Direct Insurance Presents Opportunities for Advisers

An increased demand for directly-sold life insurance products may represent an opportunity for advisers to access new revenue streams, a research firm has suggested.

Rice Warner has released its latest Direct Life Insurance Report, which found that the number of direct life insurance products available to Australian consumers has increased by 50% in the past three years.

Director and Head of Life Insurance at Rice Warner Actuaries, Richard Weatherhead, said that the shift in the market towards direct products represents real opportunity for advisers.

“Despite concerns arising from FoFA and some general views to the contrary, we consider that the move to direct represents a real opportunity for advisers to build new revenue streams via ‘no advice’ offers on the practice or dealer group website,” said Mr Weatherhead.

The report revealed that direct-sold life insurance makes up around 17.8% of overall risk insurance sales, and 11.8% of in-force business.

According to Rice Warner, increasing acceptance of the online environment as a purchasing channel, and a growth in life insurance advertising on TV, are leading to a greater uptake and more widespread acceptance from consumers of the need for insurance.

All distribution channels have seen significant growth in the past year

“All distribution channels have seen significant growth in the past year, except direct mail and branch sales, the latter reflecting the downturn in the mortgage market,” said Mr Weatherhead.

“Particularly, we’ve seen increasing acceptance of the new online model.  We know a high proportion of customers research products online before buying and over the past twelve months this has begun to translate into real online sales, with $44 million of sales either online or as a result of a telephone call triggered by an online enquiry,” he added.

He attributed the increase in direct sales to a shift in mindset from major insurers.

“Major insurers have been devoting significant resources to direct distribution and direct life business over the past year, because they are viewing it as an integral part of most business planning rather than being a ‘blue sky’ venture,” he said.