Category: Advisers

 

BestAdvice (BA): What have been the traditional problems with accessing insurance products?

Martin Schultheiss (MS): From our perspective, there are a few key challenges that advisers are facing. The first one would be time. In my previous role, (Schultheiss was group managing director of Sesame Bankhall Group before joining Uinsure) we undertook an exercise that essentially worked out all that was required by advisers to do mortgage/protection/GI – to provide the full stack of advice. We got up to around 100 questions or pieces of data that had to be collected. And I did it myself; it took up three hours of administration and that was without actually doing the advice! It shows that the time it takes to do give full advice is a real challenge.

Advisers have to input multiple pieces of data repeatedly, often across multiple systems and with multiple passwords and then logins, completely rekeying all the time. It just takes too long, it’s not practical.

Secondly, particularly in the case of home insurance, is how challenging it has been for advisers to compete with price comparison websites. It’s well-documented now how price comparison websites and others have been able to win adviser’s clients by discounting new business premiums and then over a period of time raise prices by anything up to 50% over a 3-5 year period. This practice is often referred to as ‘price walking’, whereby the premium is artificially discounted in order to capture the attention of the customer, but the intent is to make up that loss by hiking renewal premiums in subsequent years.

So, with new regulation coming in that proposes to ban this practice, we should start to see a more level price playing field, I think now’s the time for the adviser to develop confidence and to get back to having the conversation with their clients.

From a consumer perspective, I would argue there is a level of knowledge and skill required for an individual to navigate their insurance needs if they do it themselves. Again on popular online sites, you’ve got multiple questions, multiple product providers, decisions on multiple features and benefits, so it’s not as simple as it might seem. Advisers have a compelling value proposition through their advised service and should be thinking about taking that hassle away.

BA: So, presumably that’s what drove you to design a tech-based solution for advisers? How are you doing things differently and what effect will it have on an adviser’s time?

MS: First and foremost Uinsure has been on a journey of moving from being a business that manufactures products which are accessed via technology, to becoming a technology company. Our rebrand comes after having made the strategic decision to deliver insurance technology that removes the complexity we believe exists today for the benefit of advisers and their clients. That’s not an easy thing to do, by the way.

We understand that time is key. So, in three questions, advisers should be able to search the market with Uinsure, and then provide a policy in less than 60 seconds. We use data and technology to do this, allowing advisers to give advice while cutting out as much administration as possible.

General Insurance give the adviser permission to engage with the customer every single year [as it is annually renewable], which to me is probably the greatest asset an adviser could have, particularly in a world with longer term fixed rates that are reducing the frequency of engagement within a client base.

Through our tech we deliver a single common policy, with a 5 Star rating; something that’s simple to understand and not complex and all our insurers then compete to deliver the best price based on that property risk. The key is that the price is fair for the lifetime of the policy, we also review this annually to ensure the customer has the most competitive new business price at every renewal.

We’re not the cheapest because we offer a high quality product and we have never offered introductory cut price offers with the intent to hike at subsequent renewals. In fact, we’re probably one of a very small number of companies that deliver negative premium reduction on an annual basis. I see this as a point that advisers should be talking to their clients about, in contrast to what they may receive elsewhere.

BA: What are the biggest pressures advisers face in the future and how can they address them now?

MS: There are two key things that are going on in the market right now. One is that customers are coming to advisers because they trust them and want to be guided through the process, which in itself philosophically places the onus on us to do a ‘full stack’ job for that customer.

Secondly, customers are giving price comparison websites an enormous amount of permission to harvest their data and, in harvesting their data, to use it to offer other products going forward, which in itself creates an enormous risk for the adviser and the protection of their customer base; those comparison websites are offering general insurance, conveyancing, remortgaging, critical illness, income protection, life cover and execution only mortgages, all of which form the product suite of an adviser firm.

So if nothing else, an adviser should be offering a fully comprehensive service to protect the customer and preserve the relationships of their customers. This is against allowing their customers to leave data footprints all over comparison websites that are getting them to agree to privacy statements that will clearly offer a clear and present danger to the existence of the adviser’s business going forward.

BA: When advisers are reviewing technology solutions, what should they be looking for? 

MS: In the beginning of my career, technology meant the guy that came to fix my laptop when it wasn’t working. It wasn’t the essence of the core strategy. Today, for me, it’s now people, culture, technology and data; so, the first thing I would say is that it requires a completely new skill set.

Secondly, there’s a very big difference between traditional companies in manufacturing of products and services that claim to offer technology, versus companies that are technology companies which offer products and services. There’s some subtlety there, but it describes an enormous difference.

From a Uinsure perspective, it’s taken us the better part of three years to get to this moment [with the brand and new platform].

I would say to someone looking at a technology company that trust is fundamental. Make sure that the management teams of those technology companies are a combination of what we call “suits and trainers” – techies and people with industry knowledge. Make sure that there’s a good combination in the team of people that understand your business, understand the challenge you’ve got and understand what’s important to you and your customers. They should also have ‘been there’ and experienced it as well. There’s also whether they have leading edge technology capability inside of their management team to deliver.

In addition, there’s no such thing as a single answer to technology. For me, the most important thing is partnering with technology companies that have architectures that are easily integrated, so that you can combine a couple of platforms to formulate an end to end customer experience.

Advisers need to make sure that technology firms solve their problems and in a way that that gets what they need out of their business.

 

You will have seen that on 28^th May 2021 the FCA published its paper on pricing rules in the GI Market. This follows several years’ work from the regulator to address the harms suffered by loyal customers of home and motor insurance providers.

New ruling

It has long been the case that regulated firms have a duty to treat their customers fairly, however the work performed by the regulator has shown that in many cases this has not been delivered in the GI space. The most prominent change that the FCA brings in is that firms will no longer be able to slash new business premiums in order to attract new customers, only to penalise them in subsequent years with hugely inflated prices which bear little resemblance to the actual cost of providing the policy. This unfair profiteering has become known as ‘Price Walking’ and it will be banned from the start of 2022, removing the need for customers to outwit insurance providers and move their polices year on year in order to get a fair deal.

As we know, price is only part of the story and there is a raft of new rules on product governance which take effect from September 2021, meaning firms must test the products they provide for “value” on a regular basis.

Key considerations

There are some key considerations for distributors and firms as a result of the FCA’s recent moves. This will include having a clear understanding of GI provider panels value proposition and whether or not these providers have undertaken the practice of price walking your customers, whom will probably have paid a financial penalty for their loyalty. In the case of legacy back books there is also a strong likelihood that some customers will be holding policies that are outdated, have not benefited from product development and would not pass any of the tests that the FCA has introduced.

The ultimate aim for the regulator is to create consistent pricing; this may well mean the end of cheap deals in the first year, but it will bring about a more sustainable ongoing insurance bill for the customer who will have a better idea how much their home insurance costs year on year.

What this means for advisers

For advisory firms, the new rules will mean that, as price will no longer be the sole representation of value, the profession can lead the insurance conversation without the traditional sensitivity on first-year prices. It’s a significant opportunity to reclaim intermediary market share from price comparison sites which had become more successful when new business pricing competition became artificially more aggressive.

 

Most are familiar now with the FCA’s intention to ban the practice of price walking for general insurance but, with the rules still in consultation, should advisory firms sit back and wait for the proposed ban to come into effect, or be acting with more urgency?

The FCA’s proposal to prevent insurers from price walking will mean that every customer will be offered a new business price at renewal. This would outlaw a practice which has helped providers pocket an extra £1.2bn in fees from six million policyholders it identified in October 2019, as paying high or very high premiums.

Price has always been the dominant factor in any insurance purchase decision and although a low price doesn’t necessarily translate to good value, it’s easy to assume when comparing like for like cover across multiple insurance providers, that the cheapest price may seem like the best option.

However, in the interim of any regulation, Boards and Senior Managers should take some time to consider their customers best interests in relation to how they are comparing these policies. The reality is that what appears to be the cheapest first-year price, may ultimately become a bad deal if not calculated over the lifetime of the policy.

Uinsure has never price walked. This strategy has been under pressure given the nature of a very competitive market, but our practice and offering has remained consistent since our inception in 2007.

It’s an ethical standpoint that we believe is fairer and more transparent for customers, while ensuring a better outcome. Of course, refusing to price walk has occasionally meant that our first-year prices might be slightly higher than those of our competitors, but our fair pricing strategy has meant that prices are consistent and honest with no hidden fees and, therefore, representing fairer value of the lifetime of the policy.

As we move forward, our strategy will remain the same for what we believe is the ultimate benefit of the end customer and this will ensure all of our customers are treated fairly, in return for the trust they put in us.

By Lauren Bagley

The property market is becoming increasingly diverse, both in respect of home and landlord types. Homeowners and landlords alike are becoming more adventurous with their own developments and renovations meaning an increasing number of insurance queries are falling out of what is deemed to be ‘standard’.

There is also, too, disparity between how advisers perceive the landscape to be, what is reality and how advisers can actually serve these insurance risks.

With the current technology capabilities of price comparison websites, there are increasing numbers of property risks that can’t be protected instantly via an online search for insurance, such as unoccupied properties, holiday homes and different methods of construction.

And then for landlords, with a massive 85% of private rental properties in the UK being part of a portfolio, these clients are seeking ways to reduce their insurance spend and consolidate policies, meaning opportunities for advisers to support with property portfolio insurance are growing, too.

Such is the advance in intermediary technology, which far exceeds what is available directly to the consumer, these are all client needs that can be served by advisers who can provide valuable cover for multiple properties, non-standard, commercial lets and blocks of flats through the familiar Uinsure Adviser Platform.

The same basic principles to generating quotes for clients apply and, fortunately, intermediary technology now exists that means with simple training, advisers can get both the confidence and know-how to operate in these spaces.

Traditionally, these journeys have been very time-consuming but by integrating them into our platform, advisers are able to apply in as little as 90 seconds with simplified, intuitive quote journeys that are reflective of Uinsure’s market-leading mainstream home and BTL experiences.

The housing and property market won’t stand still and tech that supports the insurance industry will need to undergo ongoing evolution to ensure it keeps progressing with the times. The new ‘AirBnB’ may be just around the corner and by easily expanding areas of expertise, firms from across the UK have the very real opportunity to expand their income streams as client needs continue to evolve.

Those that do make this small leap into the new give their businesses opportunity for growth and longevity in what is an ever-changing market.