"I have a dream that one day this industry will rise up and live out the true meaning of its purpose: we hold these truths to be self-evident, that all customers are created equal."
OK, I apologise that this seminal speech by Martin Luther King given in 1963 has been plagiarised to meet my purpose but in the same way that it took a brave leadership to drive change on US race relations, perhaps brave regulations may just be the catalyst to drive further improvements in the UAE insurance industry. Focusing on customers makes good business sense – just ask Apple or Disney - yet the life industry, recently received the equivalent of its school report and was remarked "could do better".
There are complaints against advisers, and life companies are instructed to cap commissions to advisers and pay them over a longer period to align with customers' long-term interests. But there is so much more that can be done to improve customer service.
To develop a thriving industry, advisers and life companies need to decide which customers they wish to attract and develop tailored propositions for them. There is no room for "one size fits all" customer solutions today and only when we have real insight on our customers can we build an offering that meets customer needs.
I am going to share some of Friends Provident International's (FPI) study and pose a few questions for the industry. The FPI has carried out a substantial amount of research over the past three years among Indian, British, South African and Australian expatriate customers in the UAE, both of a qualitative and quantitative nature and the insight gained has been used to reshape its products. Industry insight is robustly gathered intelligence from multiple sources and not just the opinion of individuals, so you can rely on it.
So what has FPI learnt and what does it mean for customers, advisers and life companies?
1. Between 50 per cent and 76 per cent of all expatriates are likely to return to their country of origin to retire.
2. Retirement, property purchase and educating children are the three most important financial goals for expatriates.
3. Many expats wish to save for less than five years and certainly less than 10 years.
4. All expats prefer investments in their home country.
5. Most expats either want less than 25 funds to drive the performance of their policy or have no interest in funds at all, just wanting the company to meet their goals for them.
6. Advisers come second to friends and family for advice.
Based on the findings listed above, here are six questions for life companies and advisers to consider:
1. If we know that customers are going to be returning to countries with high tax liabilities such as UK, US etc, then isn't it appropriate to adjust life products to mitigate these liabilities and isn't it only fair that customers should be made aware of the tax position of these products in their home country so they can see if they work or not? - The FPI has produced a series of guides on the subject of tax and estate planning to demonstrate the effectiveness of its solutions for its target expatriates returning home.
2. If we know that retirement is the top goal for expats, isn't it appropriate for insurers to develop specific products and for advisers to promote specific products to meet this goal rather than push "one size fits all" savings products?- We think there is significant room for innovation in this space.
3. If expats like to save for less than five years, why are there so few alternatives in the market that reflect this? Shouldn’t life companies be developing products that meet the shorter-term tenure and needs of expats? - This is something that FPl has been working on for some time.
4. If expats prefer investments in their home country, shouldn't providers be linking their products to fund managers from India and other countries whose nationals they are targeting rather than just linking to the usual Western brands? - FPI added three funds from HDFC to its fund range to appeal to the Indian expatriate.
5. If expats do not want huge investment choice, why do advisers insist on, and life companies continue to offer such a wide fund choice? Is the adviser value proposition so dependent on a wide and esoteric fund range to "demystify" the complex world of investments for its customers? The world could be a lot simpler. Are we missing the point that we are all here to help customers meet their objectives?
6. If customers are wary of advisers, isn’t it necessary for advisers to raise their professional standards? - FPI has set up its Adviser Academy specifically to this end. The UAE life industry knows it is not perfect, but ultimately it still serves an important purpose. With less than 1 per cent of the population taking life or critical illness cover, there is a greater problem at hand - inertia. Hopefully, though, a combination of regulatory measures, innovation and rising standards will encourage customers to act. The industry is still there for customers at the most vulnerable and important moments in life and the consequences of not insuring or saving far outweigh the shortcomings of the industry today.
Philip Cernik is the chief marketing officer at Friends Provident International