As part of a strategy to boost growth and diversify from the traditional independent financial adviser (IFA) channel, Suncorp Life, the wealth management arm of Queensland’s Suncorp Group, will aggressively target consumers directly.
Suncorp Life has plans to more than double direct sales to match sales from the IFA channel by 2016, but also reaffirmed its commitment to financial planners with the launch of its new Adviser Support Package this week.
Direct sales accounted for $33 million, or roughly 27 per cent, of new life risk business sales for the year to June 30, 2013, while the IFA channel pulled in $68 million, or roughly 56 per cent.
New individual life and risk sales rose 14.2 per cent to $121 million for the full year. Sales of life insurance through general insurance climbed 16 per cent.
The Adviser Support Package, which falls under the Asteron Life brand, is part of Suncorp Life’s customer-retention strategy that also includes getting advisers to encourage clients to opt for level premiums over stepped premiums.
Asteron Life’s executive manager, Mark Vilo, said advisers still choose how they preferred to be remunerated be that upfront, hybrid or level commissions. However, over the long term, advice businesses with a steady and predictable recurring revenue stream built on level commissions would be more valuable.
“It’s not our job to dictate how advisers should be remunerated, but it’s no secret the industry would like more advisers to write hybrid or level business because that’s stickier business,” he said.
Suncorp’s customer-retention drive follows the group’s disappointing full-year results on August 21.
The group’s net profit after tax plunged 32.2 per cent to $491 million for the year to June 30, 2013, predominantly impacted by the sale of the non-core bank, which shaved about $500 million off profit. The result was also dragged down by Suncorp Life’s spectacular 76.1 per cent drop in profit to $60 million.
Suncorp chief executive, Patrick Snowball, said at the group’s full-year briefing on August 21 that building a strong direct distribution business and revitalising intermediary sales were key planks in Suncorp Life’s strategy to boost profits, deliver double-digit returns to shareholders and deal with structural challenges facing the insurance industry.
The Adviser Support Package, which contains tools to help advisers better engage with clients around the issue of lapse rates, was put together in response to proprietary research that showed the average age of entry for trauma insurance is 40, the average age people lapse on their insurance is age 44 and the average age for a trauma claim is 49.
Vilo said Australians in their forties made more life insurance claims than any other age group, yet they were letting go of their insurance at one of the most vulnerable stages in life, just a few years before they might need it.
“This exposes them to a major financial gap in the event of a serious illness, incident or their own death,” he said.
Rising lapse rates accounted for a $26-million loss for the year to June 30, 2013 while disability claims lead to $20 million in losses.
