What role can insurers play in driving up industry advice standards? – June protection forum part 2

Adam Higgs: So moving on and continuing the discussion from the last session, in this session we’re going to hear from a couple of insurers in terms of a lot of the things that Tom was mentioning. We will give them a chance to maybe give a reply to what Tom was asking for, but predominantly to look around what they do in monitoring business quality that they receive from different advice firms, the types of data they collect and what that tells them about firms. What I’m particularly interested in is ‘what are the typical traits of firms that that have high business quality compared to the traits of firms that that the quality maybe isn’t quite as good’.

 

So we’ll be hearing from Legal and General, we’ve got Mike Pritchard, whose name has been mentioned at least once already, so I’m glad we’ve got you on board. After that, we’ve got Andy Philo from Vitality, who will be talking about what they do and particularly the relationship between business quality and consumers with the Vitality Programme, which is fascinating and tells us a lot about how engaged clients are.

 

So having said all that, I’m going to go to Mike first. Mike, welcome. Good afternoon. On that note, I’ll pass across to you and I think you’re fresh from your business quality awards the week before last?

 

Mike Pritchard: Yes, absolutely. And there’s a few people on this call today, I recognise, who were actually there and either won awards or got some commendations for their business quality and their programmes. And thanks to Tom, Tom’s teed this up perfectly actually. And certainly from a legal and general perspective, we’ve run a distribution quality management programme focussing around lifting the bar for business quality, for Intermediaries for probably the best part of 15 years now. I created the Business Quality Awards programme with another chap who’s no longer with L&G back in 2010. Over the last 11 and a half years with a little bit of a break with COVID we’ve given out over 120 odd awards to about 100 different advisors and businesses.

 

So in terms of what we’re doing in the marketplace to actually kind of make sure there is a better space for businesses to see what good practise looks like. The Business Quality Awards is one of those one of those programmes and platforms. And as I say, for me, it’s been great to see the development over the last 11 and a half, 12 years, where business quality was always seen as a given for some of those businesses that are actually on this call today. But we wanted to actually introduce what that actually meant in terms of good customer outcomes and to be able to promote those as well. So that’s one of the reasons why, as I say, the business quality awards for us is a bit of a shop window and a lens on the industry itself to promote those that are performing well.

 

I suppose the big challenge we’ve got, and going back to where Tom is obviously focussed at the moment, is around what we’re doing in the industry to try and make sure we cut out those businesses that are either poor performers causing customer detriment, approaching customers in a way where they’re actually ‘pester-selling’ I suppose is the word where the basically bombarding customers with call after call after call until they’ve relented and they’ve actually kind of said, right, okay, we’ll just buy from you, and then obviously that kind of translates then into high cancellation rates and some of the other things that we track, so cancelled from outsets, when a policy goes on risk and doesn’t pay a premium, and lapse one. So anything that pays one premium up to 12 premiums in that first 12 months. Really, really important metrics for us in Legal & General. So when I look at the focus that we’ve got, we probably spend 90% of our time around telephone based firms because that’s where ultimately the margins that we look at, the customer detriment, the NPS score in the customer experience, we track all of that. But more importantly, why policies go on risk and then suddenly come off very, very quickly and buyer’s remorse or whether there’s other aspects, brokers churning -we see a lot of that. Those are things that really stand out for us.

 

That’s where the teams that I manage, we spend most of our time these days digging into the weeds of that and trying to understand exactly what that means. And we do get to a point where we say, do we need to have or do we want to have a relationship with those businesses that are constantly deviating from standard in terms of what we would actually see as kind of metrics, which would be seen as tolerable. And it’s critical for us that we actually act quite quickly. So again, I can only speak for Legal & General, but I run audit teams, I run a business consultancy programme as well. So we have audited firms, we do around about a dozen a year, but we’re also in a position where we’re going out there at the moment and we’re offering a kind of positive business consultancy programme so that we can work with businesses and those that want to actually improve on their current programme, look at where we can do a gap analysis with them to try and see if there’s areas that they can actually improve their programme. Then we are prepared to actually kind of invest our time and our kind of resources and make sure we can offer that service out to partners with Legal & General.

 

I think it’s a critical thing for us because the big, big issue at the moment is the cost of living crisis. Around about August last year, I did a couple of papers around where we see the kind of the journey going with this cost of living crisis. I can see massively the effects on this industry at the moment and more importantly, telephone based firms who rely on a supply of leads. And then obviously kind of making sure their ROI around those leads is healthy enough that conversion is healthy enough. And we’ve seen already this year the impact of the cost of living prices and those people actually now reining back on what they’re spending.

 

So there’s one equation but three parts to this. So customers are cancelling policies and we’re seeing cancellation rates starting to rise now. This is going to get a lot greater as we go into October. So Q4 will be the heavy pinch point. The reason for that is that people will actually start to spend more on their heating and obviously they’ll lighting, Their utility bills, etc. The way that they’re spending their money will be analysed in greater detail. We know that as lapses rises, businesses will maybe start cutting corners because they will have a fixed cost and they’ll have a kind of run rate of applications that they’re going to need to actually keep that business trading. And we know that when corners are cut, we know that quality becomes a by-product of that as well and gets impacted.

 

To give you some idea, over the last five years, I was looking at the stats the other day; in the telephone space we’ve seen 50% of the businesses that we’ve traded with over the last five years expire, either close or we’ve terminated them or they basically just faded away from the marketplace. The big challenge that we’ve got with some telephone firms and probably more so in the non advice space, is that those individuals in the businesses, they don’t go away, they look at different ways to come back into the market. So it’s within Legal & General, and I’m sure it’s within other insurers, and I won’t speak for Andy because I’m sure you’ll be able to comment on this in a minute from a Vitality perspective, but we do need to track these because ultimately, if that practice is bad practice, the chances are it’s going to be a phoenix in bad practice, another kind of new entity at some stage in the future. So we’re extremely vigilant in trying to make sure that we can lift the bar across the industry and more importantly, only allow those that we feel are actually kind of fit for purpose to actually trade in the space.

 

The onboarding, the entry level now to actually become a qualified agency within L&G is a lot higher than it was five years ago. I’m really proud of that because every single year we’re looking at different ways that we can actually kind of make sure that bar is lifted. The entry qualification. And apart from just having an FCA number which used to be the case, you could have an FCA number, you didn’t need to sign a personal guarantee and effectively you were given licence to then write whatever business you wanted to. Insurers and Legal & General many, many years ago, we didn’t do the analysis around quality that we do now. And in effect, the industry itself has actually mushroomed to the stage where we currently have a huge amount of business from telephone based businesses. And realistically, that needs to be reviewed. And as I say, we do this in a fairly diligent and structured way now.

 

Critically for us, we want to try and make sure that businesses that trade in this space are doing the right thing. So whether we are auditing firms or whether we are actually doing sample checking, which we do on a regular basis, and that’s a range of across a range of different departments and different teams that do that within Legal & General. As I say, it’s really important that we actually put that quality metric and we’re actually able to measure performance in a way that gives comfort to those good businesses, the businesses that are on this call today to know that, you know, it’s not a Wild West out there. It doesn’t exist in the way that it did years ago. And every month that goes by, we’re looking to make sure as an insurance company were up-ing our game and we’re able to actually give comfort to the likes of Tom and the PDG and attendees on this call that, you know, this is an ever evolving programme of trying to make sure that the quality mark is there.

 

In terms of what we’re looking at it across the different businesses – What looks good? What doesn’t look good? So what looks good? Value exchange with relationships with customers, absolutely critical. I mean, I come from a sales background many, many years ago, but the one thing, if I put myself in a customer’s position, I always wanted to make sure that there was some value exchange. If I get something from you, then you get my loyalty back. That’s a really simple thing. And ultimately, if you look after me, then basically I’ll look after you as well. And that’s one thing that we do recommend to every business. If you have customers, you have got a duty of care to make sure that you have a relationship with them and you actually get something back from that customer, whether it’s feedback, whether it’s kind of their loyalty over a period of time, whatever you think you need to see in terms of kind of what your metric is to get that relationship value, you need to have that in place. So that’s the first thing.

 

We do a lot of segmentation around clients and we do visual analytics and we do predictive analytics around every single business that we trade with so we can actually understand a little bit more about the socioeconomic and the socio-demographic view of customer client banks within each agency. And we do see a fairly high propensity of customers from the lower socioeconomic classes, from telephone based firms. It doesn’t surprise me because ultimately if you look at where the leads are generated, it normally comes from predominantly social media, customer surveys, there will be some kind of alliance or affiliate type approaches as well. But the bottom line for us is that we do see kind of common trends from those customers that do come from social media. And we also can track that as well and see a high cancel from outset and a higher lapse rate there as well. And we always say, look, you know, every customer’s probably got legitimate right to have insurance, but you just need to do a little bit more fact finding, understand the real reason as to why they should have a relationship with you.

 

The other thing that we would say as well is that and I do this, I see around about 100 different businesses every year, I try and make a point of actually speaking to business owners as much as I can. And the question I always asked them is, what makes you stand out from Joe Bloggs down the road? What are the 1 to 3 USPs that make you unique for your customer? And ultimately allow you to trade in the space and give you longevity as well. And as you would probably imagine, sometimes I kind of get the usual thing, which is, ‘Oh, we’re just really good at what we do’. That’s just not good enough. You need to have things that basically make you stand out. And more importantly, if I phoned up your customers in six months time and said, Where did you get your insurance from? Nine times out of ten, they will say Legal & General. I don’t want them to say that. I would rather them say Joe Bloggs financial services, but I got a Legal & General policy from them and that recognition of who the broker is and how deep the relationship is with that broker is a good testing point in terms of being able to kind of have that recognition there.

 

In terms of those businesses that we see common traits as to why they fail, normally, it’s there’s a few things that Tom’s pulled out already, they will predominantly rely on leads that are bought from all sorts of lead generators, lead providers. Some of those, the non-standard ones. And normally what we see is that those leads are churned quite quickly. Normally sold as exclusive leads, don’t really see them ever being exclusive unless that customer decides to kind of destroy their laptop and never go on the Internet ever again, because basically there is a connexion there – you put your details in once and it actually gets kind of proliferated quite widely.

 

In terms of cash flow. It’s normally hand-to-mouth. Quite a few businesses we’ve seen where they basically say, look, we’re just trying to stay ahead of our counsel from outset and our lapse one – that’s not the way to run a business. Effectively that means that  you’re short term, you’re not long term. You should be looking at a 3 to 5 year plan. I normally ask businesses, tell me what you look to do in terms of your 3 to 5 year plan and give me an idea as to kind of what that means to you.

 

The other question I normally ask is, tell me what your exit plan is. Sadly, in this industry, I think there’s a question that’s not been asked that much. But in terms of the exit plan for me would be how do you intend to actually get off the standard indemnity treadmill, which a lot of businesses are on? And at what stage do you see you having embedded value in your business if you do decide to go and sell your business. And that’s something that I think more insurers probably should be asking and maybe will be asking of those businesses where their paying upfront commissions.

 

I kind of look at it from a Legal & General point of view. I see as being a bit like a bank where we’re actually loaning money in advance for obviously four years worth of premiums being paid. Once you sell that first policy and then you get into that kind of routine of selling more and more policies there, your business effectively is they’re going around that treadmill, that cycle until the day where, you know, obviously you’ve kind of paid off all indemnity and you’re able to actually exit the industry. I’ve yet to see a business, a telephone based business successfully exit the industry. And that’s why I want to say that 50% of the businesses that we’ve seen over the last five years or so, either close or fail, there was no exit plan there.

 

So it’s really important that if businesses are setting themselves up, you know, when do they see an end point or if they don’t if they see a succession point, what does that look like? And I’d like to see that from an insurance point of view.

 

We’ve created a website with our DQM programme, which has got a lot of key tools on there. I’ve recorded a set of podcasts, I am about to record a new podcast this week, Cost of Living Crisis, and then another one in two weeks time around business consultancy and how you can access that. And I would encourage anyone that’s on this call if you want to go and have a look at our advisor centre and look at our DQM programme on there, feel free to do that. There are tools on there that are all free to you guys and I would recommend that you actually dip into them. So hopefully that’s been a little bit of a walk through, It’s giving you a bit of an overview as to what we do, how we do it, and more importantly, some of the key things that I look out for. I’m more than happy to answer any questions, and if anyone’s got any challenge points they want to bring through, then feel free to do that.

 

Adam Higgs: Thanks, Mike. At that point, I’d just say to the advisers on the call, I mean, this is your opportunity to ask these guys any questions. And I’m particularly interested in hearing feedback from anyone that’s gone through the consultative process with any insurer, not just Legal & General or Vitality, and we’ll hear from Andy in a second, and what that’s actually done for your business. What learnings you’ve taken from that, how you might have improved processes or your approach and what impact that might have made generally really interested in how that might have helped you. Also, just as interested in hearing from the advisers out there around what more can insurers do to help you? Tom, very eloquently in the first session, suggested a few ways that he believes insurers can help reduce the bad practice across the industry – but are there any other ways that insurers can help you improve your business, improve your persistency and so on? Whilst you guys are mulling that over. I’m going to pass across to Andy Philo from Vitality who is going to talk about Vitality’s approach to business quality, and particularly how you monitor usage and participation in the Vitality Programme, which I think it’s probably fair to say you probably get better participation from end consumers than anyone else out there. So I’ll pass across to you, Andy, to explain what that all means.

 

Andy Philo: Thanks, Adam. Good afternoon, everyone. Thanks for asking me to speak today. It’s really nice to follow Mike, I’ve known Mike for many years and he is a bit of a legend in the distribution quality space, got a lot respect for for what he what he does over at L&G.

 

So in the same way that you want to secure quality clients, Vitality as an insurer also wants to work with quality distribution and we’re no different from any other insurer in that regard, I guess. So we’ve operated a regular broker risk forum that reviews the quality of brokers that distribute our products. So we, monitor our single advisor firms, multi advisor firms, networks, national account service providers, and then we also monitor specifically across the advice and the non advice space. We also work alongside and in conjunction with industry bodies like Elixir has been mentioned a few times today and also reinsurers to be able to spot and identify trends and then we share best practice with those. And then we make our decisions sort of independently based on the requirements that we’ve set. The range of metrics that we’ve monitored historically have really been focussed on the downside, it’s around poor persistency, it’s complaints, non-disclosure, etc., the sort of things again that have been discussed. But clearly on occasion decisions have got to be made around the agency. So that could be we closed an agency, so the nuclear option of just closing down an agency, we could put suspension in place whilst the metric is improved or controlled, we could switch them from two year terms to four year terms. We see sort of bigger lapse rate issues around brokers that write in two year terms. So we really do sort of question, the value of those, but we do have a right to remove those and switch to four years if that’s one of the issues.

 

We maybe offer non indemnity terms as opposed to full indemnity or a hybrid. And again, we do try to encourage a movement towards a sort of hybrid commission, so an 80, 20, 60, 40, etc. in favour indemnity. It may be that we switch to commission on release of first premium as opposed to once the case is activated. We also conduct site visits to audit or listen to calls, but historically we’ve really focussed on negative actions.

 

So we just introduced our distribution quality measurement framework. We launched it back in February, March this year. We now measure seven key metrics and some of them are the same as previously. But I want to talk about one of those in particular, as Adam’s suggested. So we look at lapses, we look at MTU’s or MPW’s, cases that don’t proceed. We look at CFIs or CFOs where policies are put on risk but no premiums collected and like Mike will also look at those premiums over the first one year, two year, three or four years typically. We look at straight through processing rates. So a high STP rate, you know, that could be good because it might mean we’ve got a sophisticated underwriting rules engine, but it also could mean that there’s non disclosure there. But equally it could mean that an adviser understands our medical requirements, so he’s put in maybe cleaner cases through that, but that’s an indicator of risk for us.

 

We look at eMR consent, we look at claims. Non disclosure, so particularly post claims sampling to see whether there’s been disclosure. We do some of that upfront as well before obviously we get into a claim stage and then the final is the Vitality programme engagement. So that’s the seventh sort of metric which I will come back to shortly.

 

Just a bit more on our DQM strategy. We give a score out of 50, we also segment the market. So we’re comparing like for like brokers. So for example, we put telephonic in one cohort, mortgage brokers in another, wealth or high net worth investment firms in one risk specialist, etc. It is quite difficult to do that because some firms will be hybrids, you’ll obviously appreciate. What we’re trying to do is look at metrics, because metrics do vary depending on the different types of distribution as we’ve spoken about. But we try to match those to the cohorts that they’re actually in, and then we rank status as each firm. You have to have a minimum level of qualified business to include in there. So if you’re just an occasional writer, then you wouldn’t be included in this. So there’s a minimum level of qualification before you enter into the DQM process. And then our business consultancy will review these metrics with you as an adviser and help you to improve the poorer metrics if that’s something that we can do. But we also want to recognise good or exceptional performance. There is an element of discretion within all of this based on trends and volume. Maybe you’ve got an individual adviser within the firm that was a churn merchant. He or she is now left and that that could have a positive impact on the score now. But there are some sort of negative actions, closure, suspension that I mentioned earlier on. But what we want to do is recognise and reward those that show good or excellent metrics. So what we can do now based on this score in this new distribution quality measurement framework is, it may be possible for us to pay enhanced commission, it could be we enhance the service levels through underwriting or new business support. We could provide additional business consultant local support, could give them access to technical specialist support, help with award nominations.

 

And we’ve also seen a very direct correlation. It probably won’t be a surprise to you, but between policies put in trust and improved persistency. So we’ve built a trust calculator that shows that direct correlation between improving persistency and also just the value of retained commission and an improvement just by putting in an extra 10% or 20% of your policies in trust. So that’s been quite a big, big win and it’s a good metric to manage.

 

So unique to us, and as I said, to come back to is Vitality engagement. And as you probably all know, we have a shared value approach to client engagement aside from distribution quality, but we encourage our clients to get healthier and the value is that they are less likely to claim and they get rewarded for doing so. And we hold a lot of data, really valuable data. So we’ve got about across the globe now 20 million members through our partnerships across all the different markets. I think we operate in something like 31 markets now and that’s given us something like 40 million life years of data. So what we’re doing is we’re taking the associations between lifestyle, risk behaviour, mortality and morbidity, and then we use all of that actuarial and behavioural and clinical data and in our programme and we believe that can now be seen as a proxy for distribution quality.

 

So effectively we made our shared value model an extension for rewarding brokers for doing the right behaviours. So we’re looking at firms and saying, ‘are their clients utilising and benefiting from the Vitality programme?’ Now you’ve probably heard me say this before, but for a client doesn’t want to engage and that’s absolutely fine, but there’s no, it’s not mandatory at all, but we’d like them to do that, obviously, because there’s a win for us, a win for them and a win for you. But one element might just be how simple is it? How many of them are just off bronze? So our entry level status. Are they receiving value from the plan they get? Can they unlock value? Have the benefits also been explained and understood correctly? And we can see from that engagement quite easily whether that’s taking place or not. And if and if an adviser doesn’t want to talk to them about the Vitality programme, then we can do that. We can get clients set up in the members zone, get a health review done, and then that’s that sort of value exchange, I think was the term Mike used quite like that, around keeping in regular touch with the client and we can help you to do that and work with you to, to enable you to go back to your client.

 

But why do we do that from a broker quality aspect? Well, I guess it’s around lapse rates and we look at customers and if we can see them going from unengaged to engaged, using all that sort of massive data that I spoke about, we can see that there’s an improvement of lapsed rate by about 20%, around about 17.5%. So people moving from an unengaged relationship with us and you, to an engaged relationship and they carry on improving that. They get continuously rewarded, but also their lapse rates come down by about 20%. And then clients reach our top tier of status, so platinum, are two thirds less likely to claim. So that’s again over a large cohort that we’ve explored that.

 

But engagement is a proxy of quality. It’s not we don’t just look at it in isolation. Just probably the last few things really from a regulator point of view, obviously looking at product value distribution quality because the clients getting value from the products and we can see that that’s been explained by the adviser and clients are engaging over and above that, getting off that bronze level, which is really easy to do, they’re getting value from a product and not just waiting for that worst case scenario that we all sort of dread really. And it’s just one metric that the Vitality engagement is one metric, as I’ve said, amongst lots of lots of others.

 

So rather than just focus on negatives now, we’ve taken that step further and been able to share back values for advisors, whether that be increased commission, whether it’s support, additional support, access to additional support, it’s sort of a different approach to a distribution quality management programme. And I think it’s just finally for me, probably it’s important to state that the scoring philosophy is very much open to positive manipulation. So what I mean by that is you can influence the metrics and we’ll put reasonable time frames in order for you to to manage maybe a poor metric there. We’ll sit down, we’ll work with you, we’ll run frequent reviews and debate the numbers and challenge the numbers if that’s the case, to work out to make sure that we’ve got that data right. So I’m going to stop there because I think we’ve probably spoken to too long as insurers and probably hand back to you, Adam, to sort of open it up to the floor, if I may.

 

Adam Higgs: Thanks, Andy. I think that’s quite fascinating, and it’s an area that we’ve long believed for a long time and I absolutely agree. I mean, for those clients that are engaged with the plan and kind of understand not just what the plan is, the core of the plan and what that’s there to do, but maybe some of the wider features, some of the support services, obviously Vitality to do that side of things really well. But other insurers do offer support services that clients can use on a day to day basis. But by discussing that with clients, what you seem to be saying there, Andy, and getting clients involved and using those there, they’re seeing the value of that plan more readily and less likely to lapse. Kind of makes sense.

 

Thanks for that. Again, just to advisers and if no-one is going to come back I will come back to to both Mike and Andy and ask some questions around maybe some cases where you have gone into firms and helped improve the level of their business and how you went about that. But in advance of that, Ian from our team has put some interesting points in the chats but also wants to talk about VouchedFor who presented at our EATT conference a couple of weeks ago.

 

Ian McKenna: Yes, can I ask a quick brief show of hands how many firms on the call use VouchedFor to get ratings or feedback from their clients.  I don’t know if you’ve seen the new service that they’re just putting together, they launched it at our event a couple of weeks ago. And I have to say, as someone that is a data geek, it blew me away. They basically pulled together the results of a quarter of a million client reviews of their advisers and put together some incredibly powerful data on what are the things that make a client rather choose an adviser for the first time and stay with that advisor. Now, to be fair, I think a lot of it has been wealth focussed and I’m going to go back and talk to them more about protection. But this really is the data they can give firms the ability to look not just at how they perform overall and identify weaknesses in their processes, they can identify specifically what are the behaviours that make a client say they will refer other people to you and actually refer other people to you. And their data had very clear differences teasing this out and then they can drill it down to an individual adviser level so that you could use it both as a TCF and or consumer duty tool, but also to manage your your advisers and understand who are the people that are converting leads really well and who needs some more work. And most importantly, where do they need the more work?

 

I’m going to go back to them anyway and talk a bit more about protection. We might even try and get them on a future forum. I really was blown away by what they it didn’t win a Best in Show award. I was quite surprised, I thought it would do. We will have the video of that service up shortly, as we will for all the disturbance demos and we’ll make sure that we circulate that to the Protection Forum audience as well as the Advisor Software audience. Hopefully that’s useful folks.

 

Adam Higgs: Thanks Ian. There has been a couple of responses to the point you made Ian around support services and how people are using that. Scott, you’ve made an interesting point there about a member benefits type document that you’re doing. Is this a bit like an annual statement, to remind clients around what they’ve got access to?

 

Scott Taylor-Barr: Yes, well, it leads kind of into what Mike said about clients remembering who their adviser is. One of my first things I did when I when I joined the practice and started advising was I got a load of annual statement letters from orphaned clients and one thing I learnt very quickly is when I rang them up to tell them, ‘Oh, you know, it’s Scott your new adviser’. ‘Who were you then?’. They remembered that the insurer was Zurich or whoever, but they didn’t have a clue who had arranged it. So from that point forward I said, Well, I’m going to have to make sure that I remind these people constantly of who I am. So whenever I get an annual statement notification from an insurer that triggers in my process to send the client a letter so they’ve got a letter of my name, copy of our newsletter. And then just recently I’ve added these, these sort of member benefit statements, which all I do is go on to the insurers websites and they’ve all got a document of some description that explains all the other added features, you know, the remote GP services or the helplines they’ve all got on that sort of stuff. And I just make sure a copy of that goes to them as well. So it sort of reminds them of that value exchange, which I think is a new phrase we’re all going to note down and steal, thanks  Mike. And at the same time reminds them of who I am. So it kind kills two birds with one stone.

 

Adam Higgs: Thanks, Scott. Rob, you’ve got your hand up, do you want to come in to reply on that.

 

Robert Harvey: Well I was just going to say, just coming back to this data point as well around sort of sharing data with advisers. I wonder, I don’t know how many insurers shared data around some of these support services with advisers. I can’t remember from my time advising what sort of data I got. You know, I guess on simple stuff, like if the support services are available for a smartphone app, has the client downloaded that smartphone app? I imagine any of the insurers offering those benefits would have that sort of data. I’m thinking here of the off the shelf apps that you can download that insurers make available to their policyholders. And I guess if that data was made available and actively shared with advisers, that will be quite an interesting thing from an adviser point of view to act on. Has the client downloaded an app giving them access to virtual GP, physio, mental health support, if they haven’t There’s a good opportunity I guess there as an adviser to call that client and have a conversation with them, remind them of those services and encourage them to download it. Because I’m guessing, I don’t know, but I would have thought that in exactly as Andy said, Vitality Policyholders that gets a platinum status because they’ve engaged with the programme are less likely to cancel. I would assume that clients that are using any of the day to day support services that pretty much every insurer now, pretty much all of them offer something that can be used on a regular daily basis, I would assume that clients that are using those services again are less likely to cancel as well. So yeah, just an interesting link around that.

 

Adam Higgs: So on that point, I’m going to throw the question to Andy and Mike. In terms of the data you go back to advisers with about their business. Is part of that how much the clients are actually engaging with those the Vitality plan in your case, Andy, and the wider support services, Mike, in terms of Legal & General, is that something you give back to them? Andy, I’ll come to you first.

 

Andy Philo: Yes, certainly we can do that. I mean, I think as a general rule of thumb, that if a client is using three of our rewards through the Vitality programme, they’re never going to lapse that policy. So we operate quite a good retention process. We have a team dedicated just to retention. So if a client is actually approaching us and saying, I want to cancel this policy, obviously we refer it back to back to the adviser as well. But it may be that we speak to that client and then remind them of the benefits they’re getting because we can see at a glance what activity, what rewards they’re actually utilising. There’s a general rule of thumb. If they’re using three of our rewards, then they’re never going to cancel that policy because the sort of wider value of that plan is too extensive.

 

We obviously provide annual statements, and that is about the benefit of the plan, you know, sort of high level benefits that Scott referred to, but we also include within that the Vitality Rewards statement. So a client can see line by line what rewards they’re actually receiving. So again, netting that off to show the sort of overall cost of the of the premiums they’re actually paying has been quite valuable for us. But we really try to work with advisers, encourage advisors to do exactly as Scott says, is that at that time that goes out, you actually follow that up with a with a call or a letter just to reminding them of your additional services, maybe swap it up, insurance or whatever.

 

Mike Pritchard: From a Legal & General perspective we’ve been looking at the last couple of years of trying to get an external portal to allow any adviser that’s got an agency with L&G to have access to their data. Easier said than done, by the way. So we’re still working through that one. But I think it’s an absolutely valuable thing for everyone to have because ultimately you want to know, certainly around we do it with CYD’s or checking your details forms. That’s a really clear look through as to how many customers are interacting with the requirement to check the information that they’ve given us on the digital application. And they’re happy to say this is accurate, this is a true position and we’re quite comfortable now that once this goes on risk, potentially there should be no issues with the policy pay out if a claims ever made. So that’s a really good data point.

 

I think cancel from outset, lapses, claims experience all of that information which is really valuable to any intermediary should be available to them. But it’s just trying to make sure that we’ve got the vehicle, a secure vehicle that can allow the adviser to have access to that. So it’s a work in progress for ourselves. But I think going back to what Andy said there, I think they’ve got a very unique value proposition within Vitality, which means there’s a tangibility to the policy there, which I think a lot of other insurers basically haven’t got and I think that really does mark Vitality out in the marketplace. I kind of really respect the fact that he’s got a very, very clear view as to the highest value retention customers are the ones that actually go through a certain set of steps throughout this kind of programme that he’s got that, you know, is easy to measure.

 

So, you know,  it’s unique, but it’s something that potentially kind of I go with every insurer and I go with every intermediary, If you buy something, you need to know what the value of that is and you need to know at some stage it’s going to pay out if you ever need it. And realistically, that’s always going to be the kind of key tenet of what an insurance policy should be about. So it’s for the insurer to actually remind customers, but it’s also for the intermediary to make sure they regularly update the customer and just tell them about what they’ve got key features, benefits, and the fact that they’re the ones that can actually be the conduit to make sure if anything does happen, if they need more insurance, or if they need to have an explanation, or if there’s a referral recommendation programme, they’re the ones that are actually in the middle and they’re able to control that.

 

Adam Higgs: Thanks, guys. Ian has had his hand up for a little while, just before I pass across, we’ve heard a lot from Andy and Mike, at vitality Legal & General respectively. If any other insurers want to come in on this conversation, we’re not limiting this to Vitality and Legal & General. Rob’s put a perfectly good question in the chat there with regard to some of the other support services and what insurers might do to help advisers understand which clients are actually engaging, which a few people have responded saying they’d absolutely want to know which of their clients engage and which don’t. Ian, I’ll pass to you on that note.

 

Ian McKenna: Great. I just wanted really to come in and say, picking up on Rob’s point, actually, there is a lot of behavioural finance evidence primarily from the US, but I have a look around and see if I can find some UK data on this. Essentially, if you get a customer to play a part in building a financial plan, this has come out of a lot of the cash flow planning tools, if you get a customer actually to buy into that process and  they feel they built the plan with the adviser, there’s far, far higher persistency. This is primarily around investment contracts, but it should be even more for protection contracts if we could harness it in the right way. Adam, I think you and I need to have a look at how we can potentially support people in helping building protection plans.

 

But, you know, the behavioural finance evidence is very, very strong indeed on investments. So I can’t see why it wouldn’t be the same for protection. Obviously that’s things we need to think about going forward. Can I just also call out my earlier comment – Legal & General, I think are recognised as the company that’s been the most advanced, can I put it that way, in keeping advisers up to date and have a very specific programme around lapses. I’d like to ask what other insurers are going to be doing this, implementing a similar approach. If we’re facing increased lapse numbers, surely it’s more important than ever to make sure that there’s a system to to flag that to advisers. And actually, Mike, I know the data that you’ve got on keeping policies on the books is very impressive. Can I invite you to share some of that date data just so we can get a clear understanding of the amount of business that can be kept on the books. And then I’d really like to hear from some other insurers if they’re going to follow the L&G lead.

 

Mike Pritchard: Yes, we’ve got to be careful. Listen, I would imagine Andy and probably some of the other insurers on this call will be of the same position. We could give you an idea as to what we track. We can tell you that’s not a problem. There’s a certain amount of data that we can’t give you, which would obviously be kind of potentially kind of across the line in terms of what I could actually share and probably what the insurers could share. But if you gave me some idea, Ian, as to maybe outside of the session as to what you think could be the kind of framework of what you wanted, then I’m more than happy to work with you on that one.

 

Ian McKenna: I recall being quoted publicly data on tens of millions of pounds worth of premium that’s been kept in force over the years through the process that you have. And then if the advisers want to comment on the L&G process or am I wrong, is it not the most advanced process. Are there others doing it better?

 

Mike Pritchard: If you’re relating to our early warning system, and quite rightly, I mean, it was something like four and a half billion pounds worth of insurance was actually either reinstated or saved due to interventions from intermediaries. And that’s over the last 15 years or so, and that’s public knowledge. So we publish that every year in the same way that we do with quotes, with claims data as well. But yeah, we’ve got lots of data that is in the public domain and I’m happy to share that with, with anyone on this call if they want to see it beyond this call.

 

Adam Higgs: Caroline had a point…

 

Caroline: No, it’s only just wanting to make a point. I’m not a protection adviser. I’m a wealth manager. And clients don’t come to me to buy protection at all. But they do end up being advised to take protection because they’ve not thought of it. They’re not seeking recommendations in respect of that. They’re seeking recommendations in respect of pensions and investments. But I don’t think I’ve had any clients lapse or cancel their policies because even though they didn’t know that that’s what they wanted or they needed, they do understand the value. And I think that’s I think it’s more about value that clients need to understand, and that’s what keeps them engaged with it.

 

Adam Higgs: I think that’s a great point to finish the session on.