With the squeeze on costs that the Sandler world has bought to the financial services industry, technology provides a necessary opportunity that is shaping the protection market, Keily Poole from Friends Provident finds out how:
The progression of technology in recent past has revolutionised the way in which many industries conduct their business. It is now shaping the future and how companies innovate products and services going forward. A key driver behind the adoption of technology is the ability to drive down costs, increase service levels and provide effective management information and audit trails. It is for these reasons that technology has had such a positive impact in the financial services arena and a key driver for developments going forward.
The fit for financial services is perfect, service-based systems that increase the user experience, enhance the provider service and deliver benefits to the end customer.
The strategy behind rolling out technology platforms to enjoy these benefits has progressed rapidly in recent years. The introduction of the Internet has allowed the adviser to run a quote from a number of different providers in minutes as a replacement for traditional complicated mainframe based systems. You no longer needed to be an IT expert to adopt technology into business practice. This opened up the opportunity for advisers to utilise the benefits of technology, no longer rely on postal services and save time. It has become part of business as usual to input details needed for the basis of a quotation and expect an answer within minutes, this has rightly raised the expectations of service levels available.
The next logical step from the electronic quotation was to use electronic literature particularly for commoditised products such as term assurance. In the last two years the industry has seen providers making all paper-based literature available in electronic format, meaning cost savings which have been passed onto intermediaries in the form of enhanced commissions as an incentive for adopting the technology.
The next evolution was enhancing the electronic application form that enabled the adviser to input details in the same way that was acceptable for quotations. This initially involved purely inputting on an onscreen version of the paper application and then evolved to become more intelligent and allow some validation of information and further questioning by using PAC (Product Application Component) technology. This allows information to be captured and to be sent online to the provider without signature. This proved to save considerable amount of time, not just through postage but also through reducing errors on the validation that was now possible.
A better way of doing business
There are more opportunities to develop, and the industry is seeking innovative ways to further improve service levels by utilising the ever-improving technology available. The latest development within the protection sector has been the introduction of electronic underwriting to the application process. This is not a new idea; it has been around in a few guises for a number of years but technology, systems and processes are improving, so now it is a concept the market is ready to accept. An online interactive underwriting system can make decisions, it can accept a case on ordinary rates, rate or apply other special terms, determine whether a medical report is necessary and if necessary decline a case. In a number of cases it will decide that further consideration is necessary and will refer the case to an underwriter. It is unlikely that such systems will ever remove entirely the need for human intervention. There will be cases that will need the insight and judgement that is either impossible or uneconomic to program. At the heart is a huge database and a rules base with drill down questions on subjects such as personal and family health history, employment, sports and hobbies. The key to the electronic version is that it drills down only on those cases where necessary and it will ask precise questions. For example, on an asthma case it might ask for the frequency of attacks, when the last attack was, what treatment had been undertaken and how much time had been taken off work. Based on the answers given a decision can often be made by the system immediately.
Providers make these services as easily accessible to advisers as possible and focus on not only making it available through their own systems but also through the traditional third party portals. Couple this with the advent of back office technology and network support that the market has seen and it has transformed in the past few years. These systems have become end-to-end services encompassing a number of components. It is now possible for an adviser to quote, input an application, put policy on risk and get paid commission within minutes. It is also possible to track policies that have been referred and service existing policies through extranet services. These services are available direct from providers extranets depending on how well developed they are. In addition to this providers are working to build xml links that populate their own systems with this information enabling advisers to get all these services from one place. This is a far cry from the paper world.
Differentiation of service
Historically within the protection sector, if price is competitive, service levels have dropped and there are horror stories of policies taking 40 days or more to go on risk. In addition to this the amount of time taken by the adviser to chase up client’s policies has been disproportionate, all of this can be saved by the use of these online systems. Meaning more time to write business allowing the adviser to be in control and manage client relationships more effectively. If an adviser had time to write one and a half more term policies per month at an average premium of £26 this would give rise to an extra £10,000 in commission.
Challenges for sales process
There are many benefits of this online approach and it should be recognised that there are some challenges facing advisers when adopting this technology that are easily overcome.
The sales process currently adopted by the adviser is key to the fit of different types of technology. For example if an adviser is office based with a PC then that lends itself beautifully to using online applications with underwriting included. This is obviously not the only way in which protection policies are sold. Many operations use telephone based selling, this technology has fitted well within this process utilising the online underwriting model with telephone based adviser’s that can simply run through the questions on screen and record the answers through systems already integrated. This means that the customer will no longer have to wait for a decision or paper work for a signature but can be put on risk in a matter of minutes over the telephone.
The more tricky sales process to integrate with is that of the adviser that operates by going to a client’s home. Obviously for an online system this is a challenge to implement. However, PAC technology can be used, which is available offline. Therefore if the adviser has a laptop they can input the details and when they get back to the office the details can be uploaded to the provider. This will not get the benefit of online underwriting but will still offer a quicker return than the paper route. Another way to overcome this is through the use of data capture forms, these forms replicate the questioning used on these online systems so that the adviser can fill it in with the client in their home and simply input the details back at the office. As you cannot replicate the online underwriting section in paper due to supplementary questions being generated from the base questions there has to be a change. This is simple to manage, from the questions answered the adviser should be able to gage whether or not further supplementary questions will be asked. In these cases the adviser can manage the clients expectations by alerting them to the fact that due to the information already disclosed more information might be necessary. Then agree a convenient time to phone and go through the further questions over the phone before submitting. The adviser and client will still both enjoy much increased service levels and control over the whole process.
Used effectively technology can mean:
- Control over your business
- Speedier processing of your business
- Fewer piles of provider literature
- The confidence that you always have the latest documentation
- 24/7 access to information
- The ability to access details of your clients’ in force business
- The potential for increased earnings – positively contributing to profit margins
More information is available about Friends Provident’s online eSelect Protection system.
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