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.

Oft-quoted rule of pension planning: 'Don't delay'

The stagnation of the economy and in particular the struggling plight of SMEs, has led to calls to postpone the introduction of auto-enrolment, most recently in a Government report by Adrian Beecroft.

But the nine million workers who currently contribute nothing towards an occupational pension – and who have no ancillary benefits – cannot afford any delay. Besides, many employers have already made substantial investments to gear up for auto-enrolment.

Auto-enrolment is a huge opportunity to raise the bar for employee benefits by ensuring that the workplace becomes a universal safety net for all employees, regardless of their income. In the longer-term, after the introduction of pensions, I believe employers will make a virtue of the necessity to contribute and offer broader benefits programmes, including life and disability cover.

In turn, auto-enrolment will be the trigger for closer convergence of group risk with pensions and other workplace benefits. Technology will be the key to giving IFAs the platform they need to be able to offer comprehensive benefits to employers in a hassle-free way.

Improved AALs - especially for smaller schemes

We've improved the way we calculate automatic acceptance limits (AALs, also known as ‘free cover limits’) on group life schemes.

The changes minimise the number of members whose benefits require underwriting, with the biggest impact being on small schemes, meaning that the process becomes as hassle-free as possible for them.

The changes to AALs means that Ellipse only underwrites members whose benefits are a long way from the scheme average and will benefit small schemes in particular, reducing the need to underwrite as frequently and making the process easier.

Even where underwriting is required, Ellipse offers its fast, easy, online assessment that allows the whole process to be completed within 20 minutes (as opposed to the usual days, weeks or even months our competitors take) in the majority of cases.

With no minimum premiums, no policy fee, the availability of a Master Trust facility - and now our improved AALs – it adds up to a compelling group life proposition for advisers to take to their SME clients, so if your company hasn't yet signed a Terms of Business Agreement with us yet, please visit http://www.ellipse.co.uk/working-with-us

Communicating direct to the client about their insurance cover

At Ellipse we have purposefully set up our processes and systems so that the right people do the right stuff at the right time and duplication and delays are cut out of the process. That is why important client documents like the policy documents, statements of account and direct debit collection advance notices are delivered automatically and immediately after issuance to the adviser and client in parallel (never to the client only) as a default.

Advisers are asking us to not use this functionality so that they can check all documentation before it is passed on to the client. For obvious reasons, checking is not a high priority on the advisers’ task list and therefore this practice causes delays and service standards that look much worse than they actually are. This reflects badly on both us and the adviser.

It is not unusual for policy documents to be passed on only several months into the contract, when they were originally issued within days of the on risk confirmation. Wouldn’t the client be better off with actually having a policy document at the point of going on risk? Even worse is when direct debit collections from the client’s bank account happen before the client has actually seen the notice that advises of the collection! This then leads to queries from clients as to the basis on which money has been taken out of their account.

Tellingly, very seldom do we actually get a document rejected in this checking process. So what is happening is that all documents are held up from going to the client to cater for the odd one out that might need a change. Process experts call this “designing the process for failure”. Why not allow the documentation to flow through to the client as a standard and then catch the odd one that needs adaptation as an exception? There will never be any communication to the client that you as the adviser will be unaware of, so you will always be fully in the picture about what is happening. Our aim in handling communications direct with the client is solely to save them and their advisers time and hassle – we have no direct sales force lying in wait to poach clients and no intention of inviting business other than through independent advisers.

Nobody really owns the client ....

I don’t regard any brand or service provider owning me. Yet this argument runs constantly in financial services.

Every week in our pink papers, we observe a negative game of ping pong between advisers and insurers. The adviser shouts that an insurer has contacted their client direct and are trying to steal the client. The insurer eventually counters with a statement to say that what they are doing is critical to ensure the fairness in the service of their contractual party. Thus, the mutual paranoia continues.

What is becoming clear though is that advisers probably cannot afford to handle everything once a policy is in force. What we need is a much more mature and transparent process so that the adviser can see everything that the insurer is doing with the client that they have introduced. The challenge for advisers is to properly appraise the processes of insurers, make that a factor in the choice of insurers, allow that routine work to happen insisting that the insurer keeps them informed by copying them in on correspondence. Electronically is better because paper is just too expensive for all parties.

Choose your insurer after appraisal of their process, get out of the way on processes where there is little or no earning potential and figure out a systematic method of sample checking. Perhaps demand service level standards that are published and benchmarked.

So advisers, consider delegating more to your insurers and holding them to account through reviews. Now that would be an interestingly subtle shifting of power in the relationship..........

“Do it right, do it now” or “easy to do business with”?

The other day, one of our best supporting advisers drew a contrast to going on risk with us and one of the established insurers in the group risk market.  We quickly got into a good debate about ‘easy to deal with’ positioning in group risk.  Given that he is an alumnus of a group risk insurer who used that strap line for many years there was a good edge to the debate!

Ellipse have taken a positive and definite decision for our process to be at the other end of the spectrum to the ‘easy to deal with’ insurers.  Now that does appear totally contrarian so I’d better explain myself.

All of the things that we set out in an orderly and logical fashion as needing to go on risk have to be done by every client and their adviser at some point.  Typically, those tasks are often done long after the insurer has assumed risk.  That can feel easy at the time of going on risk but it does mean that all the parties involved have to pick up the file again. 

The further a task is from its natural place in a process, the probability that it is not done increases.  Indeed if it is not done in its natural place the risk that flows from it and the real costs of operation increase too.  Chaser processes are generated and back-logs build up.  We all know how those back-logs can destabilise the insurer, both its cost base and service reputation.  Our approach is to get the job done at the right time and then to reap a productivity dividend for the intermediary, the insurer and of course the client.  The thing just works better from the start. 

If there are gaps in the disclosure as we go on risk then the adviser creates liability for themselves.  Smarter advisory firms are highly sensitive to creating operational risk within their business. 

Overall, switching insurers is not inherently risky unless it is rushed and some sloppiness creeps in as a result. 

I have done the “easy to deal with” positioning in my Swiss Life (UK) days when there was infinite flexibility and an “everything is possible” approach.  There is no doubt that it is a superficially attractive positioning but what became clear was that it brought huge inefficiencies and many unhappy clients in its wake.  It is easy to build up a mass of unfinished tasks, incomplete data and ultimately levels of operational risk which undermine the life office and negatively impact the intermediary’s operations too.  Undoubtedly there were increased costs for adviser firms.  Personally, and professionally, I have resolved not to repeat those patterns in this business.  So we will be striving from a clear philosophical starting point and equipping advisers with systems and processes to enable “ Do it right, do it now” and to get on and make some proper returns.

Time to restructure those group life programmes in hotspots

We could beat around the bush or dance around our handbags (really?) but let’s not.

If you are an adviser to larger corporates, you’ll know the score and have clients who have had single event limits aka ‘Catastrophe Limits’ imposed on your schemes.  You will have split the larger schemes between two, three or four insurers and you might even have bought eye-wateringly expensive catastrophe excess of loss top-ups.  Cat XL is the insider jargon.  

Error Type 1 in advising these clients is assuming that there is no alternative to the capacity limits that your current insurers have provided through the last two or three review cycles.

Error Type 2 would be not asking us to quote at the centre of the restructure.

Outside of what are normally considered ‘hotspots ‘, we can do £300m to £500m event limits at no extra cost.  In the hotspots - City, Canary Wharf, W1, NW1 - you can deepen your clients cover, improve the quality of the insurance counterparty and make major cost savings for the client.  If you can design out the catastrophe excess of loss top-up there are major savings to be made.