Risk advisers are spending more time supporting existing customers to the detriment of business growth according to Zurich chief executive Justin Delaney.
Speaking at the Professional Planner Licensee Summit in Katoomba this week, Delaney said he hopes the Quality of Advice Review can fix the “friction in the system” that’s creating a mismatch between supply and demand in life insurance.
“Many of the advisers I talk to can’t grow their businesses because they’re spending so much of their time supporting existing customers – which they’ve always done – but with the number of price increases and the changing product landscape advisers are now spending much more time than they used to looking for a new product or better deal for their customer.”
Over the last five years, Delaney said, the accessibility of life insurance in Australia is an issue across every distribution channel.
“Accessibility and affordability of life insurance has really contracted. That’s why the quality of advice review important.”
Delaney said disparate reviews, whether it was the Life Insurance Framework or anti-hawking rules, have changed the face of the industry.
“On the group side Protecting Your Super and Putting Members Interests First reforms have moderated the level of insurance cover provided by default.”
Reflecting on the life insurance reforms, Bombora Advice managing director Wayne Handley said he isn’t sure how many sectors could withstand being halved within five years.
“It’s not just the market halving, it’s the number of clients we haven’t been able to see. Who is responsible for that? It’s an unintended consequence of something we did. I’m still mystified about what problem was LIF trying to solve.”
MLC Insurance chief retail insurance officer Michael Rogers said the supply pipeline of advisers being smaller meant accessing the solution was more difficult.
“Access is half of what it used to be and at the same time the cost of delivering advice to meet its complexity – because the cost is driven by complexity – has gone up by 40 per cent. You have a smaller pipeline that’s only affordable to an even smaller cohort of people than the rest of the world, but the demand is still there.”
Rogers said the growth of the life insurance market in Asia during the Covid-19 pandemic was “extraordinary”, while that same trend did not catch on here.
“That has been driven by the impacts of Covid and people sitting back and thinking they have to do something about this. We’ve seen that phenomenon in the US as well and to a certain extent across Europe. It didn’t happen here.”
Awareness of our own mortality and the reasons for attaining Life and Disability Insurance cover, has never been better.
The reason why the rest of the world had a large uptake and Australia lagged?
Here, it is like jumping through hoops on fire to get advice on a subject you know you should consider, though do not like to dwell on and because it is so expensive, confusing and time consuming, it becomes something to think about later.
From a client perspective, Life Insurance is not like Investing.
Investing is interesting and holds great opportunity for me to attain wealth, whereas Insurance is a bit depressing and is money that could be spent on other important things like holidays and paying off the home, though when I make tentative steps to get help, it all seems too hard.
Advisers are in retention and client preservation mode.
Many Advisers dread a client saying can we do a review, as that can lead to more expensive, time consuming work that takes multiple hours to complete and hundreds, up to thousands of dollars in costs to finalise, which creates more losses.
And the Industry wonders why Advisers are not pursuing new clients?
The answer is 3 words. Cost / Time / Risk.