The increasing number of claims being received by life insurers, which will be further compounded as Australia’s population continues to age, is a critical challenge for the industry, according to a survey conducted by AIA Australia.
The insurer recently hosted its Group Insurance Summit, and asked the superannuation and insurance professionals in attendance what they believed were the critical challenges facing the industry. 28% said increasing claims were an immediate concern, and a further 70% said that Australia’s ‘greying’ population, and the continued lack of consumer awareness about the importance of insurance, were future challenges that would need to be overcome.
“According to the United Nations, life expectancy in Australia is the fourth highest in the world, and by 2036 it is predicted that around 1.1 million Australians will be aged 85 years or over,” said AIA Australia’s General Manager, Life Insurance, Damien Mu.
“This is a huge demographic shift. We must continue to promote the value proposition that’s at the heart of life insurance – protecting the lives of Australians – if we are to respond to this challenge, but it cannot be done in isolation. We have to work together to ensure that Australians not only have life insurance, but that it is at an adequate level for their future needs,” Mr Mu said.
Attendees at the event also identified the sustainability of premium and poor consumer perception as immediate issues to be addressed by the industry.
In response to these challenges, improved claims processes (nominated by 42% of attendees) and product innovation to provide better value to consumers (23%) were the top rated solutions.
Memo To Insurers
1 If you dabble in group TPD, price accordingly for the fact you dont underwrite most of the risk
2 Dont add lapse rates on your direct lines to lapse rates from adviser business to justify a case for less commission to advisers
3 Understand quality advisers, excluding those who are just order takers, can sell increased premiums if the features justify the increase. If an insurerer is targeting those advisers who sell on cost alone, you will get what you deserve Price the policies accurately in anticipation of claims-thats why people buy insurance
4 Claims rejection apart, the perception of the place of insurance with consumers will continue spiralling down if direct sellers keep talking about ‘ease & convenience ” in TV ads, and Super funds keep telling their members that thier insurance is cheap.
AND DON’T CHASE MARKET SHARE
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