Our online self-service platform, CLASS, celebrated its tenth anniversary and in that time it has grown to cover around 9 per cent of all Group Risk policies in the UK.
We also retained our position at the pinnacle of our industry by the three measures of Swiss Re’s annual Group Watch report: in-force premiums (i.e. market share), companies covered and people covered.
While we are proud of our accomplishments, it is important not to get caught in a bubble. In the largest of the three traditional UK Group Risk markets, Group Life Assurance, there are 41,323 policies registered with HMRC.
We have had the largest slice of this particular pie for many years, but when you consider there are some 1.8m employers due to go through pensions automatic enrolment between 2015 and 2018 it becomes apparent that this pie could euphemistically be called “fun sized”.
Stepping away from the metaphors and euphemisms and speaking plainly, growing an undersized market was one of our main aims when developing Simply Class Group Life Assurance.
The launch was a success from my perspective in the marketing department. There was a platinum rating from industry pundits (putting the product in the top 7 per cent of all they had reviewed), comprehensive coverage and consistent, multi-channel communications.
However, there is more to a product launch than the fanfare in the first couple of weeks. Behind the scenes, we are already seeing conversion rates for Simply Class quotes in the region of 10 per cent, compared to 2-3 per cent for our “standard” business in the sub-50 lives segment.
The 10 per cent could even be higher if we take quotations which are currently under consideration by employers into account.
Even though we put a lot of work into learning what kind of product advisers would be comfortable selling, excellence alone does not grow marketsWe believe the key to this improvement is getting the right messages in front of decision makers in our target market.
We produced a video demo showing advisers just how straightforward the system is to use, and have given them supporting literature highlighting the features and benefits of the product which they can share with their clients.
Explaining the tax efficiencies, removing the need for medical underwriting and putting premiums as a percentage of salary costs on the quotes are also working – costs were always very much less than most employers’ perceptions!
These evolutions followed in direct response to feedback we got from employers in the sub-50 segment during interviews for our planning stages: if we can get the costs in front of them, the decision to buy is a no-brainer!
Our first challenge has been distribution. Under half of the adviser firms that regularly engage with CLASS have quoted for a Simply Class Group Life Assurance product.
As I mentioned above, we pushed the boat out getting the message to the market – we plastered adverts on every flat space we could find, wrote articles, emailed any adviser who’s expressed the faintest interest in hearing from us and even sent oven gloves in the post to those who haven’t.
We spent money with Twitter to get our idea in front of as many people as possible. To summarise, it was a big, loud launch and yet adviser behaviour has not changed in any significant way.
Do UK advisers lack ambition? Have they blithely let automatic enrolment pass them by without formulating any kind of strategy to capitalise on it? Or are we not providing enough of the right kind of support?
In November 2015 we released a pack of support literature which we will co-brand to help advisers raise employee benefits during pension discussions, and we’ve now followed that up in January with a customisable video.
No pension provider had provided materials to differentiate the advice offering to the employer from the non-advised direct access to pensions master trust, which is ironic as we are group risk people. If an adviser gets in touch with us, we will literally do their marketing for them almost as an outsourced marketing department!
Our next challenge is to encourage advisers and employers to take advantage of Simply Class in the low-touch, transactional way it was intended. Only around 15 per cent of the policies which start life as a Simply Class Group Life Assurance quote end up on-risk for the simplified product; the other 85 per cent divert to the full CLASS system.
We believe, although we only have anecdotal evidence at this stage, Simply Class is being used as a taster, since advisers can get four quotes to take to their clients in less than two minutes. We always believed that this would be the case but not how high a percentage the Simply Class move to CLASS would be.
At the point of presenting Simply Class, advisers have got their clients’ attention and can go into full consulting mode – not unreasonable, given it is what they are paid for.
To us, that means even though we believe the product is fit for purpose within the small and micro segments, we still need to tweak the offering.
To that end, we have a list of 25 things (at last reckoning) to address in the coming months which run the gamut from product features (minimum premium) to communication support (workplace posters).
Within six months of launching our first new product in almost ten years we have learned some key lessons. Primarily, behavioural change takes time. To state the obvious, financial advisers want to advise their clients.
Even though we put a lot of work into learning what kind of product SMEs would be interested in purchasing and advisers would be comfortable selling, excellence alone does not grow markets.
We are in a period of “test and learn” with Simply Class Group Life Assurance – we have the leading platform in Group Risk and terms and conditions you will struggle to find beaten, but growth comes from taking communication to the next level and helping advisers to do their job.
We can’t just rely on the system to do all the work – everything needs to be as easy as possible, hence our marketing support.
We are learning these lessons well, and will be putting them to good use while we look at the opportunities present in e-linkages with partner organisations and a self-serve proposition available from our website.
I can’t wait to share what we discover on those journeys with you but already one thing is sure – you can only grow a market when you make it easier for your distributors to sell as well as administer.
