Tele-interviewing has become a global phenomenon, but still carries some confusion. In the wake of a global survey Catherine Lyons clarifies the term
Tele-interviewing has had a mixed reception from UK protection advisers. Some remain wary while others verge on the evangelical. Why this huge variance in views? Well, some IFAs have stated that they don’t really know what tele-interviewing is or what it’s all about. That is understandable as tele-interviewing comes in many shapes and sizes.
To understand what is happening in the UK market it is useful to understand the bigger picture. SCOR Global life, in partnership with consultants SelectX and US underwriting expert Hank George, have conducted the first worldwide survey of insurers to gauge the extent of tele-interviewing take-up, how it is being used and what the experience has been.
The survey was issued to underwriting managers at companies in North America, UK/Ireland, Continental Europe, South Africa, Australia/New Zealand, Asia, the Middle East and Latin America/Caribbean. Over 360 companies responded to the survey of in excess of 70 questions – making this the largest single survey ever conducted.
Tele-interviewing and specifically tele-underwriting is the most important underwriting innovation of the past decade. Far from being confined to the United States, the market where the concept originated, it has swept the world, and is now used or being considered by companies in every major insurance market.
So, what is tele-interviewing? The terms ‘tele-interviewing’ and ‘tele-underwriting’ can be confusing and can mean different things to different individuals. However, for the purposes of this article tele-interviewing is a recorded telephone interview to gather risk related information directly from the applicant; tele-underwriting is the overall process used to make an underwriting decision based on the tele-interview.
Companies talk about doing ‘Big T’ and ‘small t’ tele-interviewing and again these terms can be interpreted differently.
- Big T – where an applicant undergoes a very detailed interview covering all the risk related questions and the salesperson has no role in risk information gathering.
- Small t – the salesperson carries out the interview and where there are specific disclosures from the applicant, the underwriter will initiate a tele-interview to acquire the additional information required, typically avoiding a general practitioner’s report.
Why are companies adopting tele-interviewing?
It is interesting to look at why companies introduced tele-interviewing in the first place and the reasons are different in the global market compared to the UK/Irish markets.
Global
- Reduction of agent involvement
- Reducing non-disclosure
- Improving customer experience
UK/Ireland
In the UK/Ireland around 73% of companies that participated in the survey are doing some form of tele-interviewing albeit different models:
- 45% of companies are doing it on a ‘small t’ basis
- 35% of companies are doing ‘Big T’, although not on all applications received.
Reasons companies listed for introducing it.
- Reduce dependence on general practitioner reports
- Speed up the application to issue process
- Provide better customer service
The outcome from the survey identifies that, where it can be measured, these goals have been achieved.
75% of the companies in the UK/Ireland have reduced the number of general practitioner reports they request. This ranges from a reduction of up to 10% for some companies to reducing it by over 40% for others. The variances are impacted by the type of product that it’s used for and the type of tele-interviewing that a company uses. The largest reduction is for disability products as shown below for the UK/Irish markets.
With the reduction in general practitioner reports, it follows that this also has an impact on the overall time to policy issue (from the point of sale to the policy document being issued). And 86% of companies have reduced their application to issue time, with 33% of them by over 7 days.
However, there are other factors that can also have a significant impact on the process times; company’s new business processes and the turnaround time of the actual interview. Up until recently, the customer generally had to wait until they were contacted by the tele-interviewer so that they could schedule in a slot for the actual interview. With the development of on-line / immediate scheduling facilities, the customer can arrange their interview at the point of sale.
The outcome is that it’s more likely that the customer will actually proceed with the interview.
Improving the customer experience is in the top three motives for implementing tele-interviewing. Of those companies who regularly contact customers to assess their satisfaction with the interview, the overwhelming majority say that feedback is positive.
Continuing with the quality theme, companies were asked if and how often they audit their tele-interviews. Worldwide over 80% of companies do audit their tele-interviews, with over half of these doing it proactively on a regular basis, usually monthly or quarterly. Surprisingly, between 10% and 20% state that they do no auditing at all (13% in the UK/Ireland).
The benefits of implementing tele-interviewing are not limited to those listed above. In addition to creating a new and better customer proposition – in terms of experience and speed there are some other significant benefits that companies have gained.
Reduced non-disclosure – This is probably the biggest benefit that companies can gain. 82% of companies reported lower non-disclosure. There has been a clear downward shift with non-disclosure for life and critical illness reducing from an average of 10% pre tele-interviewing to less than 5% post tele-interviewing; and income protection from a pre tele-interviewing level of in excess of 20% to less than 10% post tele-interviewing.
Reduction in costs – 0ver 50% of companies in the UK reported a reduction in their acquisition costs, however this is dependent on the type of process implemented. It is important to consider this over the long term as the cost savings may not be as significant in the implementation stage due to added development and start-up costs.
Better conversion rates - We do expect to see more disclosures from tele-interviewing and subsequently more ratings. So we might expect a higher proportion of cases not taken up with customers being discouraged by having to pay an extra premium. Or an additional step of a tele-interview after the sale may put some people off and they don’t go ahead with the interview (for 10% of companies the conversion rate is worse). However, for 35% of companies the conversion rate is better and it’s probably fair to say that having a slick process along with a high quality interview = happy customers who are keen to get their policy on risk and will pay the extra premium.
Distribution
Worldwide, the main distribution channels using tele-interviewing are brokers, bancassurance and agent sales force, and the extent to which tele-interviewing is used in each of these channels reflects the predominance of distribution in each market.
Are advisers involved in the design phase? The survey shows that 40% of companies implemented tele-interviewing without involving their sales force at the design stage. For the tele-interview programme to be a success it is important to involve all the stakeholders at the design stage right through to implementation. The term tele-interviewing means different things to different people. Although many companies are doing tele-interviewing, the processes can be very different within companies and so advisers are not sure what exactly they’re exposing their customers to.
Another barrier to overcome is a perceived ‘loss of control’. Companies who have been successful in overcoming advisers’ concerns have involved them from an early stage in the process, listened to their suggestions, countering doubts and putting in place a carefully considered process that satisfies the needs of this important stakeholder group.
Looking at approval ratings – these are highest in mature markets (where tele-interviewing exists for more than five years), with the most positive responses from underwriters and senior management. In the less mature markets it’s too soon to say for most companies. Not surprisingly, there is a mixed reaction in all markets from distributors. In the UK/Ireland, 44% of advisers are mainly pleased with it; 48% of companies reported that some of their advisers like it and others don’t and only 8% say that they mainly dislike tele-interviewing.
In the UK/Ireland the experience in regards to tele-interviewing is still quite immature with 45% of companies having implemented it within the last two years. However, on balance, it appears to have been a success; this is where companies have assessed its applicability to their business and developed products and processes where implementing tele-interviewing optimises the performance of the new business process.
The use of tele-interviewing in ‘alternative’ distribution channels is growing and can be seen as the solution to collecting further information for a no-advice, direct-to-consumer quotation, for example by direct mail or the internet.
Tele-interviewing is the modern way of gathering new business risk information. n
Catherine Lyons is Underwriting & Claims Development Manager at SCOR Global Life
