By Tom Murray, Head of Product Strategy for LifePlus Solutions at Majesco.
Traditionally IFA, direct sales agents and bancassurance channels have played a large part in the selling and servicing of life assurance products. Bringing the customer to the realisation that they have a need and helping them to see the advantages of protecting their financial future is difficult. Life and pension products are by their nature complex and the expertise of the advisers working in these channels is key to helping consumers make the right choices for their individual situation.
A difficultly now arises due to the change in the nature of consumer interaction with retailers in general due to the Covid pandemic. A large amount of retail that was previously carried out in ‘bricks and mortar’ establishments has now of necessity moved online. The result is that many of those who would never have seen themselves as internet consumers have now suddenly found themselves in that position. And once they have become used to the convenience of operating digitally, it is likely that many will wish to keep buying in this way after the pandemic is over and life returns to normal.
However, the difficulty for insurers is that online shopping is the exact opposite of the style that has heretofore been the approach for life and pension distribution. Online shopping is consumer driven; consumers actively search for the products they want. Clearly, they already have a defined need / want prior to embarking on the search. In the life and pensions sector, given how complex it is to work out further needs, sales have historically been driven by experts helping customers to define their need, before moving on to recommending products to meet those needs. The challenge for life and pension providers and the current financial intermediary channels is to find ways to use the internet to reach customers for this primary needs analysis phase.
Practically all insurers have a web presence and engage in direct to consumer (D2C) sales these days. These sales tend to be for known requirements driven by specific life events. As a result, they work perfectly well for the more commoditised products, such as mortgage protection products, where the need is well-know and clearly defined. The same is true for tax-efficient savings products such as Individual Savings Accounts (ISAs), which get a lot of publicity towards the end of each tax year as journalists fill space discussing how individuals should reduce their tax bill by taking advantage of the tax-efficient nature of ISAs and related products. These external events act as catalysts to drive consumers to search out the products and therefore D2C is a perfect distribution vehicle for them.
But for a more complex assessment of people’s needs, they require to have a full assessment carried out on their financial affairs and a robust discussion of their life goals. Heretofore, this generally happened either in an office environment or in the customers home. Given the impossibility of these approaches during the pandemic and the likelihood of it being quite a while before the situation returns completely to normal, the key question is how to create the same result over a digital medium. The challenges are significant, not least in the fact that most interviews take a number of hours just to assess the needs, even for people in very standard situations.
The key to reaching these customers is going to be a marriage of people and technology. Agents can reach out via phone or video-call but they need supporting systems that will facilitate the giving of personal financial advice digitally. Given the amount of information needed for a fact find and needs analysis process, their supporting platform should ideally allow people input their information or as much of it as possible prior to the interview. This also will reduce the time needed for the interview, as although most people have no problem with a 2 hour face to face discussion, that length of interview via phone or conference call is excessive.
This combination of technology and people is the ideal mix for the post-pandemic financial world, allowing life and pension providers to reach far wider into the market than they could via a purely website offering and enabling them to provide the personal service levels that can give consumers confidence in the products on offer. The future of distribution in the life and pensions sector is going to be a hybrid one.
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