Bad habits in group risk and how to break them

We humans are creatures of habit and routine.  It makes us feel secure.  And we have been known to cling to habits and routines even when those patterns are really bad for us.

In 2008 we created a plan to create a new group life and disability insurer that purposefully looked at very process in our value chain and say why do it like that?  Is there a better, simpler, quicker, more economic way.

One of the sacred orthodoxies was that clients won’t provide frequent data updates and will be hugely resistant to any change to the annual “simplified” administration method.   Our research showed however that the insurers supplying this part of the employee benefits structure were the least well rated and liked by the corporate clients.   “Messy, late accounts and costs that leach into subsequent budget years” sums up what the customers’ finance people  said.

So our approach is based on two assumptions

1.      If you ask the person close to the data at a point in time when the data is current they will give you complete current data  

2.      Clients will like to pay for the actual cover they have in the period that they have it and to be able to budget for the costs  

The big pension led intermediaries who pass data through pensions administrations units seem to love making this horribly complicated and the very biggest corporate clients tend to ask for longer to pay their bills – if they have a “Treasury” function that is a sign that like to hold onto cash -  but pretty much everybody else knows what to do when you ask them to provide a quarterly update of their people insured under the scheme.

Doing a job once a year means you have to relearn it. A quarterly prompting e mail with embedded links to a secure website that arrives when you have the last month’s data to hand because you have been working on it for other purposes just works.  It has become one of those comforting habits that makes life easier.                   

The British 10km | Fundraising for Winston's Wish

Little did we know when we signed up for the British 10km during our long cold winter what a scorcher the day would turn out to be! We were both more than a little nervous to run in the 30 degree heat that has enveloped the country in the last couple of weeks. Our preparation had been good; with plenty of mileage under our belts, but nothing could prepare us for this!

The start line was staggered and we passed the London buses marking the start line about 15 minutes after the race had officially began (I made a mental note of this for the finish line so that I wouldn’t be disappointed when I turned the last corner of the course to see the finish clock!). Music lined the course and we started at a fairly steady pace. My confidence grew as we passed a number of people who looked far fitter and better prepared than either of us.

Shortly after the 2km marker I heard a member of the crowd tell her friend that she saw someone running in a Winston’s Wish vest. She sounded surprised; and this spurred me on further – it is nice to hear the murmurings in the crowd as you run past. Lots of people shouted ‘Go on Winston’ at us as we ran, keeping us motivated around the course.

The official crowd of Winston’s Wish well-wishers (a bit of a tongue-twister there!) waited for us on Embankment and shouted & cheered as we passed by. I can’t begin to explain what a boost it gives to you as a runner to have people cheering specifically for you when running in a crowd of thousands of people. The course looped around through the City and back along the Embankment at which point we passed the Winston’s crowd again and received a second big cheer.

The final few kilometres of the race went by in a bit of a blur – the heat was getting to us and I longed to see the end of the course. Our final time was a respectable 52 mins and 30 seconds – not a personal best by any means, but something we can be proud of amongst the throngs of people and blistering heat.

Thank you to all of you who sponsored us in our race. It was a fantastic event to be part of, and such a good cause to be raising money for. Our sponsorship link is still up at http://www.justgiving.com/samantha-alan  if you have not yet sponsored us but would like to; we would both very much appreciate it.

John Ritchie and Steve Bee interview

We're big fans of what Steve Bee is doing with his 'Jargon-Free Benefits' concept - a plug-in-and-play solution that allows any adviser to take on the established benefit consultancies handling group pensions.  Our systems are designed to link seamlessly into such set-ups, and Steve and our own CEO, John Ritchie, were interviewed by Editor of Cover magazine, Paul Robertson, about smart ways to handle group business in the new auto-enrolled, RDR environment.

Here's a link to the video of the interview: 

http://www.covermagazine.co.uk/cover/news/2231791/video-an-audience-withellipse

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