Protection: Legacy of the '10-minute term'

Aviva protection director Richard Verdin looks back over 10 years of e-protection...

About 10 years ago I was sitting in an office at Legal & General, very much like the one I sit in at Aviva today, when someone started to tell me that a chap called John Pollock, who had recently returned from working for L&G in the southern hemisphere with a big idea for protection.

It turned out that John was proposing that L&G UK invest in something he was calling ‘10-minute term’, an idea he had either had or witnessed while working “down south”.

At the time I remember thinking, “So what?” I was young, naïve and having never worked for a big company, I had not yet fully grasped the art of creating value within large organisations. I had not long been out of sales where, to be honest, quarterly planning was considered long term.

What I also had no idea of was quite how important online term insurance was going to prove in my career. I hasten to add that I had nothing to do with the original L&G delivery, and neither did many of the people who tell stories of their involvement.

However, what that assembled team did, under John’s direction, was to change the course of developments and the focus of many other businesses. The question outstanding in my mind, however, is by how much has 10-minute term truly changed the market.

The PAC approach

At or around the time of the 10-minute term idea, ORIGO standards for electronic applications were being worked on/in place, which I seem to remember were predicated on Product Application Component technology (PAC). This, of course, allows the user to be offline when completing an application, moving online only to pass the information to the provider. The 10-minute term concept required the adviser to be online during the entire process. Both required an adviser to be competent with a keyboard.

PAC’s ‘store then forward’ approach was seen as critical at the time because dial-up was all we had to work with, and not many places in which applications were completed (work or customer homes) were even connected. However, the idea of 10-minute term was to leap a generation, skipping a stage in the evolution of online trading; this at a time when insurers were still paying IFAs to generate their own quotations from green screens, and of course many weren’t bothering, preferring de-forestation to getting connected.

IFAs and e-protection

Today PAC is still used in some quarters, as are the full benefits of 10-minute term, which has evolved into online protection, with many companies having invested to move John’s original idea along a pace. The two have evolved alongside each other, and with different distributors having developed their business models differently, each have had their parts to play in some of the success stories that exist today. Providers have changed as a consequence of 10-minute term, and some distribution businesses have been created from scratch, to take full advantage of online protection, but what of the mass IFA market?

Aviva’s online proposition for term life insurance is particularly popular with those prepared to not only go online, but be online for the duration of the process.

Yet, even today, that is not enough. Many IFAs either still have to work offline, because of connection issues or because of concerns about operating a keyboard in front of customers. They therefore still need paper applications to start a transaction, accepting the subsequent inefficiencies and re-keying risks as a part of the job. Perhaps this will continue to be the case until such time as the adviser ranks have been swelled by the generations for whom keyboards are as familiar, if not more familiar, than pens.

Tele-interviewing and underwriting

In the meantime, entrepreneurs have appeared to translate paper into a fully interactive online experience, not least through the development of order forms and tele-interviewing and tele-underwriting, using the full power of the systems available today.

But, of course, tele-interviewing has created its own inefficiencies through the necessary additional steps and added another person to the process.

Perhaps then, just like 10-minute term, inspiration will come from the southern hemisphere. Recently, insurers in Australia have introduced the ability to receive electronic order forms from advisers, then deliver the links necessary to complete interactive underwriting sessions directly to the customers inbox; not so much another step, rather the same number of steps delivered differently. Certainly, this is another way to help advisers who struggle to deal with the initial underwriting Q&As as part of their advice and sales process.

In conclusion, 10-minute term has helped and has proven important to some firms and not others, which goes to show that just like everywhere else, people in financial services adopt and/or learn at different speeds and we all have our own inbuilt or learned preferences or bias. And, just as there are Blackberry and iPhone fans, different solutions are always required for the same markets, and online protection is no different. In the meantime, John joined the board of L&G.Clearly, 10-minute term was not the only good idea he had.