- Non-disclosure issues at claim time (37%)
- 'Direct' is not subject to the same compliance regime as advised 'retail' life insurance (20%)
- Client has usually received no advice appropriate to their needs (20%)
- Generally inferior terms and conditions (16%)
- Leads to insufficient cover for the client (3%)
- I have no concerns with direct life insurance (3%)
- Pricing/value issues (1%)
Our latest poll focuses on the ongoing debate generated by the continuing rise of direct-to-consumer life insurance products. Advisers and other industry stakeholders have raised numerous concerns about the emergence of direct insurance products, but an equal number appear to have welcomed direct insurance as a positive for the industry, and for the consumer.
While the positives about direct insurance include the significantly greater awareness its mass media campaigns generate, promoting a greater pre-disposition to life insurance in the minds of the general public, its detractors point to a number of issues that concern them, and this is the conversation we want this poll to cover – that is, to ask which are the areas of greatest concern for those who have them.
While the options we have listed cover a range of issues that you believe are important, we are asking you to select your main, your primary, concern.
As we have indicated, there is a heightened interest in the direct insurance sector, given its growing prominence in recent years. This is to be reflected at the Financial Services Council’s 2014 Life Insurance Conference in Sydney on 3 April, where one of the sessions addresses direct insurance issues under the title “Keeping the promise – how direct to consumer products can bridge the gap between awareness and understanding“.
riskinfo will report on the results of our latest poll next week, and we will also share with you the key points/issues stemming from the ‘direct insurance’ session at next month’s FSC Life Insurance Conference…
The key points/issues stemming from ‘direct insurance’ session at next month’s FSC Life Insurance Conference…..can you share these on this newsletter for those who can’t attend?
Sharon we will definitely be sharing the key issues from this and many other sessions at the conference. We’ll also be tweeting regularly from the event – stay tuned!
The rise in direct insurance has correlated with the largest lapses of retail life products in Australia. The reason is simple.
Direct over the phone products peddlers are undercutting and undermining quality retail products by promising cheap prices, with 30 seconds over the phone underwriting and no medicals or confusing forms to fill in.
One example of how these untrained, telephone hawkers, spruik their wares, is from one of our clients experience with them.
Our client rang and enquired about the cheap Income Protection policy being offered from the TV add.
The person asked a few basic questions then recommended their 6 month benefit period, 90 day waiting period policy.
Our client was educated enough to ask a few questions and when asked about the 6 month benefit period, the response was “generally, people only claim for around 3 months so a 6 month benefit period is generally sufficient”.
Seems to be a lot of the word “generally” thrown in there, as of course Direct product floggers give “General advice” so they do not fall into the same regulations, qualified advisers come under.
Direct providers know that retail products are vastly superior and more expensive, which when combined with people facing tight budgets, with little knowledge of the contractual differences in these policies, plus a bombardment of advertising which focuses on price and ease of acceptance, people will start to look and compare. Price is the first and unless clients understand the policy differences, most important aspect in making a quick decision to change policies.
The retail life industry is being cannibalised by itself as many insurers who provide retail life products, also underwrite the Direct cheap and nasty covers.
The theoretical purpose of Direct Insurances is to increase the amount of Australians who will take out cover, thereby reducing the massive underinsurance problem.
The direct implication and one that only the regulators can address, is the slow death of quality retail life products, brought on by slack regulations that allow Direct Companies to do what they tried with our client and not even bother to compare their policy definitions/ benefits and warn the client in writing before they can proceed to cancel non cancellable policies that the client may not be able to get again if they later change their mind and need more comprehensive cover again.
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