Given the fast pace of technological evolution over the last two decades, even across the somewhat sedate pensions industry, why have bulk annuity broking processes remained largely unchanged and can a change in approach solve today’s capacity issues?
What’s Wrong With The Old Approach?
There’s a saying, “if it ain’t broke then don’t fix it!” Whilst the old approach to broking, i.e. requesting buy-in/buyout quotations from several insurers using a scheme-specific member data file and a wordy benefit specification, is still working, the inherent inefficiencies are damaging the prospects of schemes of all sizes. The current capacity constraints on obtaining pricing bear this out; demand for quotations in early 2018 is already so high that insurers are pushing back delivery timescales significantly and being increasingly selective over which schemes they will quote for.
These inefficiencies stem from the highly scheme-specific quotation request model. Each scheme’s data must be individually understood, modelled and priced; a time consuming exercise that costs as much as a small car.
How Can The Process Be Streamlined?
JLT is pioneering a new approach, formally launched on 22 March 2018 with 12 schemes now enrolled, which streamlines the quotation request by collapsing each scheme’s member-level data and principal benefit features into a single file covering all schemes and submitting this to insurers on a monthly basis. With all scheme data now available in one go, in a consistent and easily readable format, it’s much easier for insurers to provide quotations for more schemes, more easily and more often. It will provide insurers with the impetus to drive further automation at their ends, as well as giving them unprecedented insight into their new business pipelines.
What Are The Benefits To Schemes?
Schemes will find it easier to obtain initial and repeat quotations, making it possible, for the first time, to easily monitor transactable pricing and capture opportunities. Increased visibility will allow insurers to approach an individual scheme with specific pricing opportunities as these occur, giving a better deal.
Each scheme will receive their own quotations from insurers, modelled on their individual scheme data, and can transact at their own pace. There is no grouping of schemes at the transaction stage.
As well as being available to JLT’s current clients, schemes with no existing relationships are also able to self-load their data via our website and receive insurer pricing. If any scheme uploads its own data, then the only charge for enrolling will be a small quarterly platform maintenance fee.
Why not make 2018 the year you take control of your scheme’s pension liabilities?
This article first appeared in our Buyout Market Watch Q1 2018 newsletter.