Given that common identifier, portals could build client/ policy databases which could be populated by providers and could then allow an IFA to look at an aggregated list of policies assigned to the agency for a particular client.
For servicing activities related to a particular policy, the table could activate a click through to a provider's extra net service where the job could be completed.
The second area of value for the portal is based around multiple policy servicing req uests, for instance, for a client holding several policies,a change of address ought to be a single input which then submits that change to all relevant providers.
This may all sound wonderful in theory but it must be technically poss ible. Perhaps the biggest challenge of all is who should pay for this type of service? There are benefits for the provider but there are also benefits for the IFA in terms of fast and efficient access to client holdings and the ability to effect multiple changes from a single input.
These are challenges which will, no doubt, be facing all portals over the coming mon ths and years.
The industry needs the portal services as part of the drive towards automating our processes using e-commerce but this has to be at a price that makes commercial sense for all and must be based on the principle that,where value is shared, costs should not be disproportionate to the share of that value.