Royal & Sun Alliance’s group risk department has a motto: “Making your life easier”. And although this slogan was relatively recently, intermediaries and their clients are already beginning to see the results of a number of initiatives designed to improve the insurer’s level of service. But the group risk team say this is only the beginning.
Royal & Sun Alliance has notched up years of group risk experience. It has been active in the group life industry since 1920 and introduced group critical illness in 1995. Its group income protection products (GIP) were introduced nearly 30 years ago and the insurer currently has a 15% market share, placing it second in the GIP sector.
The company’s commitment to intermediaries is clearly evident. According to group risk manager Mike Warr, who has just completed his 25th year with the firm, 99% of business is sold via the independent adviser.
“We are focused almost exclusively on the intermediary. We have been concentrating on the `making your life easier’ theme for a couple of years as we have been looking to build and develop our relationship with them,” says Warr.
Royal & Sun Alliance sees itself as a long term player in the GIP arena, and the intermediary channel is very much a part of its strategy for steady growth. Warr is cautious of adopting aggressive expansion tactics, mindful of the dangers of compromising standards.
“We want to be able to have sustainable rates and recognise there has to be a stability in price. We can take our strengths and capitalise on them and also know our weaknesses. We want to provide a total proposition, which isn’t about being the cheapest,” he says.
Operations manager, John Woolfenden, is in agreement. Woolfenden is another Royal & Sun Alliance veteran. After 30 years with the group, he is a recognised authority on GIP: “Service is so important, more so with income protection. When you’re ill, the last thing you need is extra stress due to sloppy administration. And employers want a slick and efficient system.”
GIP is by its very nature an intermediary marketplace. Its specialist needs can best be serviced by IFAs who know the subject well and are equipped to provide a wide range of essential functions. But even the most professional intermediaries need guidance from the insurer.
Marr and his team recognised this, and, early in 1997, introduced three response services, as part of their ongoing commitment to making the life of their clients easier. The first two initiatives are crucial developments: telephone access which enabled advisers to get immediate cover in place; and Direct Access – year-round fax and e-mail, as well as a “data on disk” facility, and an 0345 telephone connection to decision makers.
But the most impressive benefit for brokers is the new “ball park” facility. This is the delivery of costings indications within a few hours, which allows the intermediary to discuss potential benefit provision without the need to wait for detailed data. The team thinks it maybe first to offer this kind of service.
“The introduction of the ball park responded to a need, IFAs were the key drivers,” comments Warr. “We had said all quotes would go out in 10 days but half of IFAs didn’t want it in that time and half wanted it earlier. So we flipped it and matched what the broker wanted.”
Woolfenden adds: “There are a growing number of intermediaries who want a quote tomorrow.. People find a rough cost useful, they don’t want to spend three weeks waiting for what might turn out to be a speculative quote.
“There are more variations in income protection so the broker doesn’t know what the quote may be. The last thing the broker wants is to give their client the wrong quote. He can’t say but we can.”
The main reason the group risk team were able to address the demand from intermediaries for speedier quotes was simple; they maintain an open dialogue with them. And the response to the new measures has been favourable.
A survey completed by intermediaries earlier this year revealed that the ball park facility has proved hugely popular. Immediate cover over the telephone was another winning formula. The fact that the Bristol-based 160-strong staff of the group risk department are based in one office and can therefore offer centralised support has also found favour.
One of the most highly valued product enhancements was shown to be the approach to “free cover” under the GIP schemes. During 1997, Royal & Sun Alliance removed the need for evidence of health for cover for pension scheme contributions and employer’s National Insurance (NI) contributions.
“Groups of employees are insured under GIP, instead of medically underwriting each person,” explains Woolfenden. “So on GIP, a benefit level is set at X amount and anything beyond it is required to be medically underwritten. But for income protection, the amount isn’t just the basic benefit. There are also the pension rights and NI contributions payable upon members’ benefits which the employers have to pay.
“We can insure against these extra contributions. There is then a free limit which is based on a basic benefit. It is simpler as far as underwriting is concerned and easier for the intermediary to explain to the client. This is now standard and as far as we’re aware, we were the first to come up with the idea.”
Warr is of the opinion that GIP is vastly undersold, especially in relation to group life. And when you consider that a mere one to one and a half per cent of payroll goes to pay for the GIP scheme, Warr may have a very valid point.
“It was UNUM who discovered that companies spent more money on mobile phones than on a GIP scheme. It comes last on a company’s list but, if something happens, people are glad to have it,” comments Warr.
And intermediaries of all shapes and sizes should not be put off recommending GIP plans to corporate clients. It is true that a lot of business is sold via the large benefit consultancies but Woolfenden says a reasonable amount is placed by the smaller regional brokers.
“I don’t see why intermediaries who are not necessarily household names should have any more difficulty selling GIP,” says Woolfenden. “It is more the case of having the right sized client. And we can step in and help the broker.
“A couple of years ago we produced a quotation pad. We asked brokers for the information they needed to come up with a quote, things which the smaller broker doesn’t know, and they can now show this to their clients.”
He adds that the majority of GIP schemes are fairly straightforward. And intermediaries will benefit from Royal & Sun Alliance’s policies being written in plain language.
Intelligible documentation is vital for GIP policies. As Peter Anderson, group risk marketing manager, points out, the intrinsically complex nature of disability products means there can sometimes be scope for confusion if communication channels are not clear: “Disability insurance is not like life insurance which is a clear-cut event. It is complicated in terms of what is and is not insured and circumstances can differ at time of claiming.
“People need policy documents which are written in everyday language which everyone understands. Everyone needs to know where they stand from the beginning.”
Insurance companies are fond of professing their commitment to intermediaries and policyholders. It is refreshing to discover one which has listened carefully to its customers’ needs and proven that actions really do speak louder than word.