Although a small but significant number of life offices have been building the extent of their new business being rec-eived electronically, on the whole, it would be fair to say that IFAs are not exactly leaping to take advantage of the various tools delivered to enable the market to move away from paper proposals.
There are exceptions. Legal & General's online term insurance service is generally accepted as a runaway success and, on the IFA side, Towry Law is proving what can be achieved through the use of its system adapted by CMG.
What both these services have in common is that they deliver real additional value to the adviser. L&G is accelerating the speed that proposals can be underwritten and policies issued. Towry follows the IFA business process and pre-populates client data from the IFAs back-office system to the electronic application.
I was one of the primary advocates of the industry new business project and it is impossible not to be disheartened by the paltry take-up of the majority of electronic new business services launched in the last year. This is not a problem that is going to solve itself. There is a real need for further industry co-operation to produce systems that while working in theory are clearly not proving attractive in real terms to advisers.
This is not purely a technology issue. Although there are undoubtedly further chan-ges that can be made in the way that the technology works, providers need to take a more active role in encouraging advisers to use technology.
A new service from Synaptic Systems, which is best known for its product research professional research database, is certainly a step in the right direction. Most of the electronic new business services set up in the last year have been designed to operate on advisers' PCs, allowing them to be used both in their offices and when visiting clients. While this gives the flexibility of being able to work in both an offline and online environment, this does, however, mean that software has to be loaded on to the adv-iser's computer. Synaptic, however, is launching a service that needs no more than a standard Microsoft Internet Explorer browser to be installed on the PC. While this means you must be connected to the internet to use the service, it does make it ideal to be used in conjunction with both IFAs and providers' customerfacing websites.
One of the problems that has been experienced by other browser-based new business services has been the time that it takes to download the pages online. I first saw this service a couple of months ago while working with Synaptic on another project. At the time,I was impressed by the fact that the company seemed to have resolved this difficulty. Last week, I had the chance to use some of the forms for two of the first life companies planning to use the service – Skandia and Norwich Union. The results were similarly impressive.
With the life and pension industry living in the 1 per cent world, and with the knock-on effects in terms of reducing commission and the withdrawal of indemnity commission by some insurers, it is essential that IFAs have new ways of attracting business on a more streamlined basis.
Allowing clients to buy dir-ect from IFA sites is an ideal way to do this. Recent research by IBM and the Financial Technology Research Centre on the plans of 40 national IFA firms suggests that 42 per cent of these firms believe making services available in this way will be the main way in which they seek to address diminishing income as a result of reduced commission. Against this background, the launch of the Synaptic system is well timed.
A further advantage of the new service for those who use the company's research product is the extent to which data can be pre-populated from the electronic applications from the IFA's other systems. The Product Research Professional system can already import information from a wide range of IFA back-office systems for use in matching the product most suited to the client's needs. Appropriate data is then carried forward to be used in obtaining the clientspecific key features document and ultimately to the online application.
It is a sad that a couple of big insurers did not want to invest the time in the development of the industry new business service so IFAs can populate electronic systems from back-office software. If the industry is ever to see payback on the considerable investment to date, it will be necessary to address this problem.
Towry Law was not prepared to accept a system without pre-population and CMG created this capacity for the company. This is a significant reason for Towry being by far the most successful in the use of electronic new business.
The Origo XML new business standards are used within the system so that insurers will benefit from considerable economies by getting business in this way. In addition, ensuring that full validation is carried on all data as it is entered into the online forms means the capacity for errors when completing paper-based forms will be greatly reduced.
It is expected that IFAs should be able to start submitting business via this service from early November. The best way for IFAs to use this service will be via the product research professional database so that they can take full advantage of the pre-population facilities. Alternatively, it can be accessed on a standalone basis from www.synaptic.co.uk and it will also be included within the IFA online portal at www.ifaonline.co.uk.
Although priority is being given to delivering this service so it can be used in the IFA market, Synaptic expects to extend it so that IFAs can use these forms to populate their own websites before the end of the year.
Ian McKenna is a consultant and director of the Financial Technology Research Centre, which works for a wide range of industry organisations, life offices and technology companies, including Microsoft, Assuresoft and The Exchange. He can be contacted by email at email@example.com
Tel: 020 7935 2599