Can protection be underwritten solely through telemetrics and big data? Darren Spriggs believes it can and explains all to Paul Robertson.
Sometimes the old cliché of not being able to see the wood for the trees is accurate. As the protection sector settles after the changes imposed last year, many are looking to the future, and it is clear that most look inwards for change and prosperity. However, it is far more likely that, as in the past year, change will be imposed from the outside and the market will adapt as usual.
So, for a ‘what's going on' type overview you can't really do much better than Darren Spriggs. The managing director of Ageas Protect is one of very few MDs in this market who is neither an underwriter nor an actuary. With a background in business on the general insurance side, he has been in protection for 18 months - Ageas itself is only five years old - and has some startling opinions on the future of protection.
Engaging with the customer
However, like most of the industry, he sees the biggest challenges as how to engage with customers, because we live in a world where we are culturally disengaged from the need for protection.
"I have lost count of the number of events I have attended, or conferences I have been to where people stand up and say people should be buying these products, they are brilliant products, and why don't people understand it?" he said.
"Well, the reason they are not buying it is because we have not got the message across properly and created that engagement with customers or potential customers as to why these things are important. If you believe the numbers, in terms of IFAs that are exiting the market, compare Q1 2013 versus Q1 2012, and look at the reduction in the bank IFAs, what we are seeing is probably one of the most significant changes in our market for many, many years."
Boiling all that down to a sentence would give us the mantra: distribution is all. So, are there new ways of distributing? And would this increase the market?
"Power is ever increasingly moving towards the consumer," Spriggs said. "I can sense that this is more of a fundamental adjustment, rather than a blip.
Distribution and the role that the traditional players play in the value chain is changing. We are already seeing reinsurers create different relationships with the consumer, whether they are quasi direct or through various distributors. So people are moving around in the value chain, coming up with different propositions to unlock simpler customer journeys, using technology to deliver what they need to customers."
Technological interaction
Ah, technology. While some insurers will occasionally want to discuss flex systems or middleware, nowadays when an insurer raises the dreaded technology topic, more often than not they are referring to aggregation sites. It is rarely good news for advisers.
Spriggs is no different: "It is easy for me to relate back to my GI days. Consumers are intimately familiar with how to interact with the aggregator side through technology to get commodity insurance such as travel, home and motor. Therefore, why would protection be any different?
"We are seeing the aggregator as a distribution channel grow in terms of premium, new business premium, every year. I definitely see the aggregator space being a significant challenge to some of the traditional distribution channels over the next five to 10 years.
