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Protection Edge: Peter Chadborn

With the protection landscape evolving at an ever-increasing pace, the latest two providers to enter the arena are Axa and Royal Liver. An out-of-date protection product range has led to a new proposition from Axa which is anticipated at the end of November.

The aim is to provide a fully flexible product which will allow all manner of protection types in one plan under one roof, thus creating a one-stop shop. Only time will tell if Axa can be cost-effective in all product areas to make this proposition competitive. A similar approach was always popular within bank assurance and while appropriate for a sales- force after a simple sale, it is seldom the case that one company can be competitive in all areas of protection.

A change in direction and structure for Royal Liver over the last 18 months has seen the acquisition of Park Row which has created a solid distribution channel to run alongside the friendly society’s direct salesforce.
The last 12 months has seen the creation of what they call a virtual company for their entry into the IFA protection market. Research into the virtual company involved selecting best of breed external organisations with regards to the various layers of the application process.

The idea was to choose those that specialise in underwriting to do the underwriting, those that specialise in claims to handle the claims process and so on. Providers are often criticised for outsourcing admin but Royal Liver is confident that its system is a viable one because of the strict service levels in place, its intention to maintain limited distribution partners and to only accept online applications.

I have had one particular concern regarding online applications which has not been easily addressed by providers. With a paper-based applic-ation, a future claim which is not upheld is likely to be a result of either misunderstanding of the product spec-ifics or non-disclosure by the client. For business submitted online, a further possibility is added to the short list – data inputting error.

Many online systems have, or at least had, limitations with regard to the additional information required when a health question is answered in the affirmative. The scope of ans-wers available from the drop- down menus does not always accurately match the client’s health conditions. This could result in the data being considered by an underwriter differing from that which app-eared on the original applic- ation form which was signed by the client. However subtle the difference may be, could this lead to administrator error being sighted as a reason for a declined claim?
Royal Liver believes that its progressive underwriting will alleviate these fears. When inputting the data online, the system will prompt the facilitator to enter additional health information, where necessary, to assist the underwriting process. Nothing new there, however, there will be an option to request for an underwriter to phone the client to get the additional information.
Royal Liver will send the client a transcript of the conversation with the underwriter which they will be required to sign to acknowledge fair representation. This should instil confidence in those who are sceptical about e-business.

Scottish Equitable’s online system includes features such as autosave where data is automatically saved through out the process and simple recall which enables the admin to access a full or partially completed application at any stage. This is a welcome improvement as nothing is more likely to make you want to throw your PC out of the window than a server or hardware failure which causes you to lose an application halfway through.

Further improvements will be made by Standard Life which is currently piloting its system with IFAs. A welcome improvement will be the req-uirement for the client to sign a copy of the e-application, sent to them by the company, after it has been submitted online.

I am convinced that if prov-iders want the whole IFA community to embrace e-business, then these are the minimum standards they are going to have to adopt.

Estimates for business submitted online are at about 30 per cent of all new applications. This business is undoubtedly going to see an exponential rise in the years to come and it is not unreasonable to expect the vast majority of providers to accept only e-business in the near future.
I believe providers will continue to promote their online systems via dual pricing or commission bias, driven essentially by the need to cut costs. As IFAs’ profit margins are also squeezed, the more favourable online systems will be those which reduce the admin burden rather than add to it.

Peter Chadborn is principal of Chadborn Baker & Kearle


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