When walking past the Lloyds building in London recently, I found myself contemplating that it is shiny and modern on the outside, yet on the inside seems to still base its success on the underwriting processes of the 18th Century.
Group risk insurance has never truly sat closely with the Lloyds style of conducting business, yet it certainly does share that perceived Lloyds contrast of old and new.
Group life assurance policies have been around ever since trustees of defined benefit pension schemes have required life assurance for their members. Yet it is only since until recently that we have talked about technology driving forward our market to benefit the end user – the employee. We lag well behind the pension market in that respect and continue to function in the same way as we always have done.
The majority of insurers still deal in individual specifications, data and so on to provide quotations. They deal in paper for underwriting and claims. Whilst they talk about a greater degree of automation in order to provide accurate premiums, reduce operational risk and speed up process, they remain happy in the main to maintain the status quo.
Automated quote systems exist but these in the main tend to sit at the lower end of market in terms of headcount and premium and as advisers are often at pains to point out, the margin for dealing with numerous online insurer systems simply does not exist within low cost broking exercises.
As such, advisers are happy to keep spreadsheets and specifications of cover in separate formats. Process and system change for the client in relation to risk benefits normally comes with an initial operational cost and advisers will not want to propose increasing charges to clients in a highly competitive intermediary market.
As mentioned, automation exists within the pension sector as provider, intermediary and employer systems all talk to each other minimising time, effort and operational risk to ensure contributions are made. With the pressures of RDR and the recent OFT report, the group risk market should look to take swift advantage of existing technology and market conditions to cut down on administration and the cost of providing group risk benefits to benefit employer and employee. It should do so by investing in existing technology.
But which of the players in the traditional group risk “tri-partite” relationship should make this plunge into real automation for the group risk market? Providers will say they have already done this. The adviser will normally point to the provider to enhance its automated offerings to actually fit in with the intermediary’s ideal of online group risk transactions, reducing its own administration. The employer will rightly point to both the provider and intermediary.
We have seen some providers take the first step into real automation by talking directly to advisers’ platforms. This is welcome, but if we are truly to make this an automated market, the journey forward has to be led by advisers. The adviser is the one who deals in multi-business lines. Automation cannot rest at just group risk to provide a truly automated experience for the end user. The adviser must provide the platform for data transfer, for employee education and operational risk reduction. We must draw on the current capabilities of our online platforms and the way they talk to payroll systems. As the customers of insurers, advisers should drive the interaction agenda, not passively allow the providers to do so.
If we are able to automate our risk benefit processes and play with all insurers, we will take this market forward and the benefits will be for the adviser, the insurer, the employer and ultimately the most important person in this process – the employee. No longer should we talk about tri-partite relationships.
We must strive for employees to see a platform that makes them the audience of one where benefits are presented to them for their personal needs and not those of the employer, adviser or insurer.
Such a platform should appear as being simple on the outside with modern technology supporting it from the inside; quite the opposite of the famous Lloyds building.