Although it can be time-consuming, reviewing existing clients' protection needs can also mean additional revenue for you. Both advisers and insurance companies are missing out on a wealth of opportunity within their bank of existing clients, and it's something they need to wake up to, writes Justin Taurog
According to the well-documented management theory, the Pareto Principle, 80% of profitability is driven by 20% of clients for most companies - and that includes the life insurance industry.
“There could now be new protection products that weren’t available at the time – and clients may value a conversation around these too”
It means that while generating new business is important, looking after existing customers well is paramount.
Not only does this approach make good business sense, but there is also a clear client need to serving existing clients.
When you look at the life insurance market today, the majority of new business is straightforward term life cover.
But we know in reality that clients probably aren't buying all the cover they need. For example, they are only buying enough cover for their outstanding mortgage, but actually they need cover for other living expenses just as much.
In reality though they may have to pair back the cover they buy due to affordability issues at the time or perhaps it's just because their adviser at the time didn't have the conversation with them about more cover.
Things change
One thing that's certain in life is change. Clients will move house, re-mortgage, have children, or change jobs. As their circumstances change, so too will their cover requirements and their budget. So it makes sense to review if their existing cover is still appropriate or if there is a need for more protection.
What's more there could now be new protection products that weren't available at the time - and clients may value a conversation around these too.
So why is it that as an industry we do not service existing clients? One reason the needs of existing customers are often neglected in favour of new customers is that mortgage clients drive the business model of many brokers.
Those taking out a mortgage will frequently take out cover to protect just their loan amount.
This means that brokers are invariably focused on new mortgage customers, rather than looking for opportunities within their existing database. But given the cost of finding new clients, perhaps its worth spending a bit more time on the clients you already have?
Reviewing existing products can also be time consuming. If customers are found to require additional cover, advisers may have to complete an often-laborious underwriting process for little return.
When you also factor in relatively high initial commission levels on new business, where is the incentive to invest time in looking after existing customers if the money lies in new business?
Perhaps it requires a change in the way we operate as an industry when it comes to existing customers.
Can we make it quicker and easier to review existing customer needs, making it more economical to go back to your existing client base?
In short, a better service for existing clients will reap benefits for both the client and your business.
Using technology to monetise existing customers
Clever use of technology by providers can make it much easier to for advisers to service clients.
From improved underwriting technology to presenting client opportunities in a simple, easy to administer format - ensuring your clients have the cover they need, also becomes an upsell opportunity.
VitalityLife has launched SmartAdviser - an iPad app that makes it quicker and easier for brokers to identify opportunities with existing customers, providing more cover where necessary.
The app enables advisers to log in and view a list of any existing VitalityLife clients who are eligible to benefit from any current campaigns.
Advisers just need to ask customers five simple questions within the app to validate that their medical circumstances haven't changed.
If the customer answers ‘yes' to all five questions they can potentially increase their cover, with no further underwriting necessary. The app can enable customers to be on risk within minutes.
It's clear that the industry has to do more to make it easier to service existing clients, and technology will lead the way as more and more developments are due to surface in 2016, making it easier and more profitable to ensure your clients' protection needs are still met.
Justin Taurog is managing director of distribution at VitalityLife
