Anthony Gould reports on how Legal & General has regained its crown as Life Insurer of the Year after setting itself some tough challenges to meet
Last year was, once again, very challenging for the UK's life and pensions sector. Central to the issues facing the sector were the legislative changes to the pensions landscape brought in by 'A-Day', against a setting of increasing interest rates and mounting uncertainty across the housing market. For Legal & General, July 2006 also saw it lose its British Insurance Awards crown as Life Insurer of the Year, after six years of making the title its own.
It was against this background that the insurer set itself four major objectives: to investigate what customers really need, with a view to placing these needs at the centre of everything it did; to evolve its distribution strategy to meet adviser requirements post-M(mortgage)-Day and depolarisation; to create a fully compliant set of pension products for A-day and take advantage of new opportunities arising from the changed legislation; and, finally, to be the number-one protection provider in the UK.
To get the ball rolling, L&G evolved its customer experience programme, putting the Financial Services Authority's principle of Treating Customers Fairly at the focus. As a result of more than 90 separate pieces of research, designed to improve its understanding of its customers, the insurer instigated in excess of 600 changes to the way it interacted with its customers - all supported by a comprehensive programme of staff workshops.
In February last year, the insurer was also the first company to sign up to the Association of British Insurer's Customer Impact Scheme, having been at the forefront of its development.
L&G's second target - to evolve its distribution strategy - saw the insurer focus on enhancing its existing relationships and developing new ones. In terms of the former, the L&G Partnership continued to evolve, allowing directly authorised and appointed representative forms to benefit from technology. All of its strategic ties were maintained - including Barclays, Alliance and Leicester, Yorkshire Building Society, Northern Rock, Chelsea and Sainsbury's - helping make it the largest high-street partner for wealth and protection business.
In terms of new distribution, it won the major Nationwide account, as well as sealing deals to provide protection products to Citibank's one million customers and mortgage protection products to estate agents Connells and Arun.
In terms of wealth products, the insurer entered into an alliance with Cofunds to make its bond and pension wrappers available on the latter's platform. This means partners can chose to sole-tie to L&G while giving their customers choice from over 250 funds. In fact, L&G now accounts for 40% of all new business through Cofunds.
The company's distribution strategy has helped to ensure that it has a balanced mix and, as such, it continues to be the only provider to hold the top three positions across independent financial adviser, sole-tied and multi-tied distribution channels.
Looking more internally, the company developed its interactive underwriting system during 2006, so that more than 55% of policies can now be processed without human intervention. It also developed a special retention system, known as an Early Warning System, which generates an alert that can be sent to a partner when the client is in arrears, has requested to cancel the policy or their life policy is about to lapse.
Overall, L&G's customer satisfaction levels increased during the past year, helping it to pick up the Lifesearch Best Service Provider award for the second year running.
This work is all well and good, but one of the major changes over the year was a regulatory one - outside of the control of the business. In response to the change to pension legislation under A-Day, L&G undertook its largest-ever project entailing changes to more than 60 IT systems using over 35,000 days of effort.
The company also invested heavily in necessary customer communications, providing information on the changes to one million customers, and improved the language in all existing pensions' communications.
Part of the response
As part of the response, its pensions term assurance product, an innovative tax-exempt life insurance plan with free waiver of cover, dominated the IFA market with a 40% market share in 2006.
The proof of a strategy's success is, of course, ultimately based on results, and L&G certainly delivered in 2006. It is number-one in the protection market with a market share of more than 20%. Through a competitive tender process, it secured a strategic partnership with Nationwide for all its wealth and protection products.
The insurer saw improved customer and employee satisfaction levels. UK sales were up 45% spread across all distribution channels and products. Furthermore, in terms of profit, the insurer saw underlying profit from its UK operations increase by 24%. L&G is a very worthy winner of this year's Life Insurer of the Year Award, having taken stock of its position and invested both time and resources to drive the business forward.
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Delighted to be back on top again, Legal & General's Gary Burchett said the win was all down to being closely aligned with customers.
Clearly making significant headway in the life insurance market during the past year, and having already been shortlisted in the 2007 British Insurance Awards entries, it came as little surprise to those in the know that Legal & General reclaimed the title of the UK's leading life insurer.
Bounding up to the stage to collect the award, it was clear that Gary Burchett, managing director for housing at Legal & General, was pleased as punch to be back in the limelight once again. In fact, the sheer amount of time it took Mr Burchett to return to his table after collecting the award was a sure sign that the industry felt the recognition was justly deserved - especially after all the work that the provider has put in during the past year.
Delighted to be back at the top again - and having pinched the award back from its close rival, who won last year - Mr Burchett said the award was testament to all the staff on board at Legal & General, and that it was all down to being closely aligned with its customers.
Eager to keep hold of the award in the future, Mr Burchett said Legal & General would keep its focus on carrying on learning, innovating and supporting what it does, and continue to stay ahead of the game.
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