If the FSA changes the way protection products are marketed, what will the effect be on technology? Andy Valvona highlights some good news for advisers
If displaying features of a product, rather than just price, becomes mandatory, this raises questions about how the quotation response screens will look to clients when they are comparing protection products online in the future. If too much detail is contained, the process may become a more time-consuming affair for the consumer.
This is equally the case in a traditional sale, where an adviser is finding facts, researching the market and making a recommendation. This is where advances in technology come in. Product research tools are available for the protection market, which integrate with the quote and apply portal systems.
The ability to filter products based on the client’s requirements and circumstances, and then to obtain quotes on those contracts which meet these criteria, will become more and more important – particularly on areas such as critical illness cover, where conditions covered by providers can vary considerably.
Many advisers will say they are not medically trained and are sometimes not sure about the conditions covered by a critical illness policy. Indeed, most advisers will be familiar with some of the providers’ sales pitches along the lines of:
Q: “When is a heart attack not a heart attack?”
A: “When it is a silent heart attack.”
In fact, being able to quickly ascertain which critical illness policies cover conditions – such as diabetes mellitus, progressive supranuclear palsy, degenerative organic brain disease and primary pulmonary hypertension to mention but a few – is not a straightforward process. However, by using a research tool such as Capita Financial Software’s Synaptic Protection Research, an adviser will be able to quickly and easily filter out products which are not suitable, before obtaining quotations for the policy via the portal.
The adviser would have confidence that a policy is being sold on features rather than just price, while creating a valid audit trail in his research. This in turn can provide evidence that the customer has been treated fairly.
In fact, there is little the FSA needs to do in terms of its pending review on protection sales, other than perhaps being a little more prescriptive in its Treating Customers Fairly (TCF) initiative, by way of suggesting that this kind of audit trail is evidence of not just selling on price.
STARRY-EYED SOLUTIONS
In B2C internet sales, we are already familiar with star rating systems relating to features of, for instance, pet or car insurance products.
The systems that are in use take a selection of the features of a product and ‘score’ them, so while a particular product may be cheaper, it might have fewer stars than an alternative product. This is an excellent way of illustrating to a consumer that not all policies are the same, and that often ‘you get what you pay for’.
It is often said that ‘a picture paints a thousand words’ and this simple, but effective, methodology has been successful in the sales of these types of insurance products. So why not in B2C internet pure protection sales? Well, this very functionality is now available by integrating the portal with the research tool.
In addition, the consumer is able to take the star rating system a step further by tweaking the relevance of the features of the product to suit their own circumstances. This means that the client can see, at a glance, how their selections impact upon the star rating of the product.
As a result, whether it be in a traditional advised sale or an execution-only internet sale, an intermediary utilising this type of technology can see clearly that features of a policy have been taken into account, rather than just price. The intermediary can also clearly demonstrate TCF, while the FSA can be sure that its aim in the review of pure protection sales is already being met.
Of course, portals can also make the lives of intermediaries much easier in other ways. For example, it is possible to compare one joint life policy with two single lives assured by displaying three quotations on the adviser’s screen instead of just one.
A dialogue box could show the total cost of the two single policies, together with the difference of the combined premiums compared with the joint policy. The same functionality can also display additional benefits at the click of a button – for example, critical illness cover and waiver of premium.
With this technology, it is also possible to build up a number of quotes for different products across different providers and display them all on one screen, with a summary dialogue box clearly indicating policy type and the total cost of all premiums. This is similar to the multi-benefit tool, which provides quotations on menu-based products, where an adviser can build up benefits with the same provider within a single overall policy.
In conclusion, the portals will continue to play a vital role in the future of protection sales. When used in conjunction with research tools, they will be able to continue to demonstrate TCF, while satisfying the FSA that pure protection is not sold purely on price.
Andy Valvona is relationship manager at Capita Financial Software
