The company claims that very few protection providers are able to process business completely electronically and even in the few cases were it is possible the process breaks down once the application fails the simplest assessment of risk. Generally providers are simply aiming to process clean cases electronically while ejecting the difficult cases into their existing manual new business and underwriting processes.
Marlborough Stirling believes one of the main reasons IFAs have been reluctant to submit applications electronically is because they get frustrated when they enter data online and then get transferred into the standard manual processing model, with all the resulting delays and chasing, if the case does not fit standard criteria.
Marlborough Stirling says that the recent launch of its STP proposition at Progress from Royal Liver gives the industry, for the first time, access to a STP platform that not only generates substantial cost savings but significantly improves acceptance rates for online business.
As part of its study, Marlborough Stirling took a random sample of 100 live cases that it was processing on behalf of existing customers and ran them through its STP platform. Of the 100 cases:
Typically around 15% acceptance is achieved across the industry by asking first line underwriting questions so to increase this to nearly 50% with no manual intervention is a significant improvement and Marlborough Stirling believes this can be increased to over 60% by adapting the rules over time.
In addition the average number of cases in the industry going for medical evidence is approximately one third, which has been significantly reduced to 13% via the STP platform.
Chris Ryland, director and co-founder at Marlborough Stirling, comments:
“When fully implemented, STP systems can give protection providers a significant competitive advantage but the vast majority of companies are implementing it, at best, in a piecemeal fashion. To encourage intermediaries to make use of the technology, providers need to ensure that an electronic application stays within the system and does not drop off into a black hole of manual processing. We are calling for protection providers to review their new business processing platforms and ensure they are operating as efficiently as possible.”
*Accepted industry figures show that it costs life companies around £100 to process each new policy and Marlborough Stirling says companies could reduce these costs by around 50% by utilising its STP platform. Multiplied by the number of new policies processed last year (3,650,000 – source: Swiss Re’s term and health watch report 2004) this equates to an industry cost saving of £183 million.
