Evaluating the costs in a give-them-more lose-lose conundrum

Protection insurers were on the receiving end of quite a challenge from advisers last week  – coordinated by the Financial Technology Research Centre – to dramatically extend post-sales online support.

The FTRC suggests that advisers are looking for providers to add a significant number of post sales functions. It is quite a shopping list. It includes annual cover statements, policy summaries and policy documents, change of address notifications, trust details, guaranteed insurability options and amendments to cover.

Without doubt this would move the relationship well beyond simple sales support. Indeed it takes to the sort of level probably more associated with a pension sale, where after-sales access to the performance of a retirement portfolio is the minimum expected for clients and advisors alike.

Space 01 would support moves to develop these systems. Though as a digital design and technology firm you could argue that we would say that, wouldn’t we.

However equally importantly we’re a communications business which specialises in developing the messages that make changes like these easy to deploy and adopt by all parties. We see a large part of the conundrum here being the establishment and management of an expectation that is equitable to both sides, wrapped up in a transparent vernacular that explains it all simply.

The fact is that when you start giving your existing (and therefore most valuable) customers something they have never had in the past they tend to ask two questions. The first is ‘why and what do I need to do?’ The second is ‘why were you not doing this already?’ That presents two calls for explanations and if you’re not careful about the dialogue it can be a lose-lose situation for the brand. People don’t always want to be given ‘more’ especially if they don’t understand the need for it.

Of course change always causes some degree of pain, not least the commercial ‘hit’. These sorts of systems and communications take time and money to develop and providers would want to understand exactly what return they are getting. On one hand it would raise customer and adviser satisfaction levels. On the other, as Ian McKenna crucially argues, it could extend persistency – a big industry challenge in this economic environment and something that benefits everyone.

Yet cost is clearly a big factor in any industry and this would cost more, at least initially. It would be interesting to see if some of the firms that rate protection products – a huge driver of sales because it is a huge driver of panels and research – would start to incorporate such after-sales online capability into their ratings.

Certainly at Space 01 we think overall this is worth considering. It aligns best practice in protection in much the same way relationships are being realigned for pensions and investments. It is in keeping with the trend to enable more and better communications which can be cost-effectively facilitated online and it could ultimately cut administration costs.

All that’s needed now is for providers to crunch the numbers and work out the new reality.