Without life insurance, without insurance that provides money for clients when they are sick or injured and can't work and without insurance that provides money for clients when they may never work again - families would and do struggle to meet their basic financial ends meet, let alone save money towards dreams hopes and ambitions.
Why is it then that Australia is one of the most underinsured nations in the world and from a consumer perspective insurance sales people have a tarnished image? And before PCE gets a steady stream of correspondence from insurance professionals disputing the image insurance sales people have...let us point out that.....the facts are irrefutable ...only 2 out of 10 people seek financial advice, insurance cover through superannuation funds is assessed to be 90% less than what is actually required, the estimated underinsurance amount is in premium terms $8billion dollars (Life Insurance In Australia Industry Report, April 2012, IBISWorld)
The fact of the matter is as Tim Stephen from IBISWorld points out, is that people do not buy what they do not understand.
The next 5 years could be a boom time for the industry. Growth is forecast at 8%. The big companies; AMP(AXA), NAB(MLC), CBA (Comminsure), ANZ(OnePath) look set to grow their market share even further perhaps gobbling up some smaller players.
But if the industry is to live out its promise - providing money to people when they need it most - the need to capture the hearts and minds of the consumer has never been more important especially as the industry competes with the allocation of household income that perversley when disposable income is readily available people feel less exposed to lifes risks.
The industry will also need to change its language to the consumer as superannuation funds compete strongly through offering insurance via superannuation accounts - despite the fact that the lack of advice from this channel leads to the exacerabation of the underinsurance problem.
So what's the answer?
IBIS point out and PCE agree, the the industry needs to improve the understanding that consumers have about life insurance - to decrease the complexity - to simplify the product and the process involved in getting insurance - and the industry must tailor the message and communication of all of this so that it actually means something - that there is a tie in to enabling customers to see how getting the right insurance cover actually contributes to the clients life ......everyday....not just when things go wrong.
Life insurers need to adopt new technologies to speak to consumers in multiple ways and to enable product tailoring to different client needs.
Rather that individual products, a life insurer could design packages that are labelled towards the clients life circumstances ......the "two kids and one parent at home" package....OK PCE hasn't worked on the name yet...but you get the drift.
But what is clear is that the industry will consolidate, cost cutting is required, jobs will be under pressure and we need a distribution effort that captures clients attention, is facilitated by professionals prepared to connect with clients and offer flexibility through simplified offerings.
But the main players perhaps are not as nimble or have the appetite to facilitate this change. They are all facing an environment requiring the securing their adviser distribution force and of running in the donkey race of product changes driven by rating house scores. This is by all means neccessary but delays what is really needed.....a new way of speaking to clients and new tools and products that replicate that new philosophy that can be used by advisers.
Can the nimble, distributionless, IFA dependant life insurance providers....the boutiques...actually lead the way?
Yes. To an extent they are far more advanced in providing the technology platforms that actually may speak in a way that is easier to engage a customer with. But they need to finish the job. They need to engage the adviser force differently, be bold with product design, engage customers directly in the education piece and create forums and listening posts with and for advisers and customers.
Flexibility will be key, technology neccessary and capturing customers and the insurance adviser distributions force attention wil be key ingredients for success.
Who's bold enough to say they have the passion and the vision to insure more Australians?
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