Advisers are expected to write more risk insurance in 2008 as market volatility and spiralling living costs shift the focus away from investment and onto insurance. Investment Trends’ prediction comes on the back of its inaugural Planner Risk and Risk Technology Report , which found more advisers are offering advice on life insurance and income protection, yet for many it accounts for only a small part of their total business.
The number of planners advising on risk rose from 81 per cent in 2006 to 84 per cent in 2007; however, 61 per cent were writing less than $50,000 in annual premiums, according to the report. On average, risk advice contributed 21 per cent to practice revenue last year. Andrew Knox, analyst at Investment Trends, says a heavy focus by planners on investment probably contributed to the low levels of annualised premiums written.
Perhaps this year that might change,” he says. “We’d expect to see an increase in the amounts of risk written. There seems to be more focus around risk this year, more enhancements being announced by the risk providers, and market volatility has people more concerned about insurance cover, particularly life risk.” Another key finding was an intention by planners over the next three years to shift risk transactions away from direct interaction with product providers towards platforms and software providers.
However, Mark Johnston, principal at Investment Trends, says most platforms reviewed provided limited functionality outside of “cleanskin super risk business”. “Maybe those limitations are some of the reasons why planners are writing smaller amounts of risk,” Knox says. “A number of platforms have announced enhancements this year to what they’re doing with life risk, so I think some of those gaps identified in the report will be filled this year.”