Professional Planner Insurance Series – Part II

It’s been a good few years since a genuinely new or innovative insurance product was launched in the Australian market. It’s generally held that the last great innovation was the advent of trauma insurance – and that was 1989.

Today, innovation focuses on fine-tuning the underwriting and claims processes, and on tweaking existing products to improve the level of service provided to advisers and consumers.

“I think the emphasis on innovation has changed,” says John Ashton, AMP’s head of product on-sale for retail wealth protection, and a 25-year veteran of the Australian risk industry.

“Over many years we saw changes in product design – we’ve seen the introduction of a brand new product, being trauma insurance – so there has certainly been product innovation along the way.

“From my point of view I see ‘innovation’ as being what we can do to make sure the adviser has a good experience, and ultimately the client has the best experience possible. That’s where we need to start doing things differently and making things easier.”

Ashton says advisers and insurers need to understandwhat each other’s strengths are.

“Insurance companies are like everybody else – they have markets and segments that they absolutely want to play in, but we need to be honest enough with advisers to say that there are certain markets that are not going to be our strengths,” he says.

“We’ll compete…but they’ll understand where we sit – and we’ll understand what their strengths are as well.

“A lot of the work we do now is really to do with analysis of market segments, customer segments; to some extent you analyse adviser segments as well. So one of the things we need to do [to] make sure we do a lot better is understand our own business, and understand the market a lot better.”

Marc Fabris, Zurich’s national manager of sales strategies and research, says “severity-based” trauma is really the most recent significant tweak to how cover is structured. But even that is more of an evolution than a new innovation.

“We’ve had quasi-severity-based trauma developing for years,” Fabris says. “You’ve got 10 per cent, 20 per cent, 25 per cent, 40 per cent benefits and in some cases 200 per cent benefits for different conditions, and they’ve refined something from South Africa.

“But when it comes to ‘pure’ innovation, yes, it’s been a while. Do we need to? I think innovation today is more about helping the delivery, and innovating on delivery.

“At the end of the day, the fundamental risks we face, and the financial implications of those risks, don’t change that much. It’s a matter of how do we better deliver that to people who don’t have it?”