Aviva is on a mission to become the protection provider that is easy to do business with. Emily Perryman spoke to Mark Cracknell, the insurer’s head of protection distribution, to find out what is in store for advisers.
Product tweaks are a common occurrence in the protection industry, but it’s not often an insurer embarks on a two-year undertaking to completely revamp its proposition.
That’s precisely what has been happening behind the scenes at one of the UK’s largest protection providers, Aviva. In November 2016, it started the process of building what it calls a “waterfront protection proposition” for the intermediary market.
The revamp includes this year’s launch of a whole of life policy for high-net-worth clients and a relevant life with “employee significant illness” policy aimed at company directors. The provider will shortly announce enhancements to its critical illness (CI) proposition, including a focus on streamlining the underwriting process.
“The key for us is straight-through-processing,” says Mark Cracknell, head of protection distribution at Aviva. “When the adviser is in front of a client they want to be able to offer terms at the point of sale. We don’t really want to refer customers for underwriting and the last thing we want to do is request a GP report because they’re expensive and we don’t get them back.”
Advisers can also expect to see new additions to Aviva’s suite of value-added services. It currently provides policyholders with free access to Best Doctors’ second medical opinion service, Bupa’s 24/7 nurse advice line, and counselling and carer support.
Cracknell says value-added services tend to get forgotten about so the insurer is planning to bring them more to the fore.
Improving its products is just one of the ways Aviva wants to ensure it stands out in the competitive protection market. Cracknell says Aviva’s strategy is to offer a complete suite of propositions and online journeys to intermediaries.
“We launched our initial proposition in November 2016 and we sought to enhance that subsequently in terms of how the underwriting engine works and our CI products. More recently, our protection platform became cloud-based, which allows us to increase screen speeds by up to 30%.
“A lot of people talk about their proposition – for us that means the whole end-to-end piece. There’s no point having the best CI product in the world if your clients find it really difficult to do business with you.”
Cracknell admits that advisers don’t always find it very easy to do business with Aviva because it “bombards” them with information and has a very broad suite of products. As a result, the provider is currently in the process of re-segmenting advisers with the aim of providing more tailored messages.
“If an advisory business concentrates on the wealth market, the type of protection they advise on can look very different to that of a telephony-based adviser who is servicing clients enquiring about term insurance and to that of a mortgage broker who has very detailed conversations about their client’s protection needs,” Cracknell explains.
“There is no point creating a huge suite of products without aligning ourselves to these different advisers. It sounds daft that we started the process in November 2016, but we’re dealing with around 20,000 advisers so you can imagine the scale of what we’re trying to do.”
Alongside this, Aviva has been running a “Boosting Business” campaign which is focused on helping advisers to sell more protection.
“People don’t normally wake up and think, ‘I’ll buy protection today’. They have to be disturbed in some way or have some form of engagement with an adviser. We’re trying to work more closely with advisers to help them to grow their business and create new leads,” Cracknell says.
Aviva’s imminent CI upgrade follows a plethora of product developments in the protection industry. Cracknell argues that while many products are becoming more comprehensive, there is a danger that CI is becoming too complicated and, in turn, causing costs to increase.
“The industry could end up creating an elite product that’s less and less affordable for consumers,” he warns. “Fundamentally, the public should be able to access CI. Whilst in a perfect world everyone would be able to access the most comprehensive plans, the reality is there’s a significant proportion who’ll never be able to afford that product.”
The answer, says Cracknell, doesn’t necessarily lie in expanding the range of budget CI products. He claims Aviva is taking the lead in looking at how to evolve CI so that it is easy to understand while still offering a full range of benefits at an affordable price.
Aviva has also tried to address the issue of affordability in the income protection (IP) space. Last year it launched a new product called Living Costs Protection, which pays a monthly fixed benefit of between £500 and £1,500 at the outset for up to 12 months. It aims to offer an alternative solution to customers with fluctuating incomes, such as the self-employed and contractors.
Cracknell says sales of Living Costs Protection have been slower than he wanted them to be, but that it was part of an ongoing test exploring how to grow the market.
“There are lots of ways to expand the IP market – through our marketing campaigns, training advisers and enhancing our product set. Living Costs Protection was one part of that. We now have a three-tier IP proposition – full IP, two-year limited IP and Living Costs Protection. The results we’re achieving on the full IP product are really positive and, actually, that’s the product we want to sell to customers.”
Dealing with competition
The past year has seen the launch of challenger insurers like YuLife and Guardian. Does this threaten Aviva?
Cracknell admits the launch of new companies can sometimes be frustrating, although in general he believes competition and innovation are good.
“Competition can drive the right behaviours in the market, but sometimes it results in providers dropping prices. This isn’t always the right thing to do because it can affect the underlying profitability of the business,” he says.
“Another downside for advisers is they might think, ‘oh my goodness, here comes another one, here’s more complication’. Competition needs to be explained in the right way.”
For each new piece of business it writes, Aviva has to compete with around five to 10 product providers, some of which are huge multinationals. In such a competitive market, how does Aviva differentiate itself?
Cracknell claims Aviva’s strengths lie in its continued investment in technology, its efforts to support advisers in selling protection, its proposition innovation and its culture.
“We have a culture where we fight for every piece of business we can. To succeed in this market, you have to be really good at what you do,” he says.
Aside from market competition, Cracknell says one of the biggest challenges for the industry is how to leverage technology in a way that is seen as a positive step.
“We often hear advisers say, ‘you’ve changed your process to a digital one’ and their perception is we’re giving them more work to do. That isn’t what technology is about – it’s about simplifying the process for the adviser and the end customer,” he says.
There is also the ongoing challenge of trying to close the UK’s enormous protection gap. Cracknell suggests part of the problem is many consumers don’t trust insurers to pay claims – something Aviva tried to address when it published its claims report in July.
Despite the challenges, there are also big opportunities for the industry. Cracknell believes the main opportunity is around wellbeing because the population is becoming increasingly aware of how they live, what they eat and their general health. Next year, Aviva is planning to look at how it can position itself as “the insurer for wellbeing”.
“In the corporate market we have a significant drive in promoting wellbeing and we are actively supporting how people manage their lifestyle,” says Cracknell. “We are looking to bring more and more of that into the protection business and the launch we’re planning in October will bring the first stages of that in. We’re firm believers that the earlier we can help someone be fitter and healthier, the more effective the management of claims will be.”
Aviva’s wellbeing drive could include helping people to manage conditions such as obesity, which is notoriously difficult to insure, as well as facilitating earlier diagnosis of cancer.
“It would be great for a customer to turn around and say, ‘Aviva helped me to manage my wellbeing’,” says Cracknell. “It’s about evolving our role in society – fundamentally we’re an insurance company but we need to support and work with people.”