Insurers should focus on improving underwriting speed if they want to attract more business from advisers, a new report from Investment Trends has found.
The 2014 Planner Risk Report has revealed that nearly half (45%) of advisers surveyed want insurance providers to increase the speed at which applications are processed, in order to help them with their risk advice.
According to Investment Trends, the average number of days it takes providers to process underwriting submissions has increased since last year. As a result, adviser satisfaction has fallen.
The underwriting process is the strongest driver of overall satisfaction with insurers
Investment Trends Senior Analyst, Recep Peker, said: “The underwriting process is the strongest driver of overall satisfaction with insurers. So, any falls in satisfaction with the underwriting process is noteworthy.
“Underwriting is very important for both acquisition and retention, and will be a key battleground for insurance providers over the next year.”
Zurich and AIA Australia received the highest satisfaction rating from their primary users, followed by Asteron Life.
The report also found that advisers are working with a greater number of insurers, up from 3.4 in 2013 to 3.7 in 2014, but are also very likely to switch providers if they are dissatisfied. 40% of planners said they stopped using at least one insurer in the previous 12 months, up from 35% in 2013.
“Insurer relationships are in a state of flux,” said Mr Peker. “Planners are aggressively expanding the number of insurers they use, while cutting those who aren’t exceptional. There are great opportunities and risks for insurers to either benefit or lose out from this switching.”
Despite insurer-adviser relationships changing rapidly over the past year, the report showed it is still crucial for an insurer to be a planner’s most-used provider, with the primary insurer receiving an average of 59% of an adviser’s premiums.
The top five insurers in terms of primary planner relationships are:
- OnePath
- AMP
- AIA Australia
- BT Life
- TAL
These providers account for 66% of primary planner relationships.
The Insurance Company that can simplify the underwriting process when a client wishes to increase an existing policy, will have a huge increase in retention.
An example;
Client has had a life policy for 6 years and is currently paying $1500 a year. He wants to add $100,000 cover which is an extra $200 premium.
In the current world we live in, it will take 6 to 10 hours to do all the work and getting a client to fill in a full application again, with full underwriting processes again, makes this a $20 a hour, minus expenses job, with the end result = A loss.
The Life Company needs to simplify the process or lose the client, which now means the $1500 profitable premium is potentially lost, let alone the $200 increase which will not be profitable for 5 + years.
The solution is simple, though is any Life Company and the regulators, willing to listen?
Wouldn’t it be good if underwriters were taught how to underwrite what’s in front of them instead of reading from a book or even more often than not told by a Reinsurer, these are the only terms you can ever ofter every client in this situation.
Case in point, an accountant /Director who has been insured for 15 years with a company and has never had a claim, wants insure his salary package including income splitting and super but excludes dividends on better terms than he has at present
We are told by the particular Life Company that they want to include Other Income Benefit Offset Clause from day 1 because the Reinsurer is worried that even though he’s willing to pay $4,500 to insure himself, his partner/co Director will continue to pay him his full salary long term even though, he has insurance.
They totally ignore the fact that someone will need to be employed to do his work during his absence on at least $100K p.a., and why would anyone pay $4500 for insurance if they were going to get paid by their firm anyway.
This is the kind of stupidity that pervades most life companies.
As for one of the so called stars in the above report,….all we can say is beware, they are not what they seem to be.
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