Life insurance advice is challenging, and insurer and technology provider initiatives are more vital than ever


King Loong Cho

In its ninth year, the Investment Trends 2017 Planner Risk Report provides an in-depth study of Australian financial planners’ advice on life insurance. The latest edition is based on a survey of 495 financial planners conducted in June 2017.

This year’s study highlights a number of important trends:

Life insurance advice is challenging, and insurer and technology provider initiatives are more vital than ever

Financial planners are already adapting to life under the Life Insurance Framework (LIF) reforms, which comes into force in January 2018. The latest Investment Trends research reveals that planners are becoming less dependent on upfront commissions, favouring hybrid commission models instead.

Many, however, do not view the LIF reforms in a positive light. The majority say they do not believe the reforms will be beneficial to their practice, the financial planning industry, nor everyday Australians.

“Many planners are evolving their business to meet the regulatory requirements,” said King Loong Choi, Senior Analyst at Investment Trends. “In addition to these changes, planners face a raft of other challenges in providing life insurance advice including paperwork, admin and compliance,” explained Choi.

“Right now, insurance and technology provider assistance is more vital than ever in helping planners expand their life insurance advice,” said Choi. This is evidenced by the 70% of planners who seek additional support, most commonly in the form of improved process efficiencies, more information on the reforms, and more adviser business support.

With insurer switching levels at an all-time high, retention is now more important than ever

Insurer switching levels have increased to a record high, with almost half of planners (47%) saying they stopped using at least one insurer in the last 12 months, up from 45% in 2016 and 35% in 2015.

High switching levels are set to continue, with over a quarter of planners (27%) saying they would like to establish a new insurer relationship over the coming 12 months.

“To strengthen planner relationships, insurers must demonstrate a value proposition that extends across the entire value chain,” said Choi. “Insurers need to provide support from the back end, through seamless underwriting and online applications, all the way to the front end, by assisting planners with client engagement and education.”

“Insurers that cultivate their planner relationships and maintain high satisfaction levels will benefit from lower attrition levels,” added Choi.

New leader in insurer satisfaction rankings

Investment Trends measured planners’ overall satisfaction with their primary life insurer, and their satisfaction across 13 different service categories. Industry wide, 90% of planners rated their primary life insurer as ‘good’ or ‘very good’ overall, down slightly from 94% in 2016. ClearView received the Investment Trends Overall Satisfaction – Insurer Award for the first time, having achieved the highest planner satisfaction score in this year’s study. The top three life insurers by overall planner satisfaction are:

  1. ClearView
  2. BT Life
  3. AIA Australia

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