“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.”
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.”