Polarisation of the market between technology haves and have-nots will be mitigated by industry initiatives says Edmund Tirbutt
With a core of group risk providers positioning themselves as technology operators, some are predicting a polarisation of the market between old- and new-world business.
But while it is certainly true that some group risk providers are still playing catch-up with others, it seems inconceivable that we will end up with two distinct camps: one doing business totally online and the other being largely paper-based.
It seems hard to see any real competitive advantage that could be derived from sticking with paper, but few providers will want to turn business away.
But some aspects of group risk are more likely to benefit from technology than others, and progress could either be entirely company specific or made on a pan-industry basis.
To the latter end industry body Group Risk Development (Grid) is already developing a portal for new business quotations from the major players with a view to improving data security and expanding the market by making it more accessible to non-specialist intermediaries.
The individual companies leading the techno-revolution roll off the tongue fairly easily.
Ellipse, part of the Munich Re Group, which began a phased launch in October 2009, is basing its entire raison d’etre on its technical prowess. Prior to its entry the primary movers and shakers were Canada Life, which in 2005 launched its online end-to-end group risk management service Class (Canada Life Automated Self Service), and Bupa, which launched its own online quotation system in 2007.
Class, which is used by over 1,400 organisations, could never be accused of standing still. This March, for example, it added a further four eReports: Simplified medical evidence report, outstanding accounts review, outstanding medical evidence overview and outstanding premium overview.
Nevertheless, other group risk insurers which haven’t been renowned for technological innovation are also getting their acts together. Legal & General, for example, will have introduced a new platform by this Christmas and this will give it the potential to take services out to employers and intermediaries next year. Like other providers, it acknowledges that there are few areas of group risk that don’t have the potential to be fully automated.
Steve Bridger, head of group risk at Aviva UK Health, says: “The theory is that anything that supports operational efficiency, reduces the cost of transaction and improves customer end-to-end time is open to systems support. Quotes and scheme underwriting can be done online, although for the bigger and more complex risks you need a personal underwriting touch from individuals with decades of experience to consider factors such as risk management and the employer’s attitude towards risk.
“But with developments such as ’once and done’ underwriting and higher free cover limits there is becoming less and less medical underwriting, and GPs and specialists can increasingly be accessed electronically.
Data security is of paramount importance but, as long as the member gives you consent via a secure online system and the hospital consultant and GP has signed up to the relevant specialist portal, you can in theory even get away without paper for using medical evidence.”
In some areas of income protection claims a personal touchm is needed and it is much easier to have one point of contact on a face-to-face basis
Ellipse, which has already underwritten one scheme member who exceeded the free cover limit in 11 minutes, is not anticipating problems regarding medical evidence with its online approach.
It very rarely uses GP and specialist reports, which it feels aren’t needed very often if you have a good questionnaire, and on the few occasions it does need medical evidence it uses Medicals Direct to go out and visit the client.
At the moment all its underwriting on large schemes currently involves a human element but it is expecting to launch a fully automated system for up to 500 lives later this year and eventually expects to be fully automated for all sizes.
Even at the claims stage, with group life there is no reason why the whole process shouldn’t be carried out online unless a claim is actually contested because diagnosis is not an issue and insurers can check whether a death has occurred through the Tracesmart facility. But no-one disagrees that group health insurance claims will remain one area where the human element is largely indispensable.
Yes, technology can facilitate a quick transfer of information but it can’t replace the human touch of an expert therapist.
Declan White, group protection marketing manager at Friends Provident, says: “In some areas of income protection claims a personal touch is needed and it is much easier to have one point of contact on a face-to-face basis. Having numerous stakeholders involved with claims, such as intermediaries, employers, members and rehab specialists, doesn’t lend itself to online solutions.
A lot of actual treatments will need to be done face-to-face or over the phone, and ultimately claimants will always want to pick up the phone to talk to a qualified claims assessor.”
The jury remains out on the viability of Grid’s proposed pan-industry quotation portal but providers are more positive in sentiment than intermediaries.
Even Canada Life, which might appear to have something to lose from such an initiative because of its current technological superiority has nothing negative to say about the proposition.
Paul Avis, sales and marketing director at Canada Life, says: “I welcome the idea because it is going to grow the market, but we will still maintain a competitive edge as many established players will have more expansive specifications for quotations and will come to us directly instead. The proposed Grid solution is a low specification way to send in quotes.
Then, if an intermediary likes our quote, they are likely to use our more hi-tech capability via Class.”
Intermediaries, however, are more lukewarm.They would clearly be reluctant to pay for it and some are concerned that, instead of expanding the market, it would merely open up opportunities for non-specialists to poach existing business.
David Dolding, head of consulting at Lorica Consulting, says: “Is it going to commoditise the process even more than has happened already? As an intermediary there are things we think it would be pertinent to have included on group risk quotes which won’t be included through the Grid portal. For example, we focus on adding value with regard to claims management on income protection and we would include information about this free service on the quote but it would be unlikely to appear on the Grid one.
“We put a lot of work into ensuring our specifications are correct and gathering the right information, and if another intermediary can’t do it themselves they shouldn’t be in group risk.
Grid Pan-Industry Initiative Taking Shape
Since May, Grid has been working on and developing a pan-industry portal for submitting and receiving quotes for new business. Eventually this could be used for quoting for renewal business but there are no plans to facilitate actually dealing on line.
The initiative, developed by Grid’s Raising The Standards Committee, is receiving input from Alico, Aviva, Canada Life, Legal & General, Unum and Zurich Corporate Risk.
There is also intermediary involvement from Bluefin, Lorica Consulting and PricewaterhouseCoopers, and approaches from two other intermediaries are currently being considered.
Steve Ellis, operations director, group protection, at Legal and General, who heads Grid’s Raising The Standards Committee, says: “It’s early days but we’ve had a couple of sessions openly debating the matter with the whole Grid membership, which is broadly supportive. But the big questions centre around cost and usage. There is a feeling that it will be largely funded by the providers, and their cooperation will obviously depend on potential demand.
“Our next step is to get engaged with software providers and to develop a prototype. Assuming we can secure funding from the insurers and that there is sufficient demand from generalist intermediaries, I think we could have something up and running by the end of 2011.”
Charles Grene, head of corporate services and marketing, Canada Life
This November Canada Life, which had already launched a Twitter site, made available a range of information and product based webcasts providing technical and product briefings aimed at the adviser, product and service presentations aimed at the employer and service and benefit presentations aimed at the employee.
The audio and visual set of briefings, using the Brainshark platform, kicked off with coverage of the impact of phasing out the Default Retirement Age, and fifteen more adviser, employer and employee briefings are scheduled.
Charles Grene, head of corporate services and marketing at Canada Life, says: “Embracing these new ways to communicate with our intermediaries is based on the premise that we need to be in touch in whatever format, with whatever frequency and in whatever medium they prefer.
“The audio-visual approach is exciting as we can get some of the best brains in the business sharing their thoughts in a cogent way to develop adviser understanding. We were aware there was a gap in the market for these insights and updates, which we now hope we have filled.”