The ideal business insurance product

Price: Is price a driving issue for business cover?

Guaranteed Insurability: Does business cover need to cater for growing financial risks without further medical underwriting?

Underwriting Criteria: Does there need to be more clarity around what can and can’t be covered and how personal insurance may overlap with business insurance?

Replaceable Lives: Is there a need to allow changing business personnel to be catered for within one policy?

Flexible Ownership: Is there a need for a business product that allows different ownership structures for multiple needs under one policy?

Claims Certainty: Does there need to be more clarity around what will and won’t be paid at claims time?

Persistency: Is persistency of business insurance worse than personal insurance?

Own Occupation TPD: Is an own occupation TPD definition essential for business insurance?

Maximum Sums Assured: Are current maximums creating issues for business insurance?

Distribution Exclusivity: Should a business product only be sold by experts?

Client Selection: Should there be a process to select client quality as a persistency management tool?

Even more telling than the graph are the comments collected from these advisers in respect of existing products. Comments include:

• Need agreed value or loss of earnings type benefits to give claims certainty.


• Own occupation TPD is a must


• Need some kind of cover that will allow for extra costs of being disabled to be covered e.g. lawyers, accountants, recruitment fees etc.


• There can be problems with claims where incomes fluctuate seasonally and a claim occurs at a slow time.


• Would like a very cut down, simple income cover product for businesses.


• Trauma cover is an issue for share-purchase in terms of determining when it should be paid and to whom.


• Underwriting and claims management expertise is rare but essential.


• Existing products are too complicated.


• Sum assured limits are a big issue, especially for trauma.


• There are issues with underwriters accepting income for cover but then offsetting it at claims time.


• Persistency of business insurance is worse than personal insurance and leads to write-back issues.


• Must have certainty at underwriting about what will happen at claims time. Need to know exactly what is required at underwriting rather than being sent back to the client repeatedly.


• Products need to be simplified.


• Don’t use trauma as it is too messy in terms of buy-sell agreements.


• Business cover should be tied to the business and not linked to the individual.


• Very keen to see someone introduce financial underwriting expertise.


• Concerned about the number of advisers trying to get into the business market with no knowledge or experience in understanding the needs and risks of businesses.


• Business overheads and locum cover are too restrictive in terms of when and where the money is paid at claim time. The business should be able to decide where the money is best spent.

What Club Life learned from this exercise was that the opportunity for us to enter the business risk market is not in replicating and tweaking existing products. There is a need to bring fresh thinking to the market and to develop a product from scratch that addresses the main concerns expressed by these advisers whilst also addressing the concerns that life companies and reinsurers have about claims experience.

So how do you develop a product that meets the needs of all three parties? By taking the time to think about it and by ‘unshackling’ the chains of what has gone before.

Let’s take, for example, the issue of maximum trauma sums assured. One of the reasons that reinsurers impose restrictive maximums on trauma cover is that with existing products it is possible to pay out large sums assured for conditions that do not significantly disrupt the ‘working’ capacity of the life assured.

This is not what was originally intended for the product but with modern medical advances it is becoming increasingly probable. The chances of claims arising from non-life threatening conditions are increasing and this is making reinsurers nervous.

Interestingly enough this same issue is causing headaches for advisers when trying to cover share-purchase arrangements. What do you do if the trauma cover pays out while the life assured is still able and willing to continue in the business? If both sides of the equation are equally concerned about the product, then surely there is an opportunity to develop an alternative product that is mutually beneficial.

Another area of concern expressed by advisers and reinsurers alike is the lack of financial underwriting experience within life companies. Often underwriters just play the role of a communication channel between the reinsurer and the adviser as they just do not have the experience or knowledge to add any value to the conversation.

The only outcome of this is time delays and frustrations as communications are channelled through a third party. Clearly then it would be in everyone’s interests to ensure financial underwriting expertise is available to the life company.

It is also obvious from adviser’s comments that they are looking for certainty regarding how the product will actually deliver at claim time. Life companies, on the other hand, are increasingly under pressure to make the process of underwriting business risks easier and faster.

This dilemma is one that must be addressed. Are clients better off with a policy that was issued quickly but where underwriting will actually take place again at claim time? Now that the market is maturing in respect of claims experience it must be possible for each side of this debate to agree on how to best address this issue.

Club Life believes that for each and every issue there is a corresponding opportunity and we are determined to deliver a product that meets not only the advisers' needs but also our own. By ensuring value is created for both parties it is possible to ensure the longevity of the product, something that is of immense importance to the clients who buy it.