The vast waste of money that is life company illustration software is being challenged by the shift to 'the cloud'. I look forward to the day when life companies can discontinue the issue of software on disks - or even for download - and use either skinny apps for smartphones or pure cloud apps. Soon the era of quote software will thankfully be behind us.
Unloved though quote software is, it was better than what there was before. Before computers were widely used by advisers we had endless nasty little premium quotation books. When I started in the industry in New Zealand I quickly amassed a collection of these from a variety of different companies - donations from advisers who had spares, and valued having someone they could ask for a second opinion. It could be characterised as an era of unrecoverble innocence - but of course it wasn't. It was merely practice that an adviser had a brochure, and all that was required in the sales process to illustrate a product was to add a premium.
Making projections of likely future values - first for traditional products and then for unit-linked contracts was the main driver for the shift to PC-based systems in the pre-internet era. But it was still common for an illustration to fit on two pages. But then came more detailed rules around what would be illustrated.
The idea that a client would hardly buy without looking at the price made the actual illustration valuable territory for legal teams keen to find a place to insert important disclosures in the sales process. They needed a place where they could confidently assert that the client had at least received information - if not actually read or understood it.
That meant a shift - to bloated illustrations, but also to nicer product brochures - which could then take a number of different paths: simplified explanations of cover, concept documents, or brand vehicles.
With the market almost entirely term life insurance, and the Financial Advisers Act now helping us to focus on other aspects of the sales process (unit standards exist in the education required, for example, for presenting plans) there is some hope that the core of the modern illustration - a premium quote - could be separated from the pages of guff that have grown around it.
By stepping out of the limelight the illustration could give way to more focus on the policy wording, which is, after all, the actual contract. The scope for illustration, brochure, and policy wording (not to mention what the adviser says) to deviate from one another has been a constant threat to clarity, and therefore the ability to enforce the policy.
We think that a redeveloped sales process will take into account these risks and opportunities. It should be built from the ground up - the foundations being:
- The legal and regulatory framework established by the Financial Advisers Act, and other requirements be they legal, regulatory, or contractual
- The body of knowledge sales-people have of what actually works with clients
- The brand objectives as expressed by a research-informed marketing team
Of course, there will be plenty of reasons for advisers to spend a fortune on IT - in fact a growing reason. They may have more complex client management systems, they may have complex planning tools, they may have clever data feeds, they may have nice presentation tools. There is no real reason why all of these cannot be based in the cloud as well, but as they involve significantly greater processing power and involve the use of sensitve data they may take longer to shift.