Despite a challenging time for the industry, Friends Provident has experienced soaring success. Johanna Gornitzki reviews the strategies and improvements the company implemented to make it become this year's Life Insurer of the Year
In 2005, competition for the market share in the life insurance market stepped up a notch. Changes to regulation through depolarisation proved to be demanding, making the year a challenging one for the industry. However, these hurdles did not stop Friends Provident from having a booming year with total new life and pension business up a staggering 70% - a new record for the firm. This success was mirrored in its total life and pension new business profits, which rose by 85%.
One of the reasons behind the company's success was its recognition of the importance of setting out a clear strategy for what it wanted to achieve. This strategy included emphasising high-quality service; optimising returns for its shareholders; growing market share in a focused and profitable manner; and using new technology and e-commerce to enhance distribution.
Friends Provident was also successful in anticipating market changes and challenges. With depolarisation coming into effect in June 2005, the Financial Services Authority moved away from a system in which advisers were tied to one product provider or offered products across the whole of the market. This allowed market participants to create innovative business models - something that Friends Provident successfully did. Anticipating that multi-tie panels were the way forward, the company challenged hard for panel positions. Its efforts paid off, and it now has 25 strategic partners, 22 of which were added in 2005.
One of Friends Provident's former weaknesses was that it did not have any links with banks or building societies. However, the firm quickly rectified this and now has links with six banks and building societies, including Barclays Bank, National Australia Bank and the Portman Building Society.
Further strengthening its position in the market, Friends Provident decided to develop new products on its group pension and protection sides. However, before designing its products, the firm researched the sector to ensure it was clear about what advisers and their clients wanted. For group pensions, clients primarily wanted the ability to invest in 'best of breed' funds, while on the protection side it was automated underwriting.
By truly listening and responding to its customers' needs, Friends Provident managed to grow its new group pension business by 48%, with its market share hitting a new high of 8.8%. It also succeeded in increasing the amount of new business transacted online to over 80% following the launch of its eSelect online underwriting system - a ground-breaking system allowing around three in five cases submitted to be underwritten without human intervention. This enabled Friends Provident to issue acceptance terms quickly.
Friends Provident was keen on developing very user-friendly technology and its innovative application of technology has been one of the factors differentiating it from its competitors in the market. Putting its customers' needs at the heart of its business, Friends Provident pulled out all the stops to make sure it adhered to the FSA's 'treating customers fairly' initiative launched in July 2005. While the concept was nothing new, the purpose of the initiative was to prompt firms to make sure that taking care of their customers was integral to their business. Responding to this initiative, Friends Provident allocated full-time staff to focus on embedding the FSA's TCF principles.
Another achievement in 2005 was that the firm's customer service helpdesk managed to hit its target of answering 80% of all calls within 20 seconds.
During the past two years, Friends Provident has also rolled out the company-wide Friends Achieving Customer Excellence programme. This helped the firm achieve top-class service after being rated as a 'poor' service provider only a few years earlier. With a renewed focus on service, the firm is now aiming even higher with its new goal of being the one to set the standard by which other industry providers are judged.
The company impressed the judges with its record increase in new business, its focus on new technology and its ability to punch above its weight. One judge commented: "The company has matured and changed over the last few years. Friends Provident could almost be compared with Wigan football club getting into the premier league - and then doing really well."
In 2001, industry sceptics believed Friends Provident was too small to survive; however, they could not have been more wrong. Friends Provident's innovative approach has brought it tremendous growth in business volume, making it a well-deserved winner of this year's Life Insurer of the Year Award.
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Friends Provident's Simon Clamp was delighted to win this award and believes the firm's high standards helped it to reach the top.
In the past, Friends Provident was seen as one of the smaller players in the life insurance market. However, after what was a record year not only in terms of sales but also in terms of improved service, it came as little surprise that the firm this year achieved the position of the UK's leading life insurer.
Simon Clamp, managing director for marketing and UK distribution at Friends Provident, was understandably delighted to collect the Life Insurer of the Year Award for the first time in the insurer's history. "I am so pleased that we won. We have won several awards before but never this one, so we are delighted," he said.
Mr Clamp believed the firm's high standard of service helped it to snatch the top position:"We have concentrated on delivering an all-round customer service to both our intermediaries and clients and I hope some of this work has been reflected in the judging process."
Looking ahead, Mr Clamp said the company would not be resting on its laurels now that it had achieved this high accolade. However, he also commented that he was looking forward to coming back next year to defend the firm's position as the number one life insurer. "I certainly hope we will win next year," he said. "We will try to keep up the good work."
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