Swiss Life has always adopted a pragmatic approach to business. It was first set up in the UK in the 1960s, when its aim was to work towards expansion by pooling risk from a number of countries.
Since then expansion has become a term that the company is all too familiar with. Not only does it have nine offices in the UK, but it is also represented in 11 countries across Europe. And this year its assets are in excess of £42 billion, making it one of the largest players in protection. As David Kneeshaw, director of personal finance, acknowledges, the protection market is a hidden goldmine. “Protection has never been so undersold,” he says. “There are literally buckets of scope.”
The company entered the individual critical illness market in 1994, but the launch of its Solutions product in May, 1998, finally ensured that it became a major market player, with the personal finance division at its Sevenoaks head office housing 133 staff.
In terms of critical illness, the flexibility of the product was just what the market needed. “The launch of Solutions is what catapulted us to the top,” says Kneeshaw. “It is a high specification product with guaranteed rates.” Last year Solutions reaped Swiss Life £10 million in premium income, and, according to Kneeshaw, this is set to increase. “If we do around £12–£14m this year then we, and the Swiss, will be happy.” Solutions gathered life, critical illness, total and permanent disability, personal pension and inheritance tax protection into one stable, and then allowed a consumer to choose the benefit and vary the amount of each as they preferred. In doing so, it introduced a notion of flexibility to the market that had previous been lacking.
And by creating each policy around the particular customer’s needs and wants, Swiss Life has earned popularity.
“We have built in quality with 143 variations on one product,” says Simon Barwell, personal finance marketing manager. “We should be able to meet almost every need the customer can come up with.”
With its policy offering so many options, Swiss Life is adamant about its commitment to the IFA market, believing that the specialist skills of financial advisers are imperative for good, sound sales. “We are a 100% IFA office and the IFA has a vital role to play,” reports Rosalind Pearson, personal finance research and planning manager. “These are complicated products that need expert advisers.”
The complex and versatile nature of Swiss Life’s products is made possible by expert underwriting – which is why it recently appointed Neil Campbell as underwriting manager. Campbell moved to the UK from South Africa, the birthplace of critical illness, and, as Barwell explains, he has brought “a different philosophy to underwriting and is a breath of fresh air”.
Campbell certainly has strong views on the future of critical illness policies, expressing disagreement at the continual expansion of policies through the number of illnesses underwritten.
“Critical illness is covering too many illnesses and we have reached maximum levels,” he says.
“Eight or 10 core illnesses were all that we needed and I think adding illnesses dilutes the product, it becomes more gimmicky. CJD is a perfect example of this.”
Campbell is insistent that the underwriting of critical illness must be completed prudently. “It is very easy to claim fraudulently so we underwrite very cautiously. It involves looking at the bigger picture and it can be difficult,” he explains. “It is a lot about looking at the environment as well, which is why we issue a very thorough questionnaire.”
Where claims are concerned, it is still early days for Swiss Life to comment, but its philosophy remains stable. “First and foremost we do want to get people back to work,” explains Campbell. “At the moment it is difficult to get people rehabilitated. We need to make this easier.”
The company believes the secret of claims management success lies with early interaction with the customer. As Barwell explains, “We need to build a relationship with the individual and recommend appropriate treatment as early as possible,” he says. “It is in everyone’s interest to get the person back to work and keep them motivated. If this means paying for private treatment then we will do so.”
Internal relationships also receive close attention from the management team at Swiss Life. It has found that splitting into business units has proved a highly effective means of structuring the company, despite the failure of other organisations to use this strategy successfully. “Most companies have abandoned this method but we ensure non-complacency through business units,” says Kneeshaw.
To help achieve this, all staff, from accounts and IT to marketing are trained in each new product.
Swiss Life is also resolute that staff attitudes matter and feedback is treated sincerely – every year a survey of staff attitudes is undertaken. And the notion of staff care is further extended by way of a new benefits scheme. “We have introduced a flexible benefits scheme for our employees which is actually more expensive for us,” explains Kneeshaw. “It allows staff to choose their own benefits from a pool of money.”
Despite its confidence and success, Swiss Life is careful to avoid complacency, instead focusing on future ventures and improvements. After all, advances in the industry mean that the provider has to maintain its habit of ingenuity if it wants to stay at the top. This is something that Swiss Life is all too aware of. “We have amended some of our definitions to suit today’s advances in medical treatment. For example, angioplasty, which is broader than the balloon angioplasty we had before. We have however, taken no steps to limit the coverage,” explains Barwell. “Mortality and morbidity rates are always changing, as does the population, so we will always be keeping an eye on the evolution of claims,” Campbell adds.
However, Swiss Life’s success in the protection market – sales are now up by 60% – does not mean it will be limited to this sector forever. Kneeshaw is visionary about the future of Swiss Life’s participation in other markets. This is no secret; Swiss Life’s interest in NPI last year was highly publicised. “We would love to go into the pensions market,” admits Kneeshaw. “Although we are big in group, we are not in pensions and savings, and organic growth is tricky. We did look closely at NPI and did not bid.
“But this doesn’t mean that our strategies have changed. We are still looking at the market.”
Other options are also under consideration. At present Swiss Life caters for the pre-retirement market, yet Kneeshaw insinuates that his ambitions stretch further. “At the moment we are definitely in the market for people up to the age of 65,” he explains. “Any other company worth buying would go beyond this.”
Long term care (LTC) is another possibility, although lack of popularity is a deterrent at the moment. “At the moment, no one is persuaded that LTC matters and actual sales levels are very low, but LTC is in the stable and we will look at it sooner or later.” Kneeshaw reveals.
As well as expansion in terms of policy and choice, Swiss Life intends to develop its technology department. The pivotal point is to assist the IFA’s interaction with the provider. “We are aiming to utilise technology to make the placing of business easier for the IFA,” explains Barwell. “As a result of this the IFA will be more in control of their account as they have access to the relevant information. For example, tracking the progress of the underwriting process for a particular client.”
Throughout all these developments, certain themes become clear. The company has a comprehensive yet committed approach to staff, customers, policy-building and brokers. And it is these attributes that seem destined to allow further success in the future. On April 1 this year, the critical illness plan will be launched in Germany and Swiss Life is confident of its success. “It is a fledgling market but if it works out in Germany, there is a lot of scope to do it all over Europe,” Kneeshaw enthuses.
No doubt another area in which Swiss Life will be looking to expand.