Managing Client Expectations: A Job for Advisers or Insurers?

Consumers are at the heart of the life insurance industry and, in an industry first, the Beddoes Institute has looked at the expectations of advisers, policyholders and claimants with regard to the roles that advisers and insurers are expected to play when clients set up a policy, in the ongoing customer relationship management while the policy is in-force and when they make a claim. In this article, Beddoes Institute Director, Dr Rebecca Sheils writes that each of these steps are important stages in the customer journey and bring expectations of the respective roles the adviser and insurer will play - which may run counter to what actually happens. While this may sound like a simple case of misunderstanding, it could lead to disappointment and a loss of faith in advice and insurance.

Introduction

In this study of consumer expectations, Beddoes Institute sought to unravel the expected roles and responsibilities of advisers and insurers by policyholders and claimants.

The study acknowledges that policyholder engagement is made difficult because of the differing relationships between policyholders/claimants, life companies and advisers, where the roles and responsibilities of each party are not agreed or well defined.

Understanding each party’s expectations, and advisers and insurers reaching agreement on their respective roles, is critical to re-establishing engagement with policyholders and providing a positive experience at the time of claim.

Using data recently collected in Beddoes’ Life Insurance Industry Performance Barometer, the expectations that advisers have of their role and the insurer’s role in managing the end-client when setting up a policy, while the policy is in-force and during a claim were catalogued. The expectations retail policyholders have of their adviser and insurer at each of these critical stages was also collected, as were the expectations that retail claimants have of their adviser and insurer when making a claim.

Roles When Setting up an Insurance Policy

When setting up a policy, most advisers (89%) and policyholders (57%) believe that advisers alone should provide policy advice and recommendations although some 8% of advisers and 30% of policyholders believe that this role should be shared between advisers and insurers.

Policyholders expect that, in addition to advisers providing policy advice and recommendations, advisers should also be primarily responsible for keeping them informed about the status of their application (33%), coordinating third parties (e.g. medical assessments) (46%) and managing the policy application (60%).

most advisers (81%) believe that they alone should provide ongoing policy advice and recommendations to their clients

While 89% of advisers agree with the majority of policyholders (57%) that they should be solely responsible for providing policy advice and recommendations, many advisers believe that they and insurers should be jointly be responsible for keeping policyholders informed (46%), coordinating third parties (39%) and managing insurance policy applications (55%). A third of advisers (33%) believe that coordinating third parties in relation to a policy application is the role of the insurer alone.

Many advisers believe that the roles that policyholders expect of them should be the joint responsibility of advisers and insurers, e.g. keeping the client informed, coordinating third parties and managing the policy application whereas many policyholders expect that advisers should be providing these services.

Roles While the Policy is In-Force

In terms of the ongoing customer relationship management, most advisers (81%) believe that they alone should provide ongoing policy advice and recommendations to their clients whereas fewer policyholders (43%) see this as the main role of their adviser. Notably, 55% of policyholders see their insurer as playing a role in this (24% see their insurer as being mainly responsible for this and 31% see both their insurer and adviser as being jointly responsible for this. This compares to 19% of advisers who see the insurer as playing a role.

Likewise, 32% of advisers see it as mainly their role to provide ongoing policy education and only 20% see this as the role of the insurer. This compares to 22% of policyholders who view this as mainly being their adviser’s responsibility, with a larger proportion of policyholders (35%) viewing this as mainly the role of their insurer.

Also of note, both advisers and policyholders have a similar view of the adviser’s role in keeping the end-client informed about their policy (i.e. when premiums are due, changes to the premiums, when payments are made, if/when payments are dishonoured or the policy lapses etc.). 25% of advisers see this as solely their role and 21% of policyholders see their adviser as being mainly responsible for this. Importantly, 65% of advisers and 48% of policyholders believe that this role is a shared role between advisers and insurers.

Policyholders increasingly look to their insurer to play a bigger role in managing them as a customer on an ongoing basis. Encouragingly, advisers also appear open to working collaboratively with the insurers in most areas, however, there is a disconnect between advisers’ and policyholders’ views of who should be providing ongoing policy advice and recommendation

Table: Expected Roles of Advisers Alone

Advisers roles when setting up a policyAdvisers that believe they are solely responsible for these roles (%)Policyholders that believe advisers are solely responsible for these roles (%)
Providing policy advice & recommendations8957
Keeping the client informed of progress4833
Managing the policy application34*60
Advisers roles in managing the customer on an ongoing basis while the policy is in-forceAdvisers that believe they are solely responsible for these roles (%)Policyholders that believe advisers are solely responsible for these roles (%)
Keeping the client informed2521
Ongoing policy education3222
Providing ongoing policy advice & recommendations81*43
Advisers roles when making a claimAdvisers that believe they are solely responsible for these roles (%)Policyholders that believe advisers are solely responsible for these roles (%)Claimants that believe advisers are solely responsible for these roles (%)
Education about the policy282342*
Managing the claims application363437
Support with ongoing claims forms292835
*Significantly different from the other groups (P<0.05)

Roles When Making a Claim

Policyholders who have not yet made a claim, recent claimants and advisers were asked what roles and responsibilities advisers and insurers should fulfil during a claim.

Most advisers believe that there is a joint insurer-adviser responsibility to educate the client about their policy (53%), to explain the claim process (57%), to manage the application (55%), to provide support with ongoing forms (57%), to work with the relevant third parties during the assessment and management of the claim (58%), and to keep the claimant informed of where things are at throughout the claim (63%).

Claimants on the other hand have mixed expectations of insurers and advisers, with the largest proportions of claimants expecting that their adviser alone will educate them about their policy (42%), explain the claims process (36%), manage the claim application (37%), and provide support with ongoing claims forms (35%).

Having said this, a large proportion of claimants (36%) expect insurers to coordinate third parties and most claimants (70%) expect either the insurer or the insurer and the adviser will jointly keep them informed of the claim application progress.

Beyond the claim application process, most advisers, policyholders and claimants agree that insurers are solely responsible for accurate and timely payments and coordinating a support and recovery plan to help the claimant return to health and wellness.

Table: Expected Roles of Advisers Jointly with Insurers

Joint advisers and insurer roles when setting up a policyAdvisers that believe they are jointly responsible with insurers for these roles (%).Policyholders that believe advisers are jointly responsible with insurers for these roles (%).
Providing policy advice & recommendations830
Keeping the client informed of progress46*42
Managing the policy application55*26
Joint advisers and insurer roles in managing the customer on an ongoing basis while the policy is in-forceAdvisers that believe they are jointly responsible with insurers for these roles (%).Policyholders that believe advisers are jointly responsible with insurers for these roles (%).
Keeping the client informed6548
Ongoing policy education4739
Providing ongoing policy advice & recommendations16*31
Joint advisers and insurer roles when making a claimAdvisers that believe they are jointly responsible with insurers for these roles (%).Policyholders that believe advisers are jointly responsible with insurers for these roles (%).Claimants that believe advisers are jointly responsible with insurers for these roles (%).
Education about the policy53*3932
Managing the claims application55*3128
Support with ongoing claims forms57*325%
*Significantly different from the other groups (P<0.05)

Interpretation

Insurance companies clearly have a role with the end-client when a policy is being set up. Advisers expect that insurers will share in the role of keeping their clients informed about the status of the policy application, coordinating third parties involved in the application (e.g. medical assessments) and managing the policy application whereas the expectation of policyholders is more varied.

Policyholders increasingly look to their insurer to play a greater role in managing them as a customer on an ongoing basis. Encouragingly, advisers also appear open to working collaboratively with the insurers in managing the customer on an ongoing basis in all areas, except for providing ongoing policy advice and recommendations which they see as their main role. This contrasts with the view of policyholders who think this is the responsibility of the insurer or a joint responsibility.

There is a need for advisers and insurers to clarify their respective roles in relation to keeping the policyholder informed, coordinating third parties and managing the policy application

Overall, advisers have more consolidated views of the role of insurers in the claims process than policyholders and claimants.  The majority of advisers expect that insurers will jointly manage the process with them and less than a third of advisers believe that they are solely responsible for any single step of the claims process.  Conversely, claimants and policyholders have mixed expectations of their advisers and insurers with large proportions (34 – 42%) believing that it is the advisers sole responsibility to manage certain steps of the claims process, especially policy education and explaining the claims process to them.

Conclusion

There is a need for advisers and insurers to clarify their respective roles in relation to keeping the policyholder informed, coordinating third parties and managing the policy application.

Not all insurers and advisers will agree on where the line should be drawn but if these roles and responsibilities are not clarified for large groups of policyholders and claimants, room for misunderstanding and disappointment will continue to exist.

Once roles are agreed, the expectations of policyholders and claimants can be aligned with these through education and communication in order to optimise their satisfaction and streamline the claims process for all involved.

Dr Rebecca Sheils is Director and co-founder of the Beddoes Institute, which specialises in delivering research and consulting services to the financial services sector.

The Life Insurance Industry Performance Barometer delivers insights into the needs and expectations that advisers and customers (policyholders and claimants) want from life insurance companies and maps how companies perform in terms of meeting these needs.

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