Delivering protection success
- Review. A basic review of the protection landscape.
- Plan. Build in the factors that advisers say drive protection success.
- Do. Two-stage delivery - robust business case and execution.
Two stage delivery explained
Here’s the stark reality: few big protection projects succeed.
There have been 10 years of launches and relaunches: Beagle Street, Canada Life, Guardian, HSBC and Scottish Widows. Some have been clients.
I’ve seen good, bad and ugly.
Increasingly reinsurers place emphasis on an insurer’s ability to deliver, as they determine where to invest their financial and operational resources.
Delivery is a differentiator.
Why do so many big projects struggle? How can we improve the chances of success and cut down on waste, building robustly, cost effectively and at pace?
This article reflects lessons learned from over 20 years’ immersion in the protection market: growing a challenger to the second biggest IFA player, launching a two-man virtual life office then working for the impressive force which has topped the protection market for over 15 years.
My audience
- Specialists who want to build and grow beyond Income Protection.
- Challengers who want to break out and grow into a top 6 player.
- Leaders who know they still have scope for optimizations.
A fresh approach
Successful protection (re-)launches by those outside the top six come around once a decade. The new approach saves money, heartache and provides upside.
The worst case scenario under the new approach is to stop after stage 3, with three months’ effort and a five-figure spend. Contrast that with pulling a launch after two or more years’ work. Worse still, spending tens of millions on systems and consultants with little to show.
That’s real risk management.
The best case scenario is that you gain:
- a robust business case
- likely market position and profitability
- unheard of new entrant capability
- credibility with reinsurers
That’s within three months.
This supplies the drive to move forward and spend with confidence.
| # | Old | New |
|---|---|---|
| 1 | Proposition ideas. Talk to a reinsurer | Build an internal case. Test it with an expert. |
| 2 | Product build. More reinsurance chat. | Build capability: analytics and pricing. |
| 3 | Systems work. Get reinsurance(?) | Approach reinsurer. Factor terms into pricing. |
| 4 | Give up. Or finish build and launch. | Give up. Or build and launch. |
| 5 | Exhaustion or continued struggle. | Review, reap and improve. |
Recall that capability in the following determines project success:
- Reinsurance — here’s why
- Pricing
- New business underwriting
- Distribution
- Product design
- Commission
- Existing business servicing
You should aim to develop expertise in the first 2-3 items early on, displaying it by the time you approach a reinsurer.
Five stages to launch
Stage 1
In the old world you generate the proposition. Perhaps you have a blank sheet of paper, are unconstrained by legacy systems and have great product ideas. You may talk to a reinsurer. They’ve heard all this before, but are too polite to say.
In the new world you postpone approaching reinsurers and instead get the proposition reviewed by a protection expert. He builds on your ideas, suggests what reinsurers want and equips you.
Stage 2
In the old world you start the product and (perhaps) systems build. There’s more reinsurance chat. It’s not entirely clear where this will end, but you are confident you can swing it and you can always run without reinsurance; they’ll realize their mistake after launch.
In the new world you start the capability build. You need a basis, a tool and a person to set prices. Your expert steps in, adding that reinsurers want distributor level data and analytics. He supplies this too and puts you in contact with experienced underwriting developers.
Stage 3
In the old world you recruit or upgrade your underwriting team and start or continue with the systems work, which now includes an underwriting engine. There’s significant commitment and the spend is mounting. No sign of reinsurance yet.
In the new world your expert introduces you to several reinsurers. Impressed with your insight, they can certainly work with your expert and nominated underwriters. A few days later two reinsurers confirm they will supply terms. Three weeks later indicative terms arrive.
You now have a robust business case:
- indicative reinsurance rates
- your potential position on a portal
- pricing and analytics capability
Stage 4
In the old world you’re a year or more in. The build is going slowly. You’ve gone back to the first reinsurer, who now say “no”. But this is no time for turning back.
In the new world month four is about to start and you need to decide how you move forward at speed. Your protection expert suggests that the launch will take at most 9 months: a year from start to finish. You can spend more money, confident in the return.
Stage 5
In the old world you recruit or upgrade your underwriting team. You start or continue with the systems work, which now includes an underwriting engine. There’s significant commitment and the spend is mounting. No sign of reinsurance yet.
In the new world you keep the expert on, he introduced you to his underwriting and systems associates. You launched in ten (10) months. You want more of this and are gearing up, delivering on your promises to reinsurers and looking forward to the next stage of growth.
You’ve already tripled your new business, but your expert says he can get you further growth of 500%+ in two years.
What a journey! Let me help you make the leap.