Here, you can find out why intermediary Bhupinder Anand believes selling protection doesn't have to be hard in the current climate, and get a unique insight into the changing face of protection underwriting from Robert Morrison.

Seeking an emotional response - Bhupinder Anand

The changing face of protection underwriting - Robert Morrison

Seeking an emotional response

Selling protection doesn't have to be hard, according to Bhupinder Anand, managing director of central London-based IFA Anand Associates, who shares some valuable insights.

"I wouldn't say that consumer attitudes towards protection have changed as a result of the recession because they still don't understand the subject," says Bhupinder Anand. But he does acknowledge that his protection business, which accounts for around a third of overall turnover, has increased marginally during these troubled times.

"The credit crunch has made people more aware of risk and less confident that their investments will perform, so protection figures more prominently during conversations with clients," he explains. "Lower mortgage costs also mean that many people have more money and they are having to decide what to do with it."

It doesn't take long, however, for the conversation to revert to consumer misconceptions. When he talks to a new client they quite often think that an existing critical illness cover policy is private medical insurance. Then there are the all too commonly held beliefs that protection policies don't pay out and that commissions are bad and fees are good.

"What is forgotten is that having to pay a fee may prevent people having conversations about protection in the first place. I am a fee-based adviser myself so it's not as though I have a vested interest in promoting the commission approach by saying this, but I see it as a problem for the industry as a whole."

The right way to sell
The 45-year-old IFA is adamant that the skill sets for selling life assurance, income protection and critical illness cover have not changed as a result of the economic downturn and suggests that those who think they have changed had the wrong approach in the first place. The secret is to position yourself as helping your client to make a wise decision rather than as trying to sell them something.

"I don't know how to deal with objections because I never get any," he continues. "If an adviser does things the right way there is no need for objections. People buy with emotion and justify their purchases with logic but too many advisers try and sell on logic and miss the emotion. So it's not surprising that they get objections about price."

"If you go shopping for a new suit and have a £200 budget you don't start looking at £200 suits. You look at what you like and if what you like costs £300 then the budget goes out of the window.

It's the same with protection. Liking something is an emotional response, not a logical one." This process of creating emotional value in the context of financial planning even helped him sell large quantities of life and critical illness cover to a 40-year-old dentist who was "the world's biggest sceptic on insurance".

Following a successful operation for a brain tumour and a £600,000 critical illness cover payout 2 years ago, however, the same individual has become "the world's biggest advocate of protection". So much so that when his now trusted adviser spoke at last year's World Critical Illness Insurance Conference in Toronto he accompanied him to tell his motivational story on stage.

The importance of avoiding expressing negativity, especially when it comes to dealing with those who are likely to incur policy exclusions or premium loadings, is also keenly stressed. Those who go out with positive angles are more likely to get positive answers.

When non-standard cases are greeted with the words "Fantastic, you've been accepted at normal terms... for someone with your issues," they respond with laughter, never resentment. Similarly, clients are never told they are overweight, only "under height", so giggles are also forthcoming in response to phrases such as "according to the graph you should be nine feet tall".

Bhupinder's association with protection started developing way back in childhood when his father built up a close rapport with an agent from Sun Life of Canada.

"My dad always said that his success as a retailer was largely attributable to his life assurance agent, who was able to use his contacts to help him open his first shop. I remember dad spending a lot of time with him so I've always had a great deal of respect for the industry, and I decided that was where I was going to work when I graduated."

Starting as a broker consultant with Scottish Equitable in 1988, he initially focused on protection, but his interest in the subject was also soon fuelled by family developments. When his father fell ill his ability to claim on his waiver of premium across his range of Sun Life of Canada pension and protection products proved invaluable. Then when his father died his mother was left with considerable financial independence, but without life assurance she would have definitely struggled.

Experiencing a successful claim can fill you with "passion", which is one of the three essential qualities that he feels advisers need in order to sell protection. The others are "knowledge" and "belief" – the latter coming from owning policies yourself. Bhupinder, who personally has well over £1 million of critical illness cover, stresses that it can be hard to sell protection products you don't have yourself because clients so often ask how much you have taken out. But advisers who have these 3 essential qualities are likely to find that selling protection takes care of itself.

"If you have a genuine relationship with your clients then how can you not talk about life assurance, critical illness cover or income protection? Concentrate on the relationship and believe in the relationship and this way the big beauty of it all is that you can sleep at night knowing that you've done a good job."

Bhupinder Anand is happy to talk to trade and consumer journalists about all aspects of protection. He can be contacted on:
Tel: 0207 486 5486
Mobile: 07949 161 241
Email: Bhupinder@anandasscociates.com

The changing face of protection underwriting

In a career that spans over 20 years, Robert Morrison, head of underwriting and claims at Bright Grey, has witnessed extensive evolution in the protection industry. Here he gives his thoughts on possible future developments.

Q: Have underwriting attitudes changed much during your career?
A: The determinant for the future remains what has gone on in the past, and underwriters and actuaries get nervous when there is no past experience. But over different time periods they have got nervous about different things. Until the mid 1980s, for example, homebuyers were given insurance without underwriting because it was assumed that there would be no significantly adverse claims experience – the logic was that if you were taking out a mortgage then you would be in good health! But the claims experience proved different to expected, so they withdrew this. Then we saw the HIV issue (huge premium increases for everyone and declines for those with HIV) come and go. We now even have instances when people with HIV can get insurance, so things have evolved.

Q: How important has the introduction of teleunderwriting been?
A: Immensely important, on a range of fronts. It means that customers don't have to reveal personal medical details to advisers, and it can negate the need for requesting time-consuming medical evidence by enabling us to talk to the customers themselves, who are often the ones who know most about their conditions. But, when insurers use proper nurses, the real benefit from teleunderwriting is that people feel more comfortable talking to a health professional. A nurse can advise that things need to be declared when they might otherwise be omitted due to applicants feeling they might not be relevant. So this creates better disclosure and fewer surprises at the claims stage.

Q: Do you offer 'Big T' or 'little t' teleunderwriting?
A: We offer both. 'Big T' teleunderwriting, which separates the advice process from the application process, has the significant advantage of removing the non-disclosure risk for IFAs, who can otherwise now be liable in certain scenarios as a result of a claim. 'Little t' reduces the need for GP reports and speeds up application processes.

Q: How much of the non-disclosure you have come across has been deliberate?
A: By far and away the majority of customers are honest people. In fact I've only dealt with two fraudulent cases in my whole career. But there are a lot of misconceptions floating around about this, just as there are about protection insurers not paying claims. Most protection insurance claims are paid and customers probably get confused when they see the word 'insurance' because there is a real difference in claims paying ethos between general insurers and protection insurers. The repercussions of dealing with sums assured of over £100,000 that can affect people's financial survival are completely different to those of dealing with a £200 digital camera. Bright Grey is passionate about paying claims.

Q: Have any technological advances been assisting your underwriting process?
A: Bright Grey has invested significantly in developing its own expert underwriting system, the only in-house built system in the UK, which is fully interactive and designed with the customer in mind. In certain scenarios it is able to offer an underwriting decision more than 70% of the time, and it is most unusual in its ability to react to change very quickly. Unlike most competitors, who buy external packages and are slaves to the providers if they want to make changes, we are entirely self-sufficient for expert underwriting and have our own team with the data and experience to write our own rules. We can pass on the benefits of savings we achieve to customers, who also benefit from a better customer experience.

Q: Can you give any examples of how this ability to react to change has helped?
A: Sure. Many customers who have existing cover with Bright Grey are now coming back for more and, although we currently refer them to our underwriters, we will soon amend the rules so that many of them will be covered immediately online. As another example, one of the questions recommended by the Association of British Insurers (ABI) is about exposure to HIV but this has only been answered by about three out of 80,000 applicants, so we will be looking to remove it. We can also amend decision trees for online underwriting according to what customers are telling us.

Q: Are there any further underwriting changes you are considering implementing?
A: Yes. Although we make less use of exclusions than most protection insurers, we accept that it would be in the spirit of treating customers fairly to offer discounts wherever possible to those with exclusions. For example, continuing to charge a customer for cancer cover when removing cancer as a payable definition doesn't seem right because cancer is one of the biggest causes of claims and contributes significantly to the cost.

Q: Could protection insurers share a combined application form like impaired life annuity providers do?
A: Probably not if they want to keep a sustained advantage. Some companies specialise in different areas where more specific questions are involved. Additionally, a one-size-fits-all approach doesn't really suit a company like us that has built its own underwriting system capable of making changes very quickly based upon our data and own experience.