The advice market for group protection products is changing rapidly. But are providers a help or a hindrance, asks Nigel Hartley.
Group Life assurance is bucking market trends and growing beyond all recognition. In addition, the way in which both financial advisers and their clients analyse and buy life products is also evolving rapidly, but only some providers are keeping up with these changes.
The question is: are providers doing enough for intermediaries any more? And is it enough to provide a predominantly online technical solution, or is there still a demand for personal service where advisers can speak to underwriters?
According to figures published in Swiss Re.'s 2014 Group Watch Report, the Registered and Excepted Lump Sum Death in Service Market in the UK is worth an annualised premium income of £962m, distributed over 43,690 schemes.
A key benefit package
As the economy continues to return to growth, it is likely that the Group Life market will also grow as more employees with higher salaries are added to more schemes, perhaps further aided by auto-enrolment.
Clearly, the Group Life market is sizeable and provides a benefit widely recognised as being highly valued by employees. It is easily understood by both employees and employers, and is at the heart of most employee benefit packages. As the majority of the market is intermediary lead the question for providers has to be: are we providing the service and solutions that intermediaries and their clients require?
There are three obvious routes for providers in response to this question:
1) Yes, we are happy with the status quo so do nothing;
2) No, we need to do more, so will provide technical solutions and portals for IFAs to use, or;
3) We will improve by concentrating on relationship management and service delivery.
From discussions over recent months with a number of local and national advisers, it is apparent that despite protestations to the contrary, some providers appear to be consciously selecting the first option: to do nothing.
Perhaps those providers believe that they can rely on past reputations or legacy business, or perhaps even adviser apathy. But surely, most forward-thinking and client-focused advisers must be questioning whether business should continue to be placed with those providers that are so patently failing to provide adequate service standards for new business quotations or renewals, irrespective of their current pricing strategies?
Online solution
While Sir Humphrey Appleby in Yes Minister might have described providers' tactic of adopting option one as "courageous", a number of providers, most notably Ellipse and Canada Life, have attempted to resolve the conundrum of service or solution by providing intermediaries with online tools.
These are certainly being well received by some intermediaries, who appreciate being in control of their clients' contracts, perhaps enjoying preferential terms such as Enhanced Free Cover Limits and other benefits. However, other intermediaries are adopting a different stance.
Their alternative view is that the adviser's responsibility sits with the client relationship and advice provision, in which case why should they have to do the insurer's pricing and administration work? Do clients want the burden of increased data reporting frequency?
Clearly, some clients and their advisers may view this only as a minor hindrance, but others are reluctant to accept either the additional work or, as some perceive it, the onus and responsibility for data entry issues, because they have doubts about where liability would sit in the result of an error.
The issue is that the only time that ultimate liability would really be clarified or become certain is at time of claim, which is certainly not the right time to be finding out who is responsible for a data miskey.
A third way
So, doing nothing to meet intermediary needs seems a somewhat ostrich-like approach, and relying on an electronic solution works for some but not for others. So is there a third way? What is important to intermediaries in the Group Life Market?
Perhaps this, from Elliot Silk, head of employee benefits at Sanlam UK, gives some clues. "It is crucial for us when working with a Group Life insurer that they provide us with their quotes in a timely fashion, and with their best possible terms," he says.
