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Protection as a Service not a Product

Graham Newman, Head of Claims Solutions Europe, FINEOS discusses the future of Protection Products.

Recently at the annual Protection Review in July I posed the question “Are we focusing too much on the wrong end of the protection process?”.  We were discussing what the industry should consider when it comes to designing the protection products of the future.  What I was getting at is that the glamour end of the industry is in sales; we hear much about distribution, price versus cost, consumer perception and how it affects buying patterns, the role of advice and the impact of brand values on market share.  All vitally important components of the protection industry, and all aspects we might term as “access”.  My point though, was that the customer doesn’t really “access” the product until they make a claim.  All they have until that eventuality is an agreement.  This has always put me in mind of a car that you own but don’t drive.  You make all the right choices over colour, engine size, comfort, whether your colleagues will be sufficiently envious; you organise the finances, hand over the cash – and then it sits on the drive against some potential future need that you may, just may, need to drive it one day.  Well, protection insurance is a bit like that, with the proviso that you may actually want the day to come when you can “Fire up the Quattro!”, which you probably don’t with an insurance protection policy.  As the industry puts a heavy focus on the distribution of protection products – the sale – then the back end of the process – driving the car away – attracts less attention and the role of claims often remains one of compensation.  “Quite right”, you may say, “That’s what protection products are for”.  However, what people really need when they are in the unfortunate position of having to make a claim is not compensation, but restitution.

What we all need when something goes wrong and we need to resort to making an insurance claim is our lives being put back in order, we want things to be right again, to be back to the way they were before the event – whatever it was.  If we are ill or injured, we want most of all to be fit and well again, to get back to work, to be able to pay the mortgage ourselves.  Of course where death claims are concerned then it’s not about getting back to the way things were – obviously that’s not possible; but for the family left behind in that sad circumstance it is about being able to move on – pay off the mortgage, pay the funeral expenses, plan for the future without money worries over a lost income, be in a position to deal with the sudden need for expensive child care and so on.  With the trauma of the death of a loved one those left behind may also need help with the essential process of simply dealing with it all – wills, probate, re-starting their lives.

There are signs that insurers are recognising the need to do more for their customers when the crunch comes and a claim is necessary, but progress is patchy, and insurers naturally cautious about adopting new procedures without being certain they are right for all concerned.  But we are seeing change, and claims are increasingly more than about just stumping up the cash, they are beginning to adopt the characteristics of restoration.

All this leads me to conclude that as protection products evolve then perhaps we should view ‘Protection’ not as a product but as a service.  A Product implies a “thing”, something static, whereas a Service has connotations of “doing”, and immediately sounds as if it might be more useful.  Broad international experience shows that there are already insurers who spend time and effort on getting their claimants back to work with innovative and imaginative programmes where they institute a plan of care, monitor progress and suggest better or alternative treatments where that progress is wanting; where they propose alternative jobs or careers when return to the original may simply no longer be possible and suggest suitable training programmes.  Some I know assist even with writing CVs and job applications.  This not only makes economic sense, always a good recommendation in the insurance industry, as a claimant off work for more than two years is likely to be always off work – but it fulfils that other – really quite special purpose of the insurance industry – that of the role it plays in bettering the social fabric of our advanced society.  An ethical and thoughtful insurance industry is essential for providing the stability that people need in order to run their lives, their jobs and their businesses.  As the industry evolves through the 21st. century it will surely find new and better ways to provide that stability and security.

As this happens the design of protection products needs primarily to take account of the delivery – not just the coverage of the product, or its saleability.  I often hear insurers bemoaning the “Time to Settle”.  “It takes so long!” they say, “Claims should be closed much more quickly”, but we see few proactive attempts to correct the problem.  The issue here is not just time to settle, but what is being done to achieve the settling.  Some of this inevitably arises from issues about who is paid where death claims are concerned, and simply writing more life policies in trust would go a long way to improving circumstances in that sector of the industry.

To make real improvements though products must be designed with the claims process in mind.  The first question on the designer’s lips should  be “How is this product going to be accessed?” or perhaps more appropriately “How is this service going to be used?”.  Just imagine if you were approached by the RAC or the AA to join them as a member.  “Don’t worry if you breakdown anywhere or at any time”, they would boast, “Just phone us and we’ll send you a cheque.” How attractive an offer would that be?  I’d like to claim I thought that one up as it encapsulates the problem of what a product should do for the claimant very nicely, but it was Alan Ferguson, Head of Protection at Friends Provident who came up with that, adding to me knowingly, “You may wish to use this analogy yourself”, and I just have.

We must bear in mind the obvious that, unlike the insurance professionals who fill up claims departments and actuarial offices, most claimants are simply not experts in claims handling.  Most will never have done it before, or so long ago they remember little of the experience, they may be stressed and emotional, in need of a helping hand in a literal sense as well as the metaphorical.

So when designing protection products the industry should ask two simple questions:

What restitution is required?
How best can we deliver that?

If more thought is given to this end of the process then we should have products, or perhaps we should refer to them as services, that better meet the need of restitution rather than simply compensation.