The life and protection insurance quotation process needs to be updated, according to industry experts, as the current system wastes money and presents a poor image of the industry.
Neil McCarthy, sales and marketing director at Direct Life and Pension Services, told FTAdviser the current quote process has not changed significantly for years.
He said: “It fails to take into account any sort of assessment of the underwriting and leaves many customers to complete applications for insurers who do not want to accept them.
“This wastes money, but more importantly presents a poor image of the industry, leaving people with no cover, reluctant to re-apply and distrusting.
“What is more, for intermediaries it presents a needless hurdle to sales, putting many off advising on protection at all.”
He argued for a better fact finding and application process, involving simple health questions, which could ensure that advisers are better equipped to recommend protection policies that will be accepted at the price the customer expects.
The slow rate at which many intermediaries process protection customers and the bigger problem of trying to get clients engaged with the impact that death or long term illness can have on the families left behind, were also raised by Mr McCarthy as issues the industry has to overcome.
“If brokers were more confident that an appropriate protection policy could be easily obtained, without the current underwriting delays, then more policies would be sold and we would have better protected individuals in the UK.
“Advisers currently do not have many opportunities to change their current practises, whereby typically they give the advice, then process the application, unless they work with a business like LifeQuote,” he added, mentioning Direct Life’s specialist protection service for advisers.
“Making sure that the customer only applies for policies that they can go on risk for, by using pre-underwriting tools can speed up the processes.”
Adam Higgs, head of research at specialist consultancy Finance and Technology Research Centre, agreed that there is no doubt the industry could and should do better.
He said: “Explaining to clients why the cost of cover has increased after underwriting can be a difficult conversation, and by capturing more information at outset situations where these occur can be reduced.
“It is time for another significant leap forward in the way the industry provides comparative quotations and there are a number of new offerings arriving in the coming months seeking to address this.”
Phil Jeynes, head of sales and marketing at UnderwriteMe, told FTAdviser that speed alone is not the major factor.
He said: “It is about making the customer feel that their individual circumstances have been taking into account, rather than them having been given a ‘one size fits all’ solution, which will probably need extensive tailoring further down the line.”
Speaking to FTAdviser, Zurich’s senior product development actuary Richard Sadler added that while he broadly agreed with Mr McCarthy, there were some points of exaggeration.
He said: “We can give terms to around 96 per cent who apply and four out of five will get the same terms they applied with, but there will always be a minority of cases where we have to spend weeks or months speaking to doctors about more obscure medical conditions.
“All insurers try to make as many immediate decisions as they can for customer and advisers, but it’s not always possible. I do support any initiative to speed the process up though, and think Direct Life’s Quote+ indicative decision tool is good, while UnderwriteMe’s process looks promising and we will track it to see whether it takes off.”
peter.walker@ft.com
