An industry sea change towards less underwriting is not necessarily the best way to improve the customer ‘journey' or increase sales, writes Andrew Gething.
It is well documented and understood that the present practice of quoting ‘standard’ prices and then increasing with rating or exclusions leads to a reduced rate of sales for these rated cases.
So much so that many processes just avoid the rated cases, either officially or, probably in far greater numbers, unofficially.
Most research tells us that the consumer overestimates the price of insurance, and the process of giving a low price and then increasing it later is a major factor in turning these consumers away from their purchase.
Online automated underwriting systems have enabled the provision of rated prices up front in the sales process for a proportion of consumers, and this is great progress.
New offerings on the market are promoting different ways to acquire a better estimate of the final rating at the point of sale, to fit in with existing provider processes.
These systems provide indicative prices, either using generic prices for rated cases (Life Support Technologies), indicative manual underwriting quotes from providers (Direct Life & Pension), or automated individual quotes from providers (XRAE - iPipeline).
These solutions are incremental improvements to the existing process to reduce the “standard price” sales detractor. While these are steps in the right direction, it is proposed that in the future we can go further than this, integrating our underwriting and sales process completely.
Off paper, on screen
Tele-interviewing and online processes have been two great improvements in our process over the past ten years, as the industry has largely moved away from paper.
Both approaches are dynamic, allowing changes in line with the inputs, while paper was a purely static one size fits all process. The main focus of these systems has been to reduce our transaction costs and speed up the process, and they have been very successful at both pursuits.
However, the truth is sales are going down and the majority of transactions started online are, in fact, completed offline. There are many reasons for this, some due to the awkwardness of the process, but mostly due to the old adage that products are sold and not bought, and human input is still needed to make the consumer feel comfortable about their purchase.
While some still pursue increased automation STP (straight-through processing) rates, we should turn our attention to increasing our engagement with the consumers. Where we have done this, there has already been success.
Part solutions to the above already exist in various forms: Experienced protection advisers manage the consumers’ expectations through the process, treating them as individuals, but these are in the minority, and this is difficult to replicate in D2C or other channels.
One insurer in Ireland already provides manual underwriting within two hours; HSBC underwriters talk to the consumer about their condition, with good conversion rates and low non-disclosure issues; Most online processes are handed off to a telephone sales team who talk the consumer through the process; The use of Live Chat in other industries is becoming common, and early signs in protection are positive; MorganAsh underwriters talk to consumers about their likely rating before proceeding with their application.
Technology is helping us, with the ability to merge tele-interviews and online applications so consumers can choose the way they want to buy. The increased use of smart phones and tablets drives us to shorter more personal engagements, using voice and text for now, and video in the near future.
It is proposed we can make our underwriting process really positive, promoting it as part of the sales process as part of our personalised engagement with consumers.
This not only uses existing competencies in the industry, but can increase sales, while managing risk. There are of course obstacles of existing systems, but it is proposed this should be the direction of travel in the long term.
Andrew Gething is managing director of MorganAsh
