The idea that we could eventually have a group risk market in which intermediaries are not continually attacking insurers’ service standards would have at one time been well nigh inconceivable. But there is now more than just a flicker of light at the end of the tunnel.
Turnaround times for new business quotations are now rarely considered much of an issue. Most quotes are issued within 10 working days and, in the case of SMEs, five days is not unusual. Two years ago turnaround times were about twice as long on average and the worst case scenarios being reported involved having to wait for several months.
SMEs with schemes of up to 100 lives are also benefiting from automated systems introduced by Canada Life in January 2006 and by Bupa in March 2007, and larger schemes are also benefiting from these indirectly because they free up provider staff and enable them to spend more time on other cases. Both systems enable intermediaries to obtain immediate quotes and to place schemes on risk online.
Canada Life’s CLASS [Canada Life Automated Self Service] system, which aims to enable an intermediary to put a scheme on risk within 15 minutes of logging on, also offers a sophisticated range of claims and commission tracking reports together with the ability to track claims histories. Perhaps more significantly still, by the middle of this year Canada Life is intending to allow scheme renewals to take place online – a process that it claims will also take no longer than 15 minutes.
It is with regard to renewal business that the majority of intermediary frustrations continue to be aired because renewal documentation frequently fails to arrive within the 30 to 60 day industry-wide accepted norm, and can even take as long as two years in extreme cases. Even when it arrives on time it is often full of inaccuracies.
John Sansone, practice manager employee benefits division at national employee benefit consultants Towry Law says “My biggest bugbear is that underwriters have continued to focus on new business at the expense of giving good service to existing clients. Some are taking too long to produce renewal accounts and there are problems with accuracy and with failing to run direct debits properly to collect the premium. Even when you’ve done the renewal process, to get those outside the free cover limit underwritten can be a tortuous experience because the teams are not joined up enough.
“Insurers are trying to put electronic systems in place but this really just outsources problems to intermediaries and clients. What they should be doing is fixing their people and internal systems procedures. They have poor quality staff but need to develop people with good technical and product knowledge.”
To be fair, post-sale administration does not exactly have a sexy image and attracting anything other than mediocre performers is always likely to be a struggle. Providers also have to cope with significant peaks and troughs in their workloads and a seemingly never-ending stream of legislative change is constantly giving rise to the need for new documentation.
But some insurers are able to volunteer the results of internal monitoring which suggests that they are getting to grips with the turnaround times and standards of accuracy expected of them. Aegon Scottish Equitable, for example, reports that since December 2007 it has been producing and issuing renewal accounts accurately within one month of renewal date in 95 per cent of cases. It acknowledges that previously it had definitely been behind schedule but, by increasing staffing levels and introducing a radical training programme, it has increased its output on renewal accounts by 400 per cent.
Even Unum, which has traditionally tended to attract the bulk of flack issued by intermediaries on service standards generally, is claiming that its internal monitoring is pointing to a “major improvement.” It reports that it has systematically been working through its renewal business over the past 12 months, particularly with major partners, and will continue to make the matter a high priority during a rolling programme over the next 12 months.
Such protestations of progress have been fairly standard from insurers during previous years, but the difference this time is that they are being given credibility by a number of intermediaries, some of which have been highly critical about service standards in the past.
Stuart Gray, managing director of Portus Consulting, says “We find both Bupa and Canada Life extremely satisfactory on service and they will issue all renewal documentation within a month of receiving their requirements. On the other hand, Unum, despite having a marvellous claims service, is still the worst of all the group risk insurers we deal with on renewal accounts. We do, however, know that it is actually addressing this problem and we are already starting to see some changes, although we still have one renewal account outstanding from late 2006.
“Unum should be more in line with the rest of the market by the end of the year because it knows it is really on the back foot compared to the other group risk players and realises that it risks losing market share if it fails to get its act together. What it is aiming for certainly can be done because Generali had very serious service problems a few years ago yet still managed to turn things around.”
However, it is hard not to suspect that some of the blame for the shoddier end of the service standard spectrum should be laid at the door of the intermediaries themselves. If, as they constantly maintain, service is such a huge issue for them, then one could be forgiven for asking why they have not voted with their feet and switched their clients to other insurers?
Steve Browning, group protection product manager at Friends Provident, says “Many intermediaries simply don’t pay enough attention to service standards. They all talk about the need for good service, but at the end of the day they don’t take it into account as much as they say they do. Anecdotally we hear stories of intermediaries complaining that it has taken two years for an insurer to issue documentation for an initial or renewal account but they don’t move the scheme elsewhere at renewal because the holding office is coming up with the best price.”
Nevertheless, some intermediaries are clearly paying more attention to service standards than others when it comes to insurer selection, and it is certainly encouraging that both Aon Consulting and Mercer Human Resource Consulting now conduct in-house research into insurer service standards by surveying their own group risk personnel. Whilst both intermediaries are able to share the results of these with clients and with the insurers themselves, the results are not generally available industry-wide.
One cannot help feeling, however, that a publicly available industry-wide benchmark of insurer service standards would have an enormously valuable role to play. A little naming and shaming in a peer group context might work wonders in focusing provider concentration.
The Association of Medical Insurance Intermediaries [AMII] already provides objective research on the service standards of private medical insurers, so perhaps something similar should happen in the group risk sector.
focus – Paul White, Senior consultant, Aon Consulting
Paul White, senior consultant at Aon Consulting, reports that there are definitely cases when poor service standards prevent his firm from placing business with the insurer offering the keenest premium quotes.
He says “For some clients service is not that important but for others it is critical. An employer with lots of high earners and claims will, for example, come across the insurers far more often than a small scheme which rarely has any claims. So, under Treating Customer Fairly, we need to know our clients and identify what they want.
“Historically, insurers have maintained that service isn’t important because companies only really buy on price, but we are saying that clients have a right to good service at whatever price they are paying.”
Aon Consulting makes considerable use of the six monthly service standards survey that it started conducting in July 2007, and finds it has made a significant difference to the service that it gets from insurers. If insurers do badly in the survey it warns them it may stop using them.
“Last year we warned one major player that we would stop asking it to quote unless service standards improved,” continues White, “and we did in fact stop asking it to quote for four months. If it hadn’t improved we would actually have gone to clients who insure with it and advised them to switch elsewhere. But its service improved sufficiently within a very short period of time for us to start asking for quotes again.”