Several new underwriting systems are coming to market, revolutionising the adviser's input. Ian McKenna looks at the details.
Last summer, the Finance & Technology Research Centre (F&TRC) carried out research across a wide range of different types of adviser firms: from mortgage specialists to wealth managers, holistic planners to aggregators to look at their current attitudes to protection new business.
One of the key conclusions to this study was that an increasing number of firms are turning away from writing protection. A key reason frequently cited was that the current process is predominately manual, complex and time consuming.
One of the major weaknesses in the process is that illustrations from traditional portals typically can't address business that may be rated. Equally they struggle to consistently address multi-benefit comparisons.
In some cases approaching all insurers for expected ratings in advance of applying for cover is the only way to manage customer expectations but this takes a great deal of time for advisers.
Provider processes vary significantly so advisers need a detailed understanding of the different extranets, application processes and tracking protocols and procedures. This imposes a major training and operational burden on advisers which could be avoided
While protection specialists are likely to have in-house knowledge of medical requirements and different provider processes, other firms suggest they are increasingly avoiding giving protection advice altogether because of such complexities. This constricts business volumes for Providers and advisers and means less consumers potentially are protected.
Even for firms who are prepared to put up with these challenges there is a major regulatory risk to consider. The traditional process for protection clearly conflicts with ICOB 5.3 which stipulates that advisers must, when establishing the suitability of a product take into account additional premiums, exclusions where they may apply and a sufficiently diverse range of insurers.
High priority
Essentially a situation where you are going back to a consumer days or even weeks after the original quotations were supplied with significant variations in costs and conditions produces a very poor consumer outcome. There are increasing suggestions that this issue is rapidly moving up the priority list at the FCA and if this is the case the regulator should be applauded.
A range of new services are being built to help deliver a better consumer and adviser experience so F&TRC recently looked at three of these to consider the benefits they can bring to the market. Quote+, an extension of the Life Quote package, is the only one of these three options currently live. It can indicate whether there is a good chance of being accepted at standard rates, being rated or declined in a matter of seconds.
A "decision in principle" tool collects more detailed information but is reliant on a manual provider response. These remove the need to approach insurer underwriting teams individually for an estimate rating. Quote+ provides insurers' indicative initial underwriting stance by taking into account the most common ratings to deliver an expected result.
This enables advisers to better manage customer expectations and has the potential to improve abandonment and NTU rates to some degree. The system continues to allow advisers to outsource the collection of medical information via tele-underwriting a feature that has long been one of the key benefits of the LifeQuote service.
This removes any non-disclosure risk from the adviser firm. Where multi-benefit plans require more than one application to be completed LifeQuote will key these on behalf of the adviser.
The service will also centrally manage pipeline tracking so that advisers do not have to understand all the different ways life companies supply tracking information. This is aggregated with LifeQuote and cases are proactively tracked on the adviser's behalf.
