How technology is changing the sector for the better

Insurers, distributors and developers spoken to by FTAdviser are all positive about the future of the sector in spite of its well documented issues with consumer engagement, but warned that those not embracing this change would quickly be left behind.

One of the most recent updates came from Finance and Technology Research Centre, whose ‘quality adviser’ tool now features business protection and relevant life product comparisons. The firm’s director Ian McKenna explains that they are not alone in trying to make it easier for advisers to navigate more complex quotes for clients.

“Worthy of note here are Direct Life and Pensions who have developed ‘quote plus’ to compare menu plans against single solutions, while iPipeline’s ‘solution builder’ goes one step further to help advisers compare costs using a mix and match approach, with menus and stand-alone policies.

“It seems like a simple enough development, but other protection businesses would do well to look at these systems and develop their own digital solutions to help advisers arrive at the optimal level of cover at the lowest cost.”

Underwhelming underwriting

Mr McKenna opines that ‘underwriting’ is almost becoming a dirty word – at least to the end consumer – with some companies making a virtue of products with no underwriting required.

“Speeding up the underwriting process should certainly be an area of focus for providers. But more than that; providers must make the process much more visible to advisers and end customers,” states Mr McKenna, adding that “the reality is that many providers have ‘Victorian’ processes replicated online.”

Underwriteme is one such advancement that has the potential to revolutionise the industry’s outdated processes, with the firm’s head of sales and marketing Phil Jeynes explaining that technology has a major role to play in getting better engagement.

“Customers are put off from buying when they are presented ‘off the peg’ quotes online, which turn out to be meaningless in many cases, failing as they do to take account of a person’s individual background and circumstances.

“Intermediaries, too, are often reticent to really sell protection as confidence in the cost they’re showing their customers is less than total. In a world of one-click purchases, a system of logins, pop ups and diversions feels hopelessly inadequate.”

Underwriteme is a technology company which has developed a fully online underwriting portal. Partner provers offer advisers to use this portal when applying for cover, with most reporting that six in 10 clients can get an instant quote based on their responses.

As at September, a total of seven firms were signed up with the firm, with one of the early adopters, Scottish Provident, reporting a 30 per cent increase in new business after employing the new application process.

Robert Harvey, a senior adviser at Drewberry Insurance, told FTAdviser that the adoption of similar electronic application questionnaires offering ‘live’ decision making has greatly sped up the process by which policies can be applied for and actually placed on risk.

“Clients with limited or no medical disclosures can be certain they will have their insurance in place almost immediately, without the need for laborious paper forms or nurse telephone interviews.”

Quick consent

Underwriting isn’t the only area where technology is being introduced to speed up dated processes, according to Mr Harvey.

“For those complex cases requiring further medical evidence, Exeter Friendly has started making use of Echosign to speed up the turnaround time by which an applicant provides their consent for the insurer to access medical records.

“With most insurers still requiring ‘wet signature’ paper declarations, it’s hoped that more providers will adopt Exeter’s approach.”

He also mentions that Legal and General’s roll-out of out a similar system for declarations called E-Consent, as well as work with Niche Health to get over 5,000 doctor’s surgeries using software that allows the electronic transfer of applicants’ medical records held on file via subject access requests.

“If this can be adopted industry-wide, with all protection insurers utilising SARs in replace of GP reports – which unlike SARs aren’t subject to a 40-day maximum turnaround time – then the speed and efficiency of getting cases underwritten can be greatly improved.”

VitalityHealth is also readying the launch of its VitalityGP service, which will allow a customer to visit their GP to have ailments diagnosed and treatments recommended all via video conferencing.

Wearable technology

Neville Koopowitz, chief executive of VitalityHealth, also notes the firm is actively using wearable technology to get a clearer picture of risk and provide customers with a more personalised approach to cover and pricing, surely the other key concern for clients.

Zurich’s head of retail proposition, Peter Hamilton, agrees wearable technology must have some part to play in protection propositions during the next few years.

“For our own part we are actively running trials on the kind of data we can collect and the insights it might provide. Many consumers will be happy to share data if they can see they will benefit from doing so. Some kind of exchange or reciprocity is the key.”

Over time premiums will be adjusted in relation to data uploaded from personal devices, with the hope being that people change the way they manage their health for the better, although inevitably those drawn to this kind of deal are more likely to take an interest in their well-being in the first place.

Mr Hamilton warns one potential concern is that we could see a market created in positive personal data, generated for example by an athletic individual running round Hyde Park wearing other people’s devices.

“A more important issue we need to be alert to is the challenge posed to the pooling of risk. With more information, it may be possible to reduce the cost of cover for the fit.

“By the same token though, insurance could become more expensive and possibly unobtainable for those who need it most, and there is the question as to whether an even greater divergence in price and availability is a socially positive outcome.”

Broadening horizons

Guy Williams, director at Liss Systems, a company responsible for much of the industry’s back office technology, argues that one key benefit of technology is the room could create for new players and new ideas to enliven the market.

“Traditionally it has been the same set of insurers, but with reducing costs and new technology, we will see new companies and more white-labelled propositions, such as the already successful approach from companies such as Beagle St.”

For instance, at the start of the year Jelf partnered with software developer Eclipse Financial Systems to create a personal protection portal.

Jelf’s head of protection Adrian Bates told FTAdviser that while it’s still early days, he thinks that having a solution for those clients that do not want protection advice is a good way to build relationships for a time when they do need more complicated cover.

Michael Ward, managing director at Eclipse, says the current quote process is fundamentally flawed.

“Most self-directed people don’t have a clue what they want in terms of cover; they just want to see the price. We have to change the questioning process – trying to find out what people are trying to achieve.

“The technology can calculate a bunch of quotes, then tailor them to circumstances – giving a range of premiums – buying cover for different levels and lengths of time.”

peter.walker@ft.com