What impact is technology and innovation having on protection insurance?

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Scottish Widows
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Supported by
Scottish Widows
What impact is technology and innovation having on protection insurance?
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Paul Shearman, proposition director at The Openwork Partnership, says the greater acceptance of working digitally has helped drive a rapid increase in the adoption of electronic GP reports (GPRs).

Shearman says: “We’ve seen many providers making use of remote nurse screening and there’s been a dramatic increase in clients’ usage of added value services such as 24-hour GPs, online mental health and physiotherapy support.”

Matthew Chapman, commercial director at Plus Financial Group, adds: “Since the start of the pandemic, I have been encouraged by the response from providers and the steps they have taken to maintain access to insurance for so many. Whether it be a renewed focus on electronic GPRs or customer declarations in favour of medical records, there has been a pragmatic approach from many insurers. 

“New technology is also improving customer experiences and speeding up processes. Innovations such as immediate cover actually enable more people to get cover on risk sooner.”     

In fact, according to advisers, most providers have stepped up since the onset of the pandemic.

Simplified processes

The push to a paperless client journey is the most obvious process to have been accelerated. For example, trusts can now be completed online, in the middle of the application journey with many providers. 

There has also been a massive effort to ensure that providers can offer some premium payment flexibility if a client has become financially distressed. 

This means that premiums can often be reduced for a period of time, to ensure some level of cover is maintained, rather than the cover having to be cancelled altogether. 

Since the start of the pandemic, I have been encouraged by the response from providers and the steps they have taken to maintain access to insurance for so many.--Matthew Chapman

Kathryn Knowles, managing director at Cura Financial Services, says: “Trusts are being more widely adapted to online forms as well as nomination of beneficiary forms. Insurers keep improving their online presales tools, to help advisers to quickly see how clients might be assessed for specific health conditions.”

For Knowles, UnderwriteMe still stands out as an “incredible” presales and online application journey that simplifies the process for advisers. 

“The ability to do one application that can then be used to build a full life, critical illness and income protection package for a client, all in one place, is great. This has been in place for a few years, but still stands out,” she adds.

Critical illness changes

When it comes to product offerings, protection experts say that insurers are focusing on simpler wordings and greater certainty over what will and won’t be covered. 

David Mead, founder of Future Proof and joint head of protection at St. James's Place Protection Planning, says that there has been a genuine and much welcomed attempt to simplify critical illness product offerings by grouping together specific conditions, such as degenerative neurological conditions, rather than specifying them as separate conditions such as Alzheimer’s, motor neurone disease and Parkinson’s.

Mead explains further: “This means that if someone is diagnosed with a degenerative neurological condition, which isn’t as a specific condition covered by the provider, it may still qualify as a valid claim.”

Ian McKenna, founder of FTRC and Protection Guru, says one major development he has seen is the increasing availability of independent medical analysis of critical illness conditions. Services like QualityAnalyser.com and iPipeline’s product features report give advisers an assessment of which policies are most likely to pay out for an individual based on the client’s age, gender, smoking history and the term of the policy. 

McKenna adds: “Importantly the [above] services are based on the professional expertise of doctors and others working in the health service. 

“Some other services offer a similar assessment based on the views of individuals working in the insurance industry. However, our view is that when comparing medical terms, you really should use assessment by medical professionals.”

Trusts are being more widely adapted to online forms as well as nomination of beneficiary forms. Insurers keep improving their online presales tools, to help advisers to quickly see how clients might be assessed for specific health conditions.--Kathryn Knowles

Other examples of innovation advisers say they have seen in the market include Aviva introducing a free annual blood-based health check as part of its Digicare+ plus service to keep policyholders engaged with their health and their insurance plans, and Zurich’s recent launch of a new pre-application tool, which helps advisers have a much better understanding of how clients with pre-existing conditions will be underwritten, using the same underwriting engine as their applications.

However, one area that according to McKenna needs more innovation is income protection, which advisers see it as a crucial core offering to have in place.

“With income protection, a lot still depends on the philosophy of the insurer and their attitude towards paying claims. There are important parts of the community, in many instances those that would benefit most from income protection cover, for whom the current wordings leave a lot to be desired. 

“For example, people who suffer significant fluctuations in their income and particularly small business owners who frequently use dividends to provide a major part of their income. Very few, if any, income protection products deal with dividend-based income well.”

Income protection remains a far better policy than CI for those worried about mental health, especially where their ability to work is impacted.

And although CI contracts do not typically cover mental health conditions, many policies now offer access to value added services that come with mental health support.

Saying that, Knowles argues the industry still needs to “move away from this stigma that mental health isn’t as serious as physical conditions”.

And although value added services can be useful, she would “caution people to double check exactly what they are covered for”.

“These services can have ‘limits’ over the mental health conditions, and the severity of symptoms, for which they are prepared to offer support. In some instances people are being signposted back to their GP, rather than finding the service useful,” she adds.

With income protection, a lot still depends on the philosophy of the insurer and their attitude towards paying claims.--Ian McKenna

Disruption

Although there has been some innovation in the protection industry, providers continue to have one eye on the future for any possible threats to the industry that might steal their thunder.

The likes of Google or Amazon always pose a threat as they have the money, technology and brand power to certainly disrupt markets.

McKenna says: “Any market where the operating methods are substantially the same as they were 50 years ago is extremely vulnerable to disturbance, especially with so many major scientific advances taking place. 

“The technology providers who supply wearable devices are in a very strong position to disturb traditional insurance relationships and distribution. We all need to be aware of this challenge and evolve products and services before others come along and disturb them.”