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QPR Medical Rating

As we have been rating medical product recently we have been asked to consider a number of non-document factors. We always believe that the policy document commitments are really the foundation of our rating process, but clearly some other factors are taken into account, although we are quite discriminating about what they are:

  1. Incidence of item
  2. Frequency payment is made
  3. Amount of payment
  4. Financial Stability Rating
  5. Readability (optional)
  6. Adviser view of impact (optional)

However, how do you take into account a 'feeling?' such as the ones described in this interesting article from Insureblog titled "Is Medicine and Art or a Science?"

How do you take into account a company's view of what is 'reasonable' when considering 'usual, customary, and reasonable' for example?

Some of these items are properly quantified in our claim modelling - and some, it is best to leave to adviser experience with the companies concerned. Come along and hear our take on some of these important issues at our Quotemonster / QPR road-show sessions in late November.

 


Quotemonster Statistics

Here are the latest weekly statistics from Quotemonster:
  • The average amount of life cover quoted in the last 7 days: $403,187
  • The average amount of trauma cover quoted in the last 7 days: $135,605
  • The highest Annualised premium quoted in the last 7 days: $43,107.10
  • The average amount of time the monster takes to quote in last 7 days: 9.57 seconds

Customer Service-Focused Incentives Can Work Well

Is it an anti-sales culture that is leading some banks to withdraw product-focused sales incentives? Not necessarily.

Customer service focused incentives can work well. If your service is actually valuable and consumers buy it because it is something they actually want then the big challenge is to ensure that they are presented with it in a suitably attractive form. Look at it another way - usually the reason bank staff, or mortgage brokers, fail to sell insurance, for example, is because they don't ask - not because no-one wants or needs the cover. LIMRA reached a similar conclusion in their research into multi-line general insurance offices. Staff 'assume' that the client doesn't need the service, or assume that because they were asked 'last year' you do not need to ask again this year.

Traditionally the way to overcome the 'don't ask' approach was to focus sales incentives on the actual sale. Sell an insurance plan and we pay you an incentive. Sell ten this month and you win the weekend with the rented Ferrari... This makes it easy for a manager to oversee and it is easy to budget for - the incentive is a variable cost.

But it is easy to see how these incentives get a bad name.

Rather than ensuring the delivery of excellent customer service the incentive can foster poor sales practices: 'ours is just the same as theirs but cheaper - switch now' - even if such a promise isn't true, it might not be testable because of the complex nature of the product. The client opens the policy document to be confronted by a sea of words. That compliance risk must be offset by good governance and oversight of the sales process.

If, however, you focus your incentive scheme on, say, delivering excellent financial reviews you turn the process on its head. Suddenly what sales staff must do in order to qualify for the incentive payment is almost what you had to expensively retrofit to the end of the sales process: the compliance tasks. So in this set up you are incentivising excellent fact-finding, needs analysis, and recommendations.

If your research was right and your clients really are underinsured, then you'll make more sales.

If you aren't making more sales, you will know exactly why: either it didn't show up as a need, or you recommended it and they didn't buy, which might be a product, pricing, or promotional problem.

 


Does Being Self-Employed Make a Difference to your LIFE cover?

So, does being self-employed make a difference to your life cover? As it happens, yes, because a number of companies offer a business future insurability benefit. Some make it optional, some built-in. We track which is which in the Quality Product Research database. This business benefit does not apply to the individual who is salaried.

It can be worth a great deal.

Speaking as a self-employed person, I'd be interested in whether my cover could effectively double over the typical period it is held for (seven years) without the need for medical evidence based on business events.

That's why we think it's important to know if your client is self-employed, or employed, before considering which life insurance you might recommend.


Controversial Use of Financial Incentives in The UK's National Health Service

The UK's use of financial incentives for hospitals, which appear to include an option called the "Liverpool Care Pathway" is coming in for some flack in the popular press over there. So it should. Consumers that already doubt the capability of the state health care system will have more fuel for their fears in stories like this.

It may not be possible to dispassionately evaluate the role of incentives in an end of life decision-making process. So let us set that aside for the moment, and consider the debate there has been over the use of sales incentives in the sales of insurance by banks, also in the UK.

A bank uses a sales incentive - say; rewarding branches that achieve cross-selling of insurance to, say, at least 40% of home loan clients.

Although this goal appears to run counter to a needs-based selling approach, the bank's research may indicate that perhaps 50% of its clients have no cover, and perhaps another 30% have insufficient cover. Hence the risk of the incentive causing poor advice may be low, at least, ignoring what product they may recommend.

But critics say, in effect, that this smells bad. The incentive is a blunt instrument and takes no account of the fact that, say, this group of people may have specific needs not reflected in the banks surveys.

Likewise with the Liverpool Care Pathways; in aggregate they may be right that this choice offered to clients is a valuable addition - not an attempt to railroad Granny into an early grave in the interest of saving the state money. It's just, it looks so bad.

More news like this and a market for long term care insurance will become viable, and immediately advisers have more ammunition for sales of medical insurance.

Hat tip to Hank Stern at Insureblog for drawing my attention to the original article.

 


The Reputational Risk and IT Relationship

Risk Management Monitor discusses the results from a survey (“2012 IBM Global Reputational Risk and IT Study,”) undertaken by the Economist Intelligence Unit, which analyzed responses from 427 senior executives from around the world, representing nearly all industries.

Many respondents of the survey indicated that cybercrime is now more of a reputational threat than systems failure, a finding that illustrates how cybersecurity is a growing concern. With greater use of social media, online commerce and doing business through mobile devices, it only makes sense that there could be higher potential risks to a company’s reputation and brand. The survey discovers that more than ever executives are attempting to shield their brands from these security threats by being more pre-emptive and looking for flaws in their risk management program.

64% of respondents state that their company will put additional effort into managing its reputation in the future while 75% state that their IT budget will grow over the next 12 months due to reputational concerns.

To read the full article and for further results from the survey click here.

 


Kiwis Not Insured: FSC Survey Results

Key quote from the FSC release on their survey:

More than 95 percent of homes and cars are insured, but only 57 percent of New Zealanders insure their lives and barely 20 percent have income protection insurance. Sixty percent of New Zealanders were characterised by researchers as finding personal insurance “all too hard”.

Although insurance is complicated, something doesn't ring true about the 'it's too complicated argument' - or at least, that can only be part of the problem. Car insurance quoting and policy documents are both more complicated than life insurance. Whereas life insurance has more unpleasant underwriting. There is a contribution to the perception from the frequency of claims and public understanding and belief in claim payment as well.

A quick link to Amanda Morrall's article on the FSC's recent survey: Link.

Here is a link to the post on the FSC's website: link.