LV=’s managing director for protection tells Health Insurance editor David Sawers why he believes the provider has the brand and team in place to take on the big boys
It is unusual for a managing director to speak so highly – or at all – of his competitors, but Iain Clark seems quite comfortable giving praise where praise is due.
In any case, it is clearly a testament to the confidence he has developed in his own organisation and the team around him since he joined LV= in July of last year.
Aviva, he says, has done a “great job” raising awareness of protection through its national advertising campaigns last year. PruProtect, he says, was “great fun” to work for. He also learnt a lot during his time at Legal & General, where he has spent most of his career.
However, Clark’s attention – and loyalties – are now of course focused firmly on LV=. So what attracted him to the role? The fact, he says, that LV= is “more of a speedboat than a supertanker” which “can change course quite quickly”.
“It’s pure economies of scale,” he says. “Within bigger businesses, the requirement of different business units means that certain things get put onto a conveyor belt which means that they come along when they get to their turn. Within this business if we see there is a strategic business requirement for something to be done then it will be done. That’s one of the things that brought me here – the speed of change and nimbleness of the society allows us to change in the marketplace a lot quicker than others.”
A PERIOD OF CHANGE
Changes have certainly come thick and fast since Clark joined LV=. This year has already seen the provider announce changes to its underwriting rules which should result in an increase in the number of applications receiving an immediate online decision. Last year, application processing times were reduced and the provider had cut average telephone interview times to around 15 minutes. Also last year, LV= enhanced its underwriting service by gathering more evidence up-front and introducing new medical underwriting limits. As a result, less than 8% of LV=’s protection applications now warrant a general practitioner’s report, down from 18% in 2008.
Clark says more fundamental changes to product are in the pipeline – although they remain under wraps for now. In fact, in spite of its heritage – formerly known as Liverpool Victoria, LV= was founded in 1843 – Clark says the organisation has a “curiosity” and desire to do new things that is sometimes not so apparent at other protection providers.
“The company is curious and wants to do things, whereas possibly in some of the bigger companies I’ve worked in they are more restricted to what is or actually has happened to them in the past,” he explains. “The curiosity here is great, the attitude is welcoming. We’re relentless at trying to do things and get things done properly.”
According to Clark, the next 18 months will see LV= position itself “as a differentiator” in the marketplace.
“We’ve got to change, the business has got to change,” he says. “We’ve got fundamental change in the marketplace happening in the next 12 months and for us to wake up on January 1 2013 with the same product set would be silly. We’ve got a great opportunity to do something different and that’s what we’re planning on doing.”
The Retail Distribution Review, Clark says, will give LV= an opportunity to work with advisers which it may not have done in the past. But he acknowledges that this will come with barriers that need to be overcome.
“Maybe people within the wealth environment possibly feel it’s easier to educate their customers when it comes to lump sum wealth management rather than regular premium management as protection is,” he says. “But I’m hoping with RDR that some of the people that are used to working in that environment will find the kind of things that we want to do in the marketplace interesting.”
Clark acknowledges that “quite probably” a few of those individuals have not written protection for some time and possibly are not used to the systems and processes that are in place now. But he is determined to be able to offer an easy route to market for advisers who may have fallen out of the protection habit but are keen to get involved again.
“Getting them into a regular cycle of using systems and processes with protection is going to be quite daunting for them,” he says. “So having a strategy that sits around those kinds of individuals will be key.”
Key to that push will be Clark’s fellow senior management team, in particular head of protection Mark Jones, who joined LV= from Friends Provident in December 2009, and head of protection Mike Farrell, who joined from Royal Liver in November 2010. Their impact on LV=’s relationship with advisers has been significant, Clark says.
“One of the things that Mike [Farrell] has done very well since he came here is realign our distribution focus,” Clark explains. “We’ve been extremely successful in getting on some of the bigger panels within the UK to give us that distribution breadth that we didn’t have before. Traditionally we’ve been seen as a niche income protection [IP] player and at the beginning of the year both Mark Jones and Mike put together some decent product propositions for critical illness which pushed us up the market tier. It enabled advisers to want to be associated with using LV= even more […] That’s given us the breadth that we need to get onto these panels and now the next 18 months to two years is about cementing those relationships.”
LV= joined Openwork’s protection panel in Q4 2010 and in 2011 joined the panels of Sesame Zenith, Pink Home Loans, Spicerhaart, Stonebridge Group, London & Country Mortgages and Personal Touch Financial Services.
“Would LV= have been there 18, 24, 36 months ago?” Clark asks. “I don’t think so.”
Impressive stuff, but just how important is protection to LV=? After all, the provider has a pretty significant general insurance book, as well as a major retirement planning and savings & investments business.
“It’s extremely important because a couple of years ago they made the decision that they wanted to be a player and they have bought some good people in,” Clark says. “They have brought people like Mike [Farrell] and Mark [Jones] into the business in the last 12-18 months.”
Clark’s own appointment, perhaps, signals LV=’s ambitions.
“I think they [LV=] had a perception of the kind of individual they wanted, which wasn’t your typical sort of actuary, to come in and run the business,” he says, “They wanted somebody that had a sale and a marketing tilt to them to help move the business forward. We’ve got enough actuaries in the business already so it was a case of somebody coming in that knows the market, knows the people, knows the kinds of things that will work, has been part of something that is visionary in the marketplace.”
THE PLAN AHEAD
Clark concedes, though, that there is room for improvement and development at LV=’s protection business. Fortunately, the organisation is in a good position to make those changes, he says.
“From a processing point of view, to be quite honest, our systems need to be updated,” he admits. “They are good for what we’ve got at the moment but if we want to get into the innovation part of the market and move it forward then our systems internally need to progress. And that’s the same in any business but the good thing here is because we are that speedboat we haven’t got the hidden bulk behind us of legacy systems as much as some of the bigger companies have.”
Some of those changes have already been made and LV= has made a significant investment in its business process unit in Exeter, which has just undergone a £1m refurbishment.
“The systems have been updated to make processing quicker for them and easier for our customers moving forward,” he says. “We are investing quite heavily in our back office and our service support centres.”
Those changes, Clark hopes, will help LV= to achieve a 5-7% share of the protection market in the next 18-24 months. And while he says that is “quite a steep move” from where LV= has been, he is confident that the provider has the infrastructure to be able to deal with higher volumes.
“One of the things that we’ve chosen to do is work in the areas that we think we can help to distribute in a profitable, margin-rich environment rather than a stack-it-high-sell-it-cheap environment,” he says.
While LV= offers some low cost options – for example it offers a budget IP plan which is now available on the Avelo Exchange portal as well as elsewhere – Clark says he would be foolish to try to compete with his larger competitors on price.
“We can’t run with L&Gs and Avivas because we just can’t beat them on price so we have to go with where we think the product mix and richness is better for us,” he says. “You pick the markets you want to play in. Some people might call that niche but I think there is a richness of markets out there that we are tapping into.”
Still, while Clark is aware of what his competitors are doing, he remains focused on how his own organisation is going to succeed in the years to come.
“We’ve got to try and drive the market,” he explains, “rather than be driven by the market.”
Iain Clark – biography
Iain Clark joined LV= in July 2011 as managing director of protection. He has 24 years’ experience in the protection market and is responsible for LV=’s entire protection proposition. Clark has spent the majority of his career with Legal & General (L&G), starting as a sales support clerk and moving up to IFA Sales Director/Bank and Building Society Director. After briefly joining PruProtect to help construct its UK distribution model in 2008, Clark returned to L&G to head up its IFA distribution business. Clark is a keen runner and has completed the London marathon twice, along with numerous half-marathons. When Clark is not running races or LV=’s protection business, he loves listening to Football Weekly extra podcasts and trance music.