After a successful 2013, it’s unlikely that Exeter Family Friendly will be resting on its laurels over the coming year. But, as the specialist IP and PMI provider’s chief executive tells HI Daily Editor David Sawers, it won’t be success at all costs
There are, of course, different ways for the chief executive of an insurer to measure how successful his company is.
Customer satisfaction, persistency, sales, solvency…the list goes on. So how does Andy Chapman, chief executive of Exeter Family Friendly, measure success?
All of those things, he tells me, are of course on his radar. But all too often success is measured in terms of size and scale. While important, he says, those two factors are by no means a definitive indicator of an insurer’s standing in the eyes of its industry.
That’s why, he continues, winning the Best Income Protection (IP) Provider title at last year’s Health Insurance Awards – and being shortlisted in the Best Individual PMI Provider category – was so important to him and his organisation.
“We’ve been told we punch way above our weight on these things which is always very nice,” he says. “I think the reason we do is that we do the simple stuff very, very well.”
That’s not to say, of course, that Exeter Family Friendly is a minnow in the world of protection. Far from it, in fact, when it comes to IP at least.
“If you add our IP and our PMI business together and compared us to the total protection sales of LV=, for example, then of course they would be small,” he says. “But actually if you look at the amount of IP business we sell compared to LV=, Friends Life and Legal & General we are actually selling quite a large amount of it.”
GROWING THE MARKET
In fact, in many ways Exeter Family Friendly has been taking on some of the roles and responsibilities that should arguably be the preserve of much larger organisations. On a relatively constrained marketing budget, Chapman has instigated a series of projects and events, for example, designed to grow the overall IP market as a whole. While the projects are designed to – “of course” – benefit Exeter Family Friendly in its own right too, their core objective is to raise awareness of the product in general.
“As a small company we are very conscious that we can’t spend millions on TV advertising,” he says. “But we can do a lot of stuff through breakfast seminars, through the internet and put everything out there to boost the market.”
Those breakfast seminars have grown in popularity among intermediaries up and down the country, Chapman says, and have helped to awaken some to the potential that IP – from whichever provider they choose to work with – has to offer their businesses.
Other Exeter Family Friendly initiatives which could help to grow the IP market as a whole have included the launch of web-based ‘financial forecast tool’, a calculator that captures information on income, expenditure and sick pay to give a 12-month snapshot of a client’s finances if ill-health stopped them from working.
And last year the provider launched another generic, web-based tool that advisers can use to talk to their clients about IP in general, not just Exeter Family Friendly products. The ‘Protection Path’ is a microsite and marketing toolkit that the provider created to help advisers to target new and existing customers. To date, around 100 bespoke marketing campaigns have been developed by advisers on the back of it, again raising awareness of IP in general as opposed to Exeter Family Friendly as a brand in its own right.
“Of course, it has given us something more to go back to the breakfast seminars and talk further about what we do as well,” Chapman says. “But any intermediary can go onto that website, take it, use it and if we don’t get the business that’s fine as well – it’s just there to build the market.”
Getting a broader range of intermediaries to think about selling IP – and indeed PMI – is clearly high up Chapman’s agenda – especially so, given that a predicted market-wide surge in the number of advisers selling protection post-Retail Distribution Review has failed to materialise.
“But what we are seeing is an increase in the enthusiasm for IP as part of a complete holistic financial planning service,” Chapman says, adding that the provider’s own sales of the product increased in 2013.
Of course, Chapman is keen to see the individual PMI market grow too. In terms of volume and “internal effort”, he says Exeter Family Friendly’s business is split 50/50 between PMI/IP.
But while the provider is “constantly looking to build both markets”, there remains a noticeable – and in Chapman’s view illogical – split in the types of intermediaries that sell IP and PMI. For many advisers it tends to be a case of selling one product or the other – not both.
“I couldn’t give you a logical and good argument but it’s just the way it has been,” he says. “PMI is fairly specialist and I think seen by consumers as a slightly different insurance to IP, life assurance and critical illness so there may be a perception there. But I don’t know why – that’s just the way it’s been.”
Chapman points out that internally for Exeter Family Friendly at least, the two products are very closely aligned.
“Internally it’s the same underwriters doing the underwriting, it’s the same new business processing,” he says. “But it’s always been that way and there’s no great sign of any major momentum that people are moving. One or two sell across the divide, but most don’t.”
Nonetheless, Chapman believes that those underwriters – and the access that intermediaries have to them – is a key selling point for Exeter Family Friendly.
“Brokers can come in and talk to our underwriters if cases are particularly tricky and that goes down well,” he says.
That acknowledgement of the needs of individuals at the coal face actually selling insurance on a day-to-day basis is perhaps borne out of Chapman’s own experience. He knows what it’s like, he says, “selling insurance on a wet Thursday afternoon in February”.
“My working life began in 1981, out on the road selling insurance products,” he says. “That’s been a huge benefit – having been out to see real customers and sell to real customers. Knowing what it’s like, what customers want and how customers perceive insurance companies.”
Chapman’s career since those days has seen him take on roles as group director at Liverpool Victoria, prior to its rebranding as LV=, and managing director of Permanent Insurance Company, a subsidiary of Equitable Life. He then became chief executive of specialist IP provider Pioneer Friendly Society prior to its merger with Exeter Friendly Society, the individual PMI provider, in 2008, to become Exeter Family Friendly.
Now, as chief executive of the merged entity, central to his vision is a commitment to ensure that customers know where they stand at claims stage – something he sees the cornerstone of any quality insurance provider.
“Confusion at claim is the insurance company’s worse nightmare and running a company I very much believe we shouldn’t have confusion at claim,” he says. “People should know they are able to claim for a policy or not and then we can process the claim. That is why we’ve got such good claims statistics.”
Chapman was chief executive of Pioneer when it became the first IP provider to publish its claims statistics back in 2006. And while he acknowledges the “good work” that trade body the Income Protection Task Force has done to ensure other providers have followed suit, he stresses this transparency should be for the greater good – not for individual insurers’ own benefit.
“What really annoys me about claims statistics is that people still seem to think it’s a sort of league table,” he says. “It shouldn’t be that, it should be used as a tool just to give consumers confidence that the insurance companies do pay valid claims.”
In 2012 – the most recent set of statistics available – Exeter Family Friendly paid 95% of IP claims but Chapman stresses again that percentage points here and there are not worth squabbling over.
“I don’t care whether my competitors pay 98% of claims or 93% of claims, as long as they disclose,” he says. “Then we can show a good story in the round. That’s the message that needs to be got over.”
Clarity is crucial on the individual PMI side of things, too, Chapman says. He has, for example, some concerns about potential customer confusion around open referral – the trend whereby some PMI providers are limiting member choice of hospital and consultant in order to keep premiums down and, they say, ensure quality.
“I don’t see how an insurance company can dictate that ‘you must use this person and you must use this hospital’. To me that’s not what PMI is about. PMI is about putting the individual in control and giving the individual choice, within reason of course,” he says. “Running a company you can see there are clearly cost savings by doing it but to me that’s not what the product is all about.”
That philosophy underpins the concept behind the provider’s flagship PMI policy, Health Choices for Me.
“We very much believe that people should know exactly what they buy,” he says. “Our Health Choices for Me product has, as the name will suggest, a number of choices that individuals can choose. They know exactly what they are buying.”
Exeter Family Friendly has also been hard at work to make that buying process as seamless as possible for both IP and PMI. It already, for example, has iPhone and iPad apps enabling offering instant quotes for both lines of products.
This year, meanwhile, will see Exeter Family Friendly work with UnderwriteMe, the rules-based engine developed by a team that includes former Ageas Protect boss Martin Werth and Jerry Brown, the former head of underwriting and claims for Swiss Re Life & Health in the UK, Ireland and Africa. That tie-up, Chapman says, should speed up the application process for IP still further.
“Again that fits absolutely squarely into our focus of keeping thing simple and enabling swift and efficient processes,” Chapman says. “One of the big issues with IP as we all know is the length of time it takes to underwrite and we are hoping that we can get at least 50% of the business applications underwritten by a rules-based underwriting engine. It has the potential whereby as soon as an adviser has hit the return button for the final keystroke then a decision will be made and the customer can go on risk. It’s absolutely brilliant.”
In addition to working with UnderwriteMe, Chapman promises some new product launches in both the IP and PMI spaces later on in the year. In addition, acquisitions could be on the cards.
“We have always set ourselves up as a very robust medium-sized insurance company,” Chapman says. “If there are any of the smaller mutuals that are finding it difficult to operate in the economic and regulatory climates going forward we would be delighted to offer ourselves as a partner to merge them into ourselves.”
One thing that Chapman is not going to do though, he says, is get carried away.
“It’s about building and capitalising on everything good that we do and will be doing going forward,” he says. “Keeping the focus, keeping it simple and building on the successes we’ve had.”
Time will tell if this particular chief executive can keep building on the successes he has enjoyed to date – but he’s already pretty sure that his organisation is on the right track.
“The particular career highlight for me at Exeter Family Friendly is actually sitting where we are now,” he says. “It doesn’t get much better than actually having industry awards from the main industry press.”