How is the protection industry evolving online?

Product providers have all but done away with paper applications and claims while, from the consumer point of view, policies can be arranged at the click of a button.

However, just as protection has reaped the benefits of the shift to online, so it has suffered many of its drawbacks. Some critics argue the financial adviser could be phased out of the sales and advice process entirely, while others say the mis-selling of protection products has been made easier by the online revolution.

In addition, the growth of protection portal sites such as The Exchange is, in some quarters, considered to be harming the industry with its emphasis on price, not suitability.

But some are in no doubt the protection arena is healthier and more efficient as a result of the benefits the Internet offers.

“Technology has helped the industry a lot,” Matt Morris, policy adviser at IFA firm LifeSearch, says.

“There have been many advantages and very few disadvantages from the shift to online in protection.

“It has enabled consumers and advisers the chance to sort out policies quicker, and it is also saving money across the industry. “I would say there are no real disadvantages to this and portal sites like The Exchange have helped by simplifying the whole process.”

His optimistic view is not shared by others who say the shift to online has failed to improve the applications or claims procedures. They instead make a case for more traditional methods like tele-underwriting, a widely-used method some see as the future of all protection applications and claims.

Graham Harvey, managing director protection at AXA, says: “There’s a renewed confidence in the consumer to do things online. I mean just look at Christmas and the record figures there were for online transactions.

“But we have been hearing from re-insurers that, when it comes to claims and that sort of thing, they are having worse experiences through the online systems than through tele-underwriting. But I think it’s horses for courses really.”

The issue has also been at the heart of recent FSA action. In August last year four lenders were put under the FSA spotlight for ignoring a ban on automatically adding Payment Protection Insurance (PPI) to online quotes.

Despite such bad PR though, all agree the future of protection remains online. Recent valuable additions, including systems such as Virtual Underwriter developed by progress from Royal Liver, are testament to that.

IFAonline

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