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Richard Verdin on protection

When Scottish Provident created Self Assurance,it set the benchmark for all protection providers to aspire to. Its efforts culminated for all to see when, in the Swiss Re 1998 annual report, it was shown to have become the biggest term provider in the UK. This was no mean feat when you consider it had written annual premium business during the year of slightly more than 37.5 m, some 20 per cent higher than HSBC, which came second.

What did ScotProv do to get it so right and what elements of its proposition ensured its success? Over the years, I have spoken to many who worked at ScotProv. During this time, some worked on products, some in service and others in sales. They all have slightly different takes on which made ScotProv so successful. Let us have a look at what they did.

When it comes to product, there is no doubt it raised the bar of expectation. There is not a protection expert I know who would not agree that its products, benefits (risks covered) and options for the customers, met just about every set of personal circumstances the advisers of their day could imagine their customers needing. However, while advisers’ expectations, as far as product benefits are concerned, have been raised, today’s mass market relies heavily on mortgage advisers for sales. Many of these are not enthusiastic about PHI(IPB) and do not want to discuss the ins and outs of the 10 or so additional medical conditions covered by product provider A’s CI policy when compared with product provider B’s policy. Some do, but many do not. I believe this degree of product development can win you friends and awards, yet it probably represents only a small part of the success they experienced.

The degree of flexibility demanded by the ScotProv product gurus created its own problems, in particular how to quote. The way in which the product could be made to fit the customer’s circumstances so neatly, meant that it didn’t fit the 1990s’sversion of The Exchange’s all-market, all-providers ‘quote utility.

The solution was that ScotProv would have to provide its own quotation solution which it did, on disc and later on the web. The quotations disc – Quod (Quotations On Disc – was a great idea but getting advisers to use it was going to be difficult. However, if successful, the dividends would be huge, not simply because once you created a habit of using Quod it would be difficult for others to break, but you effectively remove the competition from view because Quod only ever quotes/quoted ScotProv. So determined and effective was ScotProv’s effort that even today I meet advisers who describe themselves as independent and yet do little more than turn to Quod for all things protection.

The benefits that came with Quod, once installed and instilled, cannot be underestimated. However, no one has truly ever succeeded in replicating its success. I put this down to two things. First, changing the habits of advisers is never easy and second, because ScotProv was first to do this, it benefited from the first-mover advantage.

Finally, when it came to distribution, ScotProv’s focus meant it saw two things that others did not. The first was that the mishmash of regulator and regulatory carve-ups had resulted in an important means of distribution (non-reg advisers) being left out in the cold by the majority. Second, these people were as interested in alternative commission styles as they were by absolute amounts. A few tweaks to the systems, one waiver from the regulator later and all things were in place for a great success story. However, a word of warning. Many have copied parts of ScotProv, some have even tried to build new version, yet this is to misunderstand what the people at ScotProv did, during all developments they looked forward, not backwards or sideways.

Richard Verdin is sales and marketing director at Direct Life & Pensions

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