UK protection markets may be advanced, but they do not lead in terms of customer innovations, that could be the South Africans. Andy Milburn explains
Our previous column considered the low income segment of South Africa's protection market and the many lessons we can learn from it. There are many other valuable lessons that the UK and Irish protection markets can learn from South Africa. This is the first of two ‘nuts and bolts' columns which summarise some of the other lessons we can learn from our friends and colleagues in the rainbow nation.
Guaranteed Insurability Options (GIO's) are a great example of how our industry creates names for product features that our customers do not immediately understand. The title is obviously based on the understanding of the person working for the insurer - not their customer. The result is we have to explain the meaning of the product feature to the customer, wasting both the adviser's and the customer's time.
In South Africa this product feature is called ‘future cover'. If you buy ‘future cover' it gives you the option to purchase additional life, disability or impairment cover without any further underwriting. Described in a way that customers immediately understand, less time is wasted by the parties involved, and a better relationship is established as a result. Could our industry produce its product wording and material in this way?
Those of us involved in our industry's debate on replacing total & permanent disability (TPD) cover in the UK may not like this next example.
In South Africa providers offer a ‘catch all benefit'. This applies when the customer is considered to be suffering from a serious physical condition that is considered to be of equal severity to a condition that would qualify for 100% payment of the sum assured under a different condition included in the customer's cover.
The customer's condition and claim would be assessed by the provider's chief medical officer in most examples. When you read the policy documents given to the customer, the qualifying criteria are similar to our own activities of daily working (ADWs) or activities of daily living (ADLs).
Functional assessment tests are not perfect but we could implement something similar in the UK and Ireland. Imagine that a client with life and critical illness cover makes a claim against the critical illness benefit. The claim is not covered by the wording in the policy conditions. However, the claims assessor feels that the customer is in a severe enough medical state to warrant some sort of payment.
Claims of this type may be very rare. Possibly only one or two claims a year per provider could fall into this category. Why could the provider, together with their reinsurer, not refer the claimant in question to a ‘catch all' claim committee which could consider paying a sum to the customer, either a reduced amount similar to a proportionate claim or the full amount due for the sum assured that exists under other benefits covered?
It is true that the assessment could be accused of being too subjective - for example, ‘subject to CMO review'. Also would all providers treat this process in the same way? This idea may also be moving us in the opposite direction to the way the industry is moving at present too. However, if we stated that this process could only be triggered by the provider, is there a way we can implement this without creating more problems than we solve?
A third area where South African providers are ahead of us is the educational aspect of their marketing material.
Most providers issue a range of guides written specifically for customers who are diagnosed as suffering from a certain condition. In addition, providers also produce a number of guides written to help the customer understand a wide ranging number of medical treatments that they may have to undertake.
South African providers appear to spend more time, care and attention focusing on existing customers who already own a policy, rather than focusing on trying to attract new customers to their ranks.
Imagine all of the protection providers in the UK and Ireland offering their customers a ‘library' of educational material aimed at sharing further details of all of the medical conditions (and possible treatments) that the client is now covered against through their policy. Munich Re is not aware of any UK or Irish providers who offer such an educational ‘policyholder library' to their customers on the internet. This is a great idea.
South African protection providers may not be as advanced as the UK and Irish protection markets in areas such as online and tele-underwriting, or the use of internet based technology, but we can still learn from them in a number of key areas. Product features with clearer names and purpose and more care for existing clients are just two of those areas.
Andy Milburn is head of marketing at Munich Re (UK Life)
