This summer marks the third birthday of Tele-interviewing in the UK, and even the most negative diehards must acknowledge it is now part of the protection landscape.
MorganAsh have NO contested claims out of the circa ~20,000 interviews completed to date, and the majority of interviews have been on income protection insurance.
Admittedly, three years is a relatively short period to draw conclusions on claims experience. It is hence too early to state that Tele-interviewing has overcome the non-disclosure scourge that is demoralising the industry, but it is certainly looking that way. From my understanding, those few companies that undertook full Tele-interviewing in-house are having similarly good claims results.
It is important to distinguish between full Tele-interviewing and Tele-data capture, although the words Tele-interviewing and Tele-underwriting are used widely and indiscriminately to anyone using a phone to interview the applicant. Full Tele-interviewing uses a well trained individual (underwriter, initial underwriter, nurse or very well trained and experienced customer service representative) and a specialist, extensive and flexible scripting system. The interviews are in depth, interactive and cover all aspects of the person’s medical history in depth.
Tele-data capture is the simpler approach where less experienced administration or customer service staff complete an on-line application form over the phone. In this case the interaction is limited; the conversation highly scripted, with minimal flexibility, and further information is often required from the applicant or other sources.
Feedback from those undertaking Tele-data capture (including MorganAsh) indicates that it certainly provides better disclosure, and hence less claims, than would be expected from traditional approaches. However, as there is no way of identifying which cases have been submitted with Tele-data capture, as they are mixed with other on-line applications, there is no way of identifying the claims consequences of this approach.
At the recent protection review we spoke of the lack of innovation in the industry, and yet Tele-interviewing is innovative, but is taking many years to be adopted. One of the impediments to this, and I suspect many innovations, is the diverse nature of our business and the focus on annual budgets. The majority of benefits of Tele-interviewing are realised by those who don’t pay for it. The improved disclosure benefit will be realised largely by the reinsurer in 2-5 years time, and the life company’s brand reputation is again realised in the future.
The saving in salesman’s time and liability is realised by the IFA in the same period, but is obscured by the benefits being with another company and the sales commission payment system. The only reason Tel-interviewing has been able to gain traction and get started is the immediate cash savings in GPR costs which are within the same budget as that of the Tele-interviewing. If the conclusion from this is that any innovation must show an immediate cash benefit within the same annual budget, then this is a poor indication of the strategic thinking of the industry, and does not bode well for adopting other innovations.
I was once with a re-insurer who asked for the last 10 years claims experience of Tele-interviewing, so they could share this with their pricing actuary in Germany and thus recalculate the benefits and reflect this in their price. Obviously, this information does not exist, and if this requirement is placed on every innovation, we are not going to change. I am pleased to say the reinsurer in question has taken action and is now changing their clients’ medical limits to embrace Tele-interviewing.
The Association of British Insurers (ABI) are close to completing a guidance document on Tele-interviewing and on-line applications, and this should assist in the take-up of the method. I understand it is due for general release in a few months.
In the USA, the birthplace of Tele-interviewing, they will celebrate its 20th birthday in 2009 and it is still being rolled out there as something regarded as new. I hope that we can learn quicker than our American cousins.
Andrew Gething is managing director at MorganAsh
The views expressed in this blog are the individual's own and not necessarily those of the company which he represents.
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