As insurers strive to establish the market potential for long term care insurance, the issue of intermediary distribution is sometimes overlooked. But research compiled by Jacque Langford, head of IFA sales at PPP lifetime care, examines the opportunities for IFAs in depth. Langford’s insight into the IFA market derives from a hands-on experience. She spent nearly three months working closely with a major national IFA, as well as liaising with other intermediaries and health care organisations.
Langford’s key objectives were fivefold. Top of the agenda was the establishment of the key criteria for effective and productive relationships between IFAs and insurers, closely followed by discovering the thinking behind the IFAs selection of specific product categories and providers.
Also under analysis were: the market potential for long term care insurance (a much vaunted subject); the constraints, opportunities and risks facing PPP lifetime care in developing business through IFAs; and the potential for IFA distribution of long term care.
While demographics emphasising the potential for long term care are often bandied about, less is said about the intermediaries’ influence on future sales.
Langford really wanted to find out the reasons why intermediaries were not selling long term care; and how intermediaries already active in the market went about selling long term care policies.
Working with a national IFA gave her exclusive access to the inner workings of an IFA. She looked at its business strategy and pinpointed where long term care might fit in. And although this benefited the IFA, it also provided Langford with a unique insight into the role of the long term care insurer.
Langford highlights the fact that if long term care becomes a regulated product, independent intermediaries will be required to “include recommendations concerning provision for potential long term care costs in the advice they give to clients”. This is surely a clear indication that insurers should be doing more to court good relationships with their independent sales force. Langford ascertained that in order for insurer/IFA relationships to flourish, IFAs must be treated as customers in their own right. And this means listening to their needs and wants.
“For demand to exist, IFAs must not only recognise long term care insurance as a solution to their need to provide appropriate advice for their clients, but must also be both able and willing to `buy (recommend) long term care insurance for their clients,” says Langford.
She adds that interviews carried out with IFAs suggested that many were uncomfortable with their lack of expertise in selling long term care, resulting in a reluctance to recommend the products.
“They tend instead to concentrate on the investment and pensions products which are more familiar to them. Several also expressed the same doubts of the need for long term care insurance that were identified with end customers.
“It is important insurers recognise this point in planning their sales approach to, and support of, IFAs entering the long term care market,” says Langford.
Some of the findings of the IFA research came as a surprise to PPP lifetime care.
“We had always assumed that intermediaries preferred a consultant to visit them. But the overwhelming answer was that this was not the case. They wanted instant advice, when they needed it, on things like training and the sales process,” she says.
“They needed help on how to approach long term care, so we set up three separate support teams: national accounts, regional offices of national accounts and regional IFAs. Most insurers have an IFA helpline but we wanted a higher level of support, so we introduced `Interaction’ [which incorporates all elements of the support teams].”
Naturally, the choice of an insurer is of paramount importance to an intermediary, especially when they feel unsure about an unfamiliar product. Langford discovered the following were top of intermediaries’ lists when considering a product provider:
• Financial stability and security of the provider
• Previous performance of the provider
• Product benefits and price
• Direct telephone contact with a named and competent individual
• Technical support on product, funding, regulatory and taxation issues • Competence and quality of the sales consultant
• Marketing support including clear and informative literature, etc
• Fast underwriting decisions and regular reports on policy processing progress
• Some IFAs also mentioned a preference for more up to date methods of providing quotations, such as the Common Trading Platform, Internet or rates provided on disk
Langford’s report concluded there was “considerable opportunity for IFAs to develop their long term care business”, a prospect which many intermediaries have known for some time. As soon as more insurers recognise this, the long term care market can begin to realise its full potential.