“Hate something. Change something. Make something better”.
So went the catchy lyrics for Honda’s ads (some 15 years ago now). Has the insurance industry been doing for protection application processes what Honda did for diesel engines?
Perhaps, thanks to the emergence over the years of comparison, quote and buy now capabilities.
A potential problem was identified (insurers all have different processes / question sets and the risk of non-disclosure largely rests with the adviser). Things were changed using digital technology to help streamline and de-risk the process and make other options available.
While some advisers are making full use of digital comparison, quote and buy now facilities, others are sticking to age-old ways of working: dealing directly with each insurer. Why? Because it is simply what they are used to.
The process might suit them and their clients and not everyone wants third party involvement. But there are also those who grumble about it day in, day out because they are beholden to a different process according to each insurer – and processes that invariably ensures the responsibility for checking full disclosure rests with the adviser.
If you don’t like it, change it
In this CPD column, we will help advisers to consider the different processes available to them.
We are not advocating one route over another. We are simply saying there are other options out there and the overriding message is: if you do not like the process you use now, change it.
Dave Miller, executive general manager (Commercial) at Iress, provider of comparison quote and transaction portal The Exchange, sums up the current state of play. “We still find that a proportion of protection advisers aren’t fully benefitting from the application processes that have been developed between portals and product providers.
“The ability to pre-populate data that has already been captured as part of the quotation and/or fact-find process through to the provider’s extranet, thus not only making the adviser more efficient but also ensuring no errors when re-keying data, is still being overlooked.
“Typically, and based on our own research, this is as a result of either processes being passed on by other advisers and/or a lack of awareness of the benefits.”
We spoke to Peter Chadborn, financial planner at Plan Money, who carried out his own research into the application processes used by all the major insurers. He found:
- Some provide the option for the adviser or the insurer to go through the underwriting questions.
- Some provide a link for the customer to complete the questions themselves, thereby removing the adviser from that aspect of the process.
- Some say the underwriting information must be collated and keyed by the adviser, with tele-underwriting only used if further information is needed.
- Some say the adviser should start the application, then as soon as they reach the medical questions there is a button to delegate the underwriting to the client. The client receives an email link to the medical questions and this form, once completed, goes back to the adviser.
- Some offer a full tele-underwriting service where the client provides all their medical information to a nurse.
- And, last but not least, some offer the option of either a telephone interview with an expert third party, or an online medical and lifestyle questionnaire may be completed by the adviser on behalf of the client.
“There’s no uniformity in the client journey across insurers,” says Mr Chadborn. “Financial planners aren’t medical experts so it’s preferable to remove the adviser from the underwriting aspect. Also, you often get better disclosure if the client is inputting the data themselves or speaking to a stranger. It can often be the case that the adviser is a family friend, which can make some discussions difficult.