- Yes (66%)
- No (24%)
- Not sure (10%)
Advisers have lent their general support for more severity-based trauma insurance offerings to be made available in the Australian market.
As we go to press, 68% of those voting in our latest poll have given their thumbs up for more severity-based trama products, but one in four advisers (24%) is against the idea, while 8% remain on the fence (see: ANZ Wealth Launches Severity-Based Trauma Option).
Support for more severity-based trauma solutions has been accompanied by some qualifyting remarks about a number of issues that may need to be addressed before some advisers embrace this style of product more fully. Those issues include:
- Compliance
- Litigation risk
- Need for greater simplicity
Addressing these concerns, comments have included:
“Adviser compliance for a policy which provides PART of the sum insured depending on medical opinion, is, in my view, liability city for litigation lawyers… severity based trauma policies should never be sold under GENERAL ADVICE.”
The old chestnut that people won’t buy what they don’t understand is true here…
And this:
“I personally find the new policies very complex and difficult to explain to clients. For this reason I’ve stayed away from them…”
“I understand the products but find I can’t explain them as ‘confidently’ as the old style ones. I can explain the concept…But with these newies there really is a lot of devil in the detail. The old chestnut that people won’t buy what they don’t understand is true here so I’m giving the product line a wide berth for now.”
Advisers may be interested to know that a number of product providers have contacted Riskinfo asking for more details around this poll, which we think indicates the possibility that it may not be too much longer before more severity-based trauma products are released into the Australian theatre of operations.
We’ll report back on any future activity in this area but also encourage you to have your say on this question now. Send your message to the product providers as our poll remains open for another week…
Pleasing poll results and really positive to see advisers warming to the this type of trauma offering. Most will know that severity based trauma options have been available in Australia for 5 years and nearly 2 decades internationally.
Locally, classic trauma experience has shown an upward trend for the best part of the last decade and with continued definition ‘refinement’ and medical advancements, traditional trauma products are becoming more and more unsustainable, largely because of high maximum sums insured and 100% payments for low threshold conditions.
Severity based and multi-pay next gen products are increasing in appeal overseas with most of these products now offering a broader level of coverage to customers, benefits payable for more conditions and cover that continues to support patients throughout the progression of many illnesses.
At least 40% of providers in Asia now offer some form of next generation trauma product. In the UK and Europe new products are rapidly gaining market share through effective marketing. One product in particular now boasts over 170 separate claim conditions. With only so many critical conditions and procedures available for cover, expansion of products to severity levels within conditions has become necessary from a competitive point of view, with most providers now competing in both the classic and next generation trauma markets.
The introduction of severity levels of conditions naturally leads to a wider set of events being covered and it is this more ‘comprehensive’ level of cover that appeals to customers and advisers. One international provider boasts that customers are up to 3 times more likely to get a payment with their severity based product and yet whilst providing more coverage, that coverage is more reflective of the insurable need and fundamentally more affordable to customers.
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