The Quotient not only covers the transactional element but also provides a means for insurers to comment and identify current business and environmental issues facing the life and pensions market, including:
â¢ the Retail Distribution Review and the âguided salesâ channel
â¢ Treating Customers Fairly (TCF) initiative
â¢ and of course, this year, how the current economic climate is beginning to effect our respondents
This yearâs results underline how critical efficient and effective use of technology has become within the industry. The research produced by Focus Solutions shows that more than a quarter of insurers have already increased their budgets for IT projects associated with regulatory change with the outcome of the RDR looming. This further underlines the critical role of technology to support a changing distribution landscape.
Indeed the survey also showed that 40% of Life and Pension providers are receiving over half of their business electronically with an overall industry average of 1 in every 2.6 transactions now being submitted electronically.
One provider in the survey increased their electronic new business submissions from circa 1% to over 73% in a 12-month period; a result achieved through the introduction of an effective ecommerce strategy and the adoption of an easy to use multi-channel technology platform. All of this demonstrates what can be achieved when a high quality ecommerce proposition is delivered to the adviser community and shows that the investment by providers in technology is really starting to pay off.
The Business to Consumer channel is becoming increasingly prevalent with nearly two thirds of insurers operating either a B2C channel (direct to the consumer) or, a B2B2C channel (via distribution partners). In the survey, 33% of insurers are now transacting between 11% to 25% of their overall e-new business through these channels â showing that the more intelligent consumer is not only using the internet to source information about financial products but is also purchasing products directly.
Submitting business electronically via the providerâs intermediary extranet still remains the most dominant method of submitting e-new business (by volume) closely followed by the industry portals. However other new channels have definitely started to emerge in 2007 including Wrap platforms and the Business to Consumer channels via white labelled product offerings.
The research also concludes that over half of the insurers believed that with the imminent changes in regulation (post RDR) there will be an end to the commission only adviser. IFAs will move to a fee base and have no alternative other than to embrace Wrap / Investment platforms to enhance client service and retention.
With a number of providers announcing distribution agreements with some of the largest consumer brands and with the FSAâ guided sales plans we see the consumer channel continuing to grow over the foreseeable future. More and more providers will try to tap into 27m UK adults currently not using a financial adviser.
There was general agreement that the guided sales model would pose a threat to intermediaries, with 88% of providers believing this would be the case. However providers still do not have a complete understanding of RDR and, from the Quotient survey it seems that they are unsure where the real opportunities lie.
Richard Stevenson, Chief Executive, Focus Solutions Group plc, commented:
âThe underlying message that we took from this yearâs Quotient is that the distribution landscape is most definitely changing. The FSAâs RDR proposals are forcing providers to review their distribution strategies in terms of the Wrap market, B2C / B2B2C channels, incorporating guided sales, and how they best service the IFA community.
Electronic trading is recognised today as a âmustâ rather than an option for providers as it was when we produced the first Quotient back in 2000. Those providers that still havenât embraced ecommerce will simply not survive in the new regulatory world.
What we are experiencing today is a number of the major and specialist providers refreshing and consolidating their entire extranet frameworkâs to enable products to be launched at a fraction of the associated time and cost. These frameworks can easily be flexed to support multiple distribution channels / partners from a single technology platform. This is where Focus can help.â