2015 FSC Life Insurance Conference Wrap

The 2015 FSC Life Insurance Conference was held last week in Sydney, headlined by the release of the Trowbridge Report and initial debate about its recommendations. But while ‘Trowbridge’ was the major talking point at this year’s Conference, the FSC also delivered a full day of relevant and thought-provoking content for delegates, who represented all sectors of Australia’s life insurance community.

FSC CEO, Sally Loane

In opening the Conference, recently-appointed FSC CEO, Sally Loane, noted some ‘green shoots’ emerging in the life insurance sector following a period where industry sustainability has become a key focus. She pointed to recent improvements in lapse rates, group life claims experience and a better long-term sustainability outlook. Ms Loane also highlighted ASIC’s Review of Retail Life Insurance Advice as the motivating factor in linking with the Association of Financial Advisers to launch the Life Insurance and Advice Working Group, headed by independent chair, John Trowbridge.

In speaking to delegates about the broader LIAWG process, which she noted was characterised by a meticulous process underpinned by integrity and independence, Ms Loane said the process itself had generated  a greater understanding of the varying perspectives held by advisers, licensees and life insurers.

Ms Loane reiterated the critical importance of life insurance to a functional and self-reliant community, but noted the continuing challenge to relate this message to consumers: “… while the majority of us insure our houses, our cars and our health – arguably not enough of us insure the things that are even more valuable – our lives, our quality of life and our incomes.” Ms Loane quoted research that found 83% of Australians insure their cars, while only 31% insure their ability to maintain their financial well-being with income protection insurance.

Under a 2015 Conference theme of ‘Evolve’, Ms Loane also urged delegates and the industry to move towards a culture of innovation.

BrightRock

The culture of innovation was highlighted in a presentation by Schalk Malan, representing new South African financial services provider, BrightRock. Mr Malan’s message related to how a total ‘revamp’ of the nature of life insurance, built from ground-up, with the consumer at the centre of every part of the business, can deliver a new life insurance paradigm or conversation.

For example, Mr Malan spoke to Conference delegates about re-positioning what are traditionally the three big ‘D’s in the South African life insurance market, namely: Death, Disability and Dread Disease. According to Mr Malan, the prospective customer is none the wiser after having discussed the three Ds with their adviser, because they don’t directly relate to their actual needs. Mr Malan said BrightRock has replaced the three Ds industry jargon with six main categories of consumer needs-matched solutions, which turn a ‘product push’ into a ‘client pull’:

1. Household needs
2. Childcare needs
3. Additional expense needs
4. Healthcare needs
5. Debt needs
6. Death-related needs

…every single part of your business is a product

Mr Malan laid out other elements of the BrightRock proposition, such as unprecendeted product flexibility that extended to over 56,000 client cover options, compared with a normal South African life company offering of around 32. He said this flexibility, based around changing consumer needs, allowed clients to move between different types of cover benefits as their needs changed, without any underwriting.

Importantly, Mr Malan emphasised that “… you cannot change one part of your business and leave the rest unchanged.” According to BrightRock’s philosophy, it has to be an ‘all or nothing’ approach to innovation, where Mr Malan told his audience that “… every single part of your business is a product.”

Other highlights

Throughout a day that offered both plenary and concurrent sessions, change, innovation and evolution were never far from the centrepoint of most discussions and presentations…

• Mr Malan was joined by Raj Mendes, Managing Director of The Customer Experience Company, and Lisa Claes, Executive Director Distribution, ING DIRECT, on a panel to discuss how to bring more of a customer focus to the life insurance industry. According to Mr Malan, his company is using customer centric design because they don’t want to be the dinosaur left behind when new players enter the life insurance market. He said the next evolution of insurance products should be built together with customers, not just for them.
• CEO of SuperFriend, Margo Lydon, led a discussion on mental health and the workplace, sharing the work her organisation has done with group insurers to build a ‘best practice’ mental illness claims framework. Fellow panellist, Georgie Harman, the CEO of beyondblue, shared the surprising statistic that one-third of psychological injury workers compensation claims are for ‘low morale’ – ie: people who are frustrated with their work environment and relationships and not necessarily suffering from mental illness or a diagnosed condition.
• Suncorp Life eCommerce Executive Manager, Shaun Taylor, said the life industry should be focused on building technology solutions that allow consumers to control their own purchasing journey online. His team adopts three main principles when approaching a technology project: be human, build knowledge, and build trust.

‘Power Panel’

The final plenary session of the day featured Brett Clark, incoming TAL Group CEO, Deanne Stewart, CEO of Metlife Australia, and Alexis George, MD Insurance, ANZ Wealth. Chaired by Helen Troup, Executive General Manager, CommInsure, the panel were asked questions from the floor about their views on the information presented throughout the day, and the key takeouts for their businesses.

Ms George observed, from her experience working in the Asian and European markets, that most other overseas jurisdictions are looking to Australia to copy our products, processes and regulation. But she admitted that Australian insurers were not up to scratch when it came to technology and digital strategies, and this was something that required immediate attention.

Ms Stewart, who is relatively new to insurance, said she’d been surprised by the number of people who are truly passionate about working in this sector, particularly compared to other parts of the wealth management industry. She also encouraged insurers to recruit from other sectors, to bring innovation and new ways of thinking.

Adding to this, Mr Clark said the industry needed to develop strategies to retain the talent already within the sector. He agreed that there are hundreds of people working in the industry with a passion for insurance, and wondered aloud how this passion could be translated to the wider consumer audience, to increase the take-up of insurance.

All three panellists agreed that the highlight of the day was Mr Trowbridge’s presentation, collectively acknowledging that the Report represented a turning-point for the life insurance industry.