If there is anyone out there who still believes the web will have little long-term impact on intermediary health insurance business, here are some figures that should make them think again.
In 1999 IFA Promotion (IFAP), the organisation that promotes independent financial advice to the public, received nearly 8,300 enquiries via its website. By the end of this year IFAP predicts this number will have increased to 175,000.
In part, this dramatic rise is a result of the increased profile of IFAP itself. But the organisation is so concerned that its members may be missing out on the potential of the internet that it is publishing a 60-page guide to help them get started.
The Association of Independent Financial Advisers (AIFA) is equally keen to help its technologically challenged members – who will also be receiving a free copy of the advice.
The booklet aims to help those independent financial advisers (IFAs) with no internet presence – and those who need to consider how to make their presence more effective.
Both groups exist in large numbers. A recent survey of 600 IFAs, undertaken by online quotation portal Exchange FS, showed nearly 40 per cent of IFAs were still without a website.
However, less than five per cent could see no good reason for getting involved in the technology.
Exchange’s head of life and health protection Stephen Wynne-Jones believes companies such as his have already done much to persuade IFAs to take to the superhighway by removing many of the set-up costs involved.
And IFA Simon Wardley of London-based CMC agrees. He has had some degree of business presence on the net since 1996 but is a true convert to the package provided by Exchange.
He explains: “Other IFAs see our site and think I’m Bill Gates because they think setting up on the internet is hard. But with the Exchange it’s easy – you just follow the system. And it only costs about £35 a month, which includes all the maintenance tools.”
This is not the only expense. Web design is another necessary cost but there are many competent firms – in most locations – offering cost-effective design services.
And Wardley points out his web costs last year were similar to the price of printing marketing brochures – something he feels he no longer has to do as he can direct clients to his site.
And with cost no longer an issue, Wardley believes the true barrier to many IFAs setting up an effective internet presence is fear. He says they simply do not understand enough of the technology to feel comfortable with what they are doing.
But Wynne-Jones believes there are now so many start-up packages available for intermediaries wanting to take advantage of the internet that all they really need to do is work out how they want to use the net before approaching the experts for help.
He believes the technical know-how is readily accessed and easily used by those intermediaries that have already determined how the internet fits into their overall marketing strategy.
He explains: “Intermediaries need to work out what they want to do. They need to know whether they want a small web presence or whether they want to give information to existing clients or target new ones. They have to ask whether the site is a direct means of transacting business or whether it will be used to serve clients in other ways.”
Wynne-Jones believes once these questions have been answered the Exchange can meet most IFA needs. It can provide templates from which IFAs can build their own sites and it also offers the tools needed to allow them to provide comparative quotes for term assurance through their own sites. Regularly updated news and statistics can be accessed too, and the Exchange believes this may stimulate market demand.
Different types of benefit are available from other companies. Mediquote, which offers online comparative details of 77 health insurance products from 12 providers, already has a site directory that can guide users to their closest IFA.
Mike Dodd, the managing director of Mediquote’s parent company Sirius, explains: “We can provide a hyperlink from our site to the site of an IFA who works with us. It means a consumer who lives in Kingston can be directed through to their local IFA.”
But Dodd admits only a couple dozen of intermediaries are currently listed on the site. He puts this down to a lack of interest from the sector.
Other options come from providers that can put their information onto IFAs’ sites – ensuring the browser stays with the IFA while looking at pricing.
Permanent Insurance’s website facility is arranged so IFAs can set it up on their own sites simply – just by following the instructions .
Marketing manager Rod Macdonald explains: “We give IFAs the facility to offer life and critical illness quotations on their websites through our own quote engine. And that can be extended so that we don’t just provide a quote – we can give them the opportunity to purchase.”
That, however, is the rub. Opinion is still very much divided on just how useful the internet is in delivering real customers. Macdonald believes there is little point offering a quote service if you do not allow the consumer to follow the buying process through to its logical end.
But he admits no one is being overwhelmed by internet-based sales. A point with which everyone seems to agree.
CMC’s Wardley comments: “We do get people looking for a price coming to the site – but it’s hard to know if they really want advice or if they’re just looking around. I never really know whether I should email them back and explain what we do and ask for their details.”
At Mediquote too, Dodd is unconvinced that the majority of the public is ready to buy financial services online – although he does anticipate the time when they will.
“At the moment it’s more of a business-to-business tool. You would need a massive budget and a massive brand to buy the hearts and minds of the public. However, when the generation that left school in the last five years are in their 30s I’m not sure that will still be the case.”
Interestingly, one of the UK’s most successful internet-based healthcare brokers, Medibroker Online, does not offer clients the opportunity to purchase online.
Managing director Leslie Smith explains: “Our customers demand transparent efficiency. Medibroker is set up to allow them to bookmark the site and then read at their leisure. We use checklists to let them educate themselves about the sector. We do not talk about products.
“They can then fill in a request-for-quote form online and send it back. We then send them a snapshot of six companies to have a look at and tell them to call us or email us if they would like us to analyse three of them – and then we go straight to paper.”
In short, Smith sees Medibroker as a consultant to the client (his team are paid on salary rather than commission to underline this point) and he believes the internet works as a marketing lead- generation tool. And his approach is obviously working: medibroker.co.uk receives 300,000 hits each month.
His advice to IFAs is to put up an effective passive website – not one trying to sell but one that offers value. He says: “IFAs should put up a few articles or some case studies to add to the idea of their expertise.”
And he points out that his business has not become successful by word of mouth – he spends over $100,000 a year on marketing in cyberspace through search engines and so on.
David Elms, marketing manager at IFAP and brains behind its soon-to-be-launched guide, agrees: “You need a website to help you communicate cost-effectively.
Whatever reservations consumers have about purchasing over the web, they are embracing the web for their initial research. That’s why it’s important for IFAs to have a presence – if not, local consumers will not find you.”
And Elms believes if the much-vaunted recession hits, IFAs will have even more reason to establish a professional internet presence.
“People aren’t bothered at the moment because business is buoyant and so they remain oblivious to anything they are missing. But they cannot ignore potential clients for ever.”
That is not to say that creating a useful presence is without its problems. Elms, Wardley and Smith all point to issues surrounding compliance. Wardley and Dodd also warn intermediaries of the dangers of producing websites with too many bells and whistles, saying sites that take too long to download deter all but the most determined of browsers.
But neither of these issues should be enough to deter intermediaries from developing an appropriate web presence. And 175,000 queries are a pretty good incentive.