Keep calm and carry on

I suspect most of you are fed up with the electronic trade news feeds, feeding us a diet of gloom and doom on the start of RDR. The high water mark was the “Standard Life predicts IFA extinction within the year” story which was simply a miscommunication between an internal PR and a keen trade journo.

It seems to me that advisers and adviser businesses have always been adaptable, resilient and agile enough to adapt to environment changes. The establishment in our sector ~ the largest insurance companies, the banks, the “regulator classes” - have had a decade long antipathy to smaller adviser firms. But here is the reason why predictions of adviser extinction are just plain wrong.

Advisers like customers. 

They like to talk to them, persuade them to get organised and do the right thing for themselves and their families and in that they are the subset of our sector that are truly different. The historical perspective that the adviser layer of the value chain was the source of mis-selling is just wrong. The heart of the problem were the product structures provided by financial service providers and the front end loading to pay distributors. The latter was created because providers did not want to absorb marketing and distribution risk. The product defects usually came from the providers’ compulsion to shift as many different types of risk to customers. Every product mis-selling scandal had its roots in the product design.

The imminent demise of advisers has been predicted many times before, but they have proved their ability to adapt, even if each shift in the environment sees some falling by the wayside. Clients still have risks that need mitigating and enough of them value the expertise advisers provide, so I’m sure that the prophets of doom will once again be confounded.

Group protection payouts - no time for delays

There is no doubt that classic UK group life provided by employers as an employee benefit is a marvellously efficient way of getting meaningful levels of cover to families.  The cost is fully tax deductible for the employer and using a registered discretionary trust the payment at claim does not have to go through the deceased’s estate where there could be significant delays.

So why am I concerned that in a significant proportion of claims that the money is not getting to beneficiaries quickly enough?  The reason is often that the sponsoring employer is not ready to receive the money.  The two main causes are that, although the trust is established, a trustee bank account has not been set up or there are no current trustees to exercise the discretion. 

Another cause of delay can be caused by nomination of beneficiary records not being maintained.  If a trustee knows where the member wants the money to go to naturally the process is quicker. 

What is Ellipse doing about it? Firstly we have established a Mastertrust and lots of our micro, small and SME group life schemes use that facility (http://www.ellipse.co.uk/master-trust).   We are also building some more online functionality to help sponsoring employers to be well organised in this area.    

As advisers, sponsoring employers and insurers we really should be really tuned in to getting benefits paid promptly.  Most families have very little margin for catastrophes with real earnings flat and petrol, rail fares, utilities and food costs steadily rising. So it is up to us to make sure we are all organised to make sure the group life benefit works optimally.    

(This Blog first appeared in Cover magazine)

Ellipse launches 10 per cent early notification rebate GIP plan

Ellipse has launched a group income protection plan that offers companies a 10 per cent reduction in premium if absences are notified promptly, or if no employee is absent for more than four consecutive weeks during a year.

Called ‘Interact’, the product follows the launch of InteractPlus earlier this year, which combins traditional group income protection with an integrated absence management system.
Ellipse will offer Interact quotes for groups of up to 300 members online.

It has also added single relevant life policies to its group life range, although these will only be offered to clients who also have registered for excepted group life cover with Ellipse.

The insurer will now also write any of their group contracts for groups of two people or more, rather
than five as previously.

Ellipse CEO John Ritchie says: “Offering group income protection without some mechanism for either guaranteeing or maximising the chances of absences being notified quickly just doesn’t make sense. The process is critical, as we need to ensure appropriate, professional intervention can happen early enough to make a difference.

“We still see InteractPlusas our flagship product because the integration of an absence management process with income protection guarantees that we hear about potential long-term absences early enough. Like all unique products, though, it can be tricky for advisers to compare with the other market offers. They have asked us for a more conventional option, which is what Interact provides, without departing from our core belief in getting early claims notification.”

“Small companies come to us because we offer a fast, straightforward service, including a Master Trust facility, with no policy fees or minimum premium levels to artificially increase their costs.”

http://www.moneymarketing.co.uk/channels/corporate-adviser/news/ellipse-launches-10-per-cent-early-notification-rebate-gip-plan/1060752.article

Ellipse can now generate group policy accounts in minutes

The online service from the group risk insurer enables clients to upload spreadsheets, including any changes in members or their details, directly into a secure environment.
As soon as the upload is complete, new policy accounts are produced and made available online.
Ellipse encourages quarterly updates of data, ensuring a close alignment of the cover companies have with the premium being charged. The overall time spent on policy accounting is now considerably less.
Eva Schwandner, Chief Operations Officer at Ellipse, said "One of the historic reasons for group risk policies being associated with poor service is the length of time clients have had to wait for their policy accounts to come through - typically weeks and often months after a scheme year has ended.

"Utilising available technology, it is perfectly possible - as we have now shown - for accounts to flow immediately from updated data."
"We believe massive efficiency gains can be derived simply by dealing with the right counterparty at the right time.
"For data refreshing, the client is the party with the information we need so it's logical to request it directly from them.
"Advisers are kept in the loop throughout, but the aim is to free them up from handling low-value administration.
Ellipse has made available a video on its website, it takes viewers through an example of a company updating its data from start to finish.

http://www.covermagazine.co.uk/cover/news/2217983/ellipse-can-now-generate-group-policy-accounts-in-minutes

Ellipse is sponsoring The Drift Kings

Ellipse is sponsoring The Drift Kings, three underprepared but enthusiastic students who are driving a van overland to deepest Mongolia.  (One of our Scheme Underwriters, Jo Garrett, is the – somewhat concerned – mother of one of the three, which is how we first got involved with them.)

Once (if?) it gets there the van will be handed across to a local community to be used as an ambulance, supply-carrier, bus or all of the above (and more!), so it’s all being done with a very good purpose.

You can follow their adventures, donate and find out more about the cause at:
http://mongolia.charityrallies.org/dogooders 

When does cover cease?

Since the removal of the default retirement age (DRA) employers cannot (in most circumstances) force the employee to retire at a fixed age. But as the industry was able to secure an exemption from the DRA for insured group life benefits, employers now have to decide:

“Should I provide group life benefits to members of staff over the state pension age?”

If the answer is “YES”, schemes should be designed so that all members of staff over the SPA receive benefits.  ‘Extended’ cover for some individuals and not others is no longer possible.

For employers who take this line, Ellipse can provide cover ceasing at a fixed age of 75.  There will be no underwriting or actively at work requirements; cover will continue either to age 75 or until the employee retires or leaves the company, whichever comes first.

Thanks to the exemption for group risk, if the employer decides the answer is “NO” we can cover up to age 65 or SPA, whichever comes later.  Cover can then only be extended for specific members if they undergo full underwriting.

If you have existing clients with us, they need to decide if their answer to the question above is “Yes” or “No” when their schemes come up for review – we can of course look at any schemes with members already close to existing cover cease ages before then.  

Along with my other colleagues in the Distribution team, I would be happy to field any queries you might have around the impact of the removal of the DRA on your clients.

Health Insurance magazine's Product of the Month...

...is InteractPlus, our new contract providing integrated income protection and absence management. Their review (read it here) awarded it 8.5 out of 10.

More information about the product, the 'Sick Notes' research we conducted in conjunction with Professor Cary Cooper, and the presentations from our product launch event, click here.