Taliored approach to risk for the SMSF market

Like many of us, my working day starts with coffee. There are a number of vendors within the vicinity of the office, ranging from mobile coffee carts to Starbucks.

There is a place in the coffee scene for all of them. Some people swear by the chains, while others prefer the local barista who knows them by name, and their order by heart. In many ways, it’s the same when it comes to group insurance.

There has always been a place for larger insurers, and there is certainly a place for smaller boutique providers who can offer policies outside the “standard” offering. Many of Australia’s larger insurers’ offerings vary little, with generic policies and services that clients must accept.

As a smaller insurer, we prefer to start with a blank slate and work with our clients to produce the policy their members want.

We prefer to look at the solution first, and the product second, to build a service plan around claims management, reporting requirements and the required technology. We ask our clients whether the standard benefit – equal to 75 per cent of income – is sufficient for a fund’s members to live on, and then look at the services they want to receive.

The proliferation of self-managed super funds (SMSFs) points to an increasing demand within the financial sector for tailored services designed for individuals, not the group. Part of the appeal for our clients is the ability to customise options such as benefit levels, waiting periods and exclusions.

For some of our larger competitors this sort of approach would be far more difficult. Building enhancements into existing IT frameworks designed for one-size-fits-all policies would be challenging and costly.

Despite the challenges in the insurance industry, the opportunity for small insurers in the market is growing. In Australia, Beazley remains small enough to offer local, boutique-style service but backed by the stability and global reach of Lloyd’s.

Another common perception is that large insurers have advantages when it comes to pricing. While this may be true for generic products, the good news is that a boutique service doesn’t have to cost more.

As super funds look at new ways to build loyalty by differentiating their funds to meet their members’ needs, insurance should also evolve and focus on the value we bring as a partner, rather than the cost we incur as a supplier.

Globally, we’re seeing this across its insurance markets, with strong demand from clients for insurance-based solutions that offer services to manage risks and solve problems, rather than payouts in the event of a claim. Demonstrating value through the quality of return-to-work services and mental health initiatives is a starting point for insurers to add real value for clients.

The insurance offered through our super funds has gone a long way to address the level of underinsurance that exists in Australia, and the whole industry should be congratulated for that.

But we also need to continue to question whether what we’re doing is enough, because perhaps our coffee budget is better spent at the small cart across the road. It’s a question worth asking.

This article was originally published on the Professional Planner insurance app for iPad. Download the app.