It is surprising to find an award winning insurance company in the UK surrounded by vineyards and nestling at the foot of Surrey beauty spot, Boxhill.
But perhaps the fresh air and calming atmosphere have had a beneficial effect on Friends Provident – after all, the company has won more than 10 national awards for a range of products, including PMI, contribution plans, and fund management.
And most recently it received first prize for the best individual income protection provider at the Health Insurance Awards in late 1998. So what is its secret?
“Our main strengths are the solid foundations of the retail side and our multi-distribution strategy. We have strength in breadth. Our reputation is strong and will get stronger as we continue to deliver good quality products and service through all the channels,” says Brian Wilkinson, group communications manager.
Over 60% of business is generated through IFAs. A quarter of sales then come through the direct sales operation, 4% from appointed representatives and just 3% from direct marketing.
The high level of business from IFAs matches Friend Provident’s emphasis on their importance.
Wilkinson is convinced that IFAs provide a personal service that places them head and shoulders above any other distribution channel. “You can’t beat face-to-face selling. Professional advice is an important commodity and at the essence of what we do,” he says.
The insurer is certainly no newcomer to the insurance market, and has years of experience to draw upon. It was set up in Bradford in 1835 by a group of Quakers. But more than 150 years of tradition has done nothing to hinder progressive thinking. For example, Friends Provident was the pioneer of ethical funds under the Stewardship brand, and is now market leader. “Everybody is bailing into that market – and it is important to know that investors do have an ethical option available to them,” says Wilkinson.
Recently, the Friends Provident “group” has grown to include operations in Edinburgh, New York and Hong Kong.
And over the last four or five years it has emerged from just a life business to a fully fledged financial services group incorporating two major arms. And the ongoing acquisition programme has widened the financial service operations to include international fund management and a top ten unit trust company. Combined, the group now holds an impressive £23bn funds under management.
A significant portion of revenue comes from the fund management side, further to the first 1998 acquisition of Ivory & Sime. The second acquisiton of London & Manchester was finalised in November 1998, and adds a hefty amount of corporate pensions business to the company.
But the group denies that it is losing direction.
“It is fundamental the acquisition is a good fit,” says Wilkinson, “We are not looking for every opportunity around the corner.”
Friends Provident seems to have a knack of picking the right market for action. For example, for a product that was predicted as the sector for astronomical growth, the income protection market has not really witnessed any significant sales surge.
In 1998, Friends Provident had 23% of the income protection market. It holds a prominent first position – in second place lies Canada Life with just 13%. “There is a perception that it is hard to sell,” says Mike Turner, protection manager. Obviously not for Friends Provident – here, sales of income protection increased by 30% during 1998.
Wilkinson puts the product success down to extensive cover. “Our guaranteed products are particularly strong. The premium is guaranteed though claims experience, irrespective of occupation change or number of claims. And claims experience does not affect the rate as it can do in other areas of the market,” he says.
Friends Provident makes no claim to offer competitively priced products, and does not believe that low pricing is important. “Guarantees cost money. We are at the expensive end, but if you look at the IFA market, there is currently a very heavy emphasis on guaranteed products that we can provide,” says Turner.
Friends Provident is particularly proud of its claims handling record, which has also helped it to win major awards. “IFAs trust us. We have an enviable claims handling system. We are one of the few companies that is open about our claims track record and publish claims/pay ratios, which we have done for two to three years,” explains Turner.
Clients are guided through the systems by an individual assessor, ensuring that clients only have to deal with one, named, person throughout the process. According to Friend’s Provident, no other insurer currently offers this.
Turner says: “When we are contacted with a claim, it is completed over the phone straight away – we can get it done in one hit. People prefer to deal with one person instead of going though a lengthy procedure of processing letters and forms.”
Reducing claims time and improving client service forms a major part of company strategy.
Turner explains the company’s philosophy: “The two worst worries for any client are money and health worries. If you are making a claim, you have both to deal with. While we have got to be careful what we offer, we will try to do it in a sympathetic and caring way to the client.”
So Friends Provident will make every effort to ensure that all products are flexible, as well as personalising cover. It manages to differentiate between the claims it receives – while still making a profit – and doesn’t, it says, “stand on the formality of the small print if it is a valid claim”.
“If someone has their own business, we ask for accounts to see the income they are trying to reclaim. Perhaps they have a degenerative disease, such as MS or Parkinson’s. We have had insureds who have managed to keep business going despite the onset of the disability. And in some cases we have been able to turn the clock back to pre-disability and pre-income levels, because, while they have struggled to maintain the business and done all the right things, health problems have prevented them from doing it successfully,” explains Turner.
One unique feature of the income protection products are hospitalisation benefits. Questions have been raised by IFAs as to whether the benefits are really worth it, seeing as patients don’t often stay in the hospital for more seven days.
But there is no doubt that it is selling – feedback from Friends Provident’s claims department shows that in the last two years it has paid out over 100 hospitalisation benefit claims.
The company employs a 100-strong national account team based all over the country that works with national firms and networks. Account handlers are actively involved with the IFAs throughout the sales process.
There is no typical IFA for Friends Provident, it just wants to deal with intermediaries who reflect its core values: dedication to the customer, flexibility and a high value placed on service.
“We get quality business from IFAs and aim to help them in anyway,” says Wilkinson. IFAs would do well to take them up on this. Who knows, perhaps they will get to share a little of Friends Provident’s secret of success.