- Agree (73%)
- Disagree (24%)
- Not sure (3%)
Our latest poll asks whether you believe the complexity associated with many of today’s retail life insurance products is doing more harm than good.
Consumers in 2014 are being offered an ever-increasing array of choice when it comes to life insurance products. This includes the expanding direct insurance market and the increasing availability of retail-style policy features within the group insurance sector.
Within the retail life insurance market, advisers see the constant upgrading of risk products as both a blessing and a curse: a blessing because product upgrades offer new solutions for clients and prospective clients; a curse because of the growing complexity involved in the adviser’s assessment of whether it is in the best interests of their client to move to the new product, if the enhanced features are not automatically passed back to existing policy holders.
A key argument supporting the growing complexity of retail life insurance products is that they can offer better solutions for consumers. Examples include the ability to link products both inside and outside superannuation in order to optimise tax-deductible premiums while retaining more flexible benefit options outside the super environment. Constant medical diagnosis and treatment advancements also lead to new ways of delivering product solutions, including updating trauma insurance features and benefits.
The argument against such progress is that more complex products, by their very nature, make it more difficult for both adviser and client to navigate their way to the most appropriate outcome. It becomes more difficult to determine exactly what options ultimately serve the client’s best interests.
And while free market forces encourage innovation, advisers sometimes view product enhancements simply as life companies engaging in ‘one-upmanship’, rather than truly delivering a better solution (eg introducing more ‘exotic’ trauma conditions under which a future claim may be possible).
While our poll question itself may be a little simplistic, that is, this is not a black and white, yes or no issue, its purpose is to generate a conversation about the pros and cons associated with the evolution of more complex retail life insurance product solutions.
The issue of product complexity is discussed in some detail in our most recently-published industry round table feature (see: The Age of the Consumer: BT Thought Leadership Round Table). Complexity issues also exist within the claims and underwriting environment, and we will address this type of complexity in another conversation.
In the meantime, where are you placed when it comes to embracing the seemingly growing complexity of life insurance products? Do the perceived benefits outweigh the perceived disadvantages? Should life companies consider offering more ‘back-to-basics’ product solutions within the retail advice market? How should the industry move forward when it comes to developing new product solutions for consumers? Tell us what you think…
Its our job to understand and explain so called complexity in products. Take a glance at court cases and you will see judges consistently state to advisers that the adviser is the EXPERT, and, ipso facto, judges will assume you know the products and their impact on clients, ALL OF THEM.
When 74% of advisers think risk products are too complex it confirms my suspicions that there a lot of advisers playing with risk. To do risk properly is a full time job, not something to look at post GFC reductions in FUM revenue. Remember, “a little learning …………” etc
BUT there is a difference in INSURER attitude than there was a decade ago. Insurers used to do product launches. A seminar where the changes were explained, and even the nasties were NOT covered over, and pointed questions could be asked. In the last 5 years, only Macquarie ( with its very different trauma contracts) and BT ( keyperson IP ) have conducted a full blown seminar presentation ( over 45 minutes ) on product changes .
All of the insurers who slid CAPABILITY CLAUSES into IP contracts in recent years DID NOT have a “product launch ” to announce this drastic reduction in contractual-right-to-claim. It seems WE, and they, were too distracted by putting IP in super or split lump sum policies.
Kaplan say its not their brief to do seminars on product changes, or even training on product basics. Then who, if the insurers won’t ! The AFA has the courses but not, it seems, the desire !
I think we can trace some of the problem to the arrival of research houses. The original houses DID NOT rate products, but they provided EDUCATED ADVISERS with the resources to check what good & bad points each product offered.
BUT back then advisers were expected to have done the recruit training. You needed to know what to look for, and where to look
One answer in our techo society is WEBINARS, conducted by the RESEARCH HOUSES. The dealers can put in some dollars, and so can insurers.
Whatever, the facts are in a decade we have gone backwards in our general product knowledge. At the same time we have a regulator who, every now and again, reminds us we have an obligation to make “additional reasonable enquiries beyond dealer provided research ”
There is no “complexity “. Just a lack of product training.
Test your knowledge. Name the insurer who introduced nasty OVERSEAS TRAVEL EXCLUSIONS into its IP policies two years ago without telling advisers
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