New software package runs a check on life insurance hard-sell
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Your support makes all the difference.DATA SCIENCES, one of the country's biggest computer software firms, has launched a package designed to safeguard consumers against poor advice from life insurance sales staff.
The product comes in the wake of mounting concern about the quality of life insurance sales forces and the advice they have given to the public, particularly on switching from occupational schemes to personal pensions.
Insurance industry regulators are due to enforce tougher requirements by 1 January on disclosure of commissions and performance projections.
The Data Sciences package, which it developed in consultation with Lautro, the industry's present regulator, incorporates the latest compliance features. These include disclosure on cash commissions and a requirement that performance projections specific to each customer be made at the point of sale. Lautro said it will confirm that insurers who have installed the software meet all its compliance requirements.
Market research conducted for Data Sciences last year suggested that fewer than half of the top 40 life companies used computers at the point of sale, and two-thirds of those that did found their system unsatisfactory.
The new requirements are likely to make computer technology essential, especially for producing customer-specific information. Using computers to record the fact-find and sales advice also leaves a clearer audit trail in case of complaint.
Examples such as Lautro's recent pounds 300,000 fine on Norwich Union - which also had to suspend its entire sales force for retraining - have begun to focus the industry's attention on using software as a means of improving the quality of advice given by sales staff.
Legal & General, whose sales people are already computerised, said the new compliance requirements were likely to bring big changes in software and systems adopted.
There is a sting in the tail for life companies. Data Sciences reckons Prelude, its new software, could eventually be sold directly to consumers, cutting out life insurance sales forces altogether.
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