Integrity Life’s Chief Underwriter, Scott Hodgson – known to many advisers in the sector – considers the nature of underinsurance in Australia and shares his thoughts about life insurance advisers and the role they play in our community.
Looking back on his own family’s relationship with their ‘local AMP agent’ in the 1960s, Scott paints a picture of how risk advisers were regarded in decades past. He was motivated to share these reflections in response to the article from industry legend, Russell Collins, which we published a few weeks ago (click here)*…
I read Russell’s response to the Riskinfo poll, in respect to solutions to underinsurance, with a bit of a heavy heart to be honest – and not for his sentiments like “Selling life insurance is not a job – it’s a vocation!”
Bravo sir!
My mood was more influenced by the fact we have been having these discussions for a very long time. Our industry seems to be in a rut; unable to get past our trust gap, and not as effective as we would like to be in getting the positive stories (particularly around claims) out there.
…I could see the esteem in which my parents held her
I joined the life insurance industry because of my mum – she worked for the AMP in the 1960s, and we had our own AMP ‘rep’, whom I recall visiting our home and writing whole of life and endowment policies for us. Not that I knew at the time what the policies were – Nola was a lovely lady, engaging with my siblings and I, and I could see the esteem in which my parents held her. They told me that the policies were for the future, and they would keep us protected “…no matter what happened”. Even at that young age, I felt some comfort in knowing our future was being protected, even though the actual mechanics were pretty-opaque to a 5-year-old.
Well, we kids all made it through to adulthood, parents by our side, and the protection part of the policies was thankfully never needed. My Dad retired in his late 60’s, cashed in his by then ‘paid-up’ policies, and was very pleased.
Times have changed. The financial / economic landscape is different, so the policies have changed along with that. But no matter the contract variations, the fundamentals of life insurance protection have not changed.
The dreams and aspirations one has are usually tied in some way to financial goals. So, most of us need to earn income and grow assets – working hard to do that, while enjoying our lives along the way too.
Those dreams and aspirations can only come to fruition if everything goes ‘to plan’.
What if it doesn’t? Premature death or permanent (even temporary) disability is not part of the plan. So, our industry provides a solution – an alternative to the end of those dreams, and not just that – often helping to avoid plunging a family into financial distress (when they are already dealing with emotional stress).
So, from this underwriters’ point of view, there’s nothing more important than having the conversations Russell speaks of – those moments like my parents had many years ago, where a purchase was made based on trust, and peace of mind obtained.
We must find ways to facilitate the provision of advice and help advisers have those conversations…
We must find ways to facilitate the provision of advice and help advisers have those conversations and build the pool of life insurance premiums so we can help all those whose plans are derailed by death or disability.
Solving underinsurance, in this humble underwriter’s perspective, is a task in connecting people with the products in a way that helps them understand their value. Advisers have always been able to do this well, if given a chance.
*This is the second article we have published which responds to the sentiments shared by Russell Collins. Click here for the response we received from Sydney adviser, Guy Mankey.
Scott Hodgson is Chief Underwriter – Integrity Life.
You are absolutely correct Scott. Our job is to connect people with the products in a way that helps them understand their value and we have always been able to do this well. The problem is that the type of person who might suitable for and considering a career in the ‘profession’ would look at it in its current state and say, ‘why would I bother?’. It is overregulated, under paying with education requirements are not only largely irrelevant but completely over the top. If my daughter had come to me after year 12 and said, ‘what do you think dad? I’m tossing up between studying to become a solicitor, accountant, doctor or an insurance advisor’, I know which would be the 1st to go. Insurance advice has become so toxic that not only are most of the specialists I know avoiding writing new business but many (most?) of my planner friends are telling clients they no longer provide service in that area. Not because they don’t believe in the products, not because their clients don’t need or shouldn’t have it, but simply because with everything involved it now requires too much risk, effort and uncertainty and not enough reward.
Couldn’t agree more Guy. Some months ago, I read an article in RiskInfo which stated that advisers are “overwhelmed” by regulation. I have also been watching the FPA’s virtual Congress, which runs each Monday morning. The CEO of FASEA was interviewed some weeks ago, and the comments from advisers posted during the interview, basically slammed him because of his ignorance of what he and his organisation have done and are doing. FASEA want to raise the professional image of our profession, but as we all know, what they are imposing is ludicrous. I believe that there is some kind of goal to rid the industry of us experienced advisers, and replace us with new kids whom they can mould into rule following robots! Nevertheless, after 22 years as a risk specialist, I really do wonder why I continue, especially when it comes to writing new business. It’s just not worth it. I also wonder if there is now no turning back, and the retail life industry in this country is doomed.
The need for insurance is on display every day. As if Covid wasn’t a reason enough to have insurance, the storms in Melbourne last night unexpectedly took 3 lives.
Insurance is not for ‘if’ but ‘when’ and few people can predict when their time is up. Insurance in any form is a waste of money unless it is in place when it is needed most. And then it is the most valuable money available EVER! When I started as an insurance agent in 1987 my education with the LUA required that I go speak with a widow or widower. I was ‘lucky’ in as much as my next door neighbour was widowed and I spoke with him about his experience. He revealed how the insurance on his wife allowed him employ someone to look after his two baby girls and bring his mother into his house. There was lots more, and during my time as an advisor, I learnt the stories first hand when I delivered cheques and condolences. I never doubted the value of the work I did and neither did those families or payment recipients.
If people need to understand the role of insurance and why they should be lining up to buy it, they should speak to someone who has benefitted from it. Insurance is only of value if it is in place on the day it is needed, and even then, it is never enough. But it’s better than nothing and only pennies on the pound!
I left after 20 years because bureaucracy had gone stupid and I couldn’t speak to my clients in simple English without documenting everything. I so feel for the people who have remained in the industry because they continue to be hounded for doing their job and have roadblocks continuously thrown across their path. The banks have come into the industry, made a cash grab for profit, and jumped out before being lashed with legislation. It’s come back to bite them.
The oldest company has treated their advisers with disdain and disrespect whilst devastating lives built on reputation, loyalty and trust.
Insurance will always be needed and it’s a shame the governments have followed minorities to the point where being an insurance adviser has become a distrusted occupation. But to those who have received the benefit of what insurance has done for them will forever be grateful they paid the premiums! All thanks to the men and women who forged the path!
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