Riskinfo thanks the FSC’s policy manager for life insurance, Aidan Nguyen, for taking the time to reflect on the nature of life insurance in Australia – its value and purpose, which serves to underpin a common bond that links all those who work in this industry…
While it may surprise some to know that the original concept of life insurance can be traced back millennia to ancient times, there is no doubt the life insurance industry plays a vital role by providing financial protection when people need it most. For many of us working in the industry, we know that insurance is a noble profession. Our customers and the community should feel this as well.
So what is noble? “Noble” is having or showing fine personal qualities or high moral principles. Nobility means virtue, honour, honesty and integrity. In essence, having nobility is about doing the right thing.
How does nobility translate into action and outcomes? Well, this is a rather hard question to answer, but one way is to look at recent data.
Life Insurance Claims data collected and published by APRA shows that, on average during 2019, 17 death claims were made for every 10,000 policies held. While this figure was higher for disability income claims, of which 84 claims were made for every 10,000 policies held, the vast majority of customers are unlikely to claim on their policy. It will therefore be very difficult, if not impossible, for someone to properly assess the value of their insurance cover based on their personal experiences alone.
…life insurance is a transaction enabled through trust, not price
That is why life insurance is a transaction enabled through trust, not price. Life insurers make a promise to each and every customer that they will be there to pay any valid claims, including potentially one day theirs. And it is trust that is the key to this core promise.
The same APRA data shows that 97 per cent of death claims were paid in the first instance where a decision has been made. The equivalent proportion for disability income claims was 95 per cent. The life insurance industry pays out, on average, almost $33 million to 279 Australian households every single day, 365 days a year. Needless to say, from this bird’s eye view, there are a great many instances in which life insurers can affirm they are fulfilling their noble purpose.
It is important to reflect on the fact that for every disappointing story we hear on life insurance, there are so many more positive stories, which are deserving of attention, but that we just don’t hear about. Glen James’ story is just one story that we want to share.
Glen recently shared his experience on the value of trauma insurance for a special episode on his podcast My Millennial Money (MMM). For those readers that haven’t heard of the MMM podcast, its episodes provide some really informative and useful content on a range of money matters. Having this content being discussed in a light-hearted way is tremendously valuable for a topic such as life insurance, which for too many too often is hard to think about (let alone talk about).
…life insurance is the intersecting point of two topics traditionally considered taboo to speak openly about in society
In some respects, this is because life insurance is the intersecting point of two topics traditionally considered taboo to speak openly about in society: life threatening events and personal finance.
Of course, we can and we must, as an industry, always aspire to do better for our customers. But let’s not forget to take stock of the noble role we are playing each day in protecting the Australian community during these difficult times.
Aidan Nguyen is the policy manager for life insurance at the Financial Services Council.
Thank you Aidan. Well said. It is a comfort to read this article.
It is a noble article, written by a young man who seems to have noble purposes, though I wonder if Aiden is aware of the chaos that the FSC has caused the Life Insurance Industry.
I am at a loss for words.
This sort of article, is like a fox showing momentary remorse for plundering a hen house.
I hope Aiden, as Policy Manager for Life Insurance at the FSC, that you reflect on what the FSC has done in the past and you may bring to light, a proper path that leads to an alignment of all interests in this Industry, not the vested interest model that the FSC previously led.
“It’s really not that hard to do the right thing. And when you eff up, you put your hand up and say ‘hey, sorry, but I did the wrong thing’ because people tend to be a lot more forgiving if you’re honest rather than being caught.”
Whilst Aiden is obviously honorable and genuine in his commentary, I unfortunately do not ever think the incredible damage the FSC did during the LIF negotiations and process will ever be forgiven.
They effectively sold advisers down the river in the name of greed on behalf of their Life Insurance company members and an ideological belief that the lower remuneration levels were, the better the consumer would be in regard to affordability and quality of advice.
This has now proven to be completely wrong despite the repetitive calls from experienced advisers that it was not an appropriate strategy.
Now we have skyrocketing premiums, rapidly declining adviser numbers and significant retraction in new business volumes.
This experiment has been a complete failure of massive proportions.
In addition, the relationships between quality risk advisers and the Life Insurance companies has been so badly and unnecessarily damaged.
You do not do better for the consumer by destroying the quality distribution system that drives the reach, understanding and implementation of Life Insurance.
This has what has happened and the FSC were complicit in its involvement.
The FSC hierarchy doesn’t believe in the nobility of insurance. We know this because it places no value on its most important advocates. The FSC believes in “disrupters”, bank assurance and cosy relationships with institutional executives and politicians. For the FSC to declare otherwise is disingenuous and insulting to our collective intelligence.
It’s a shame that we can’t rewind like we can with our videos and TV programmes in our industry.
The life-risk insurance industry for 100 years+ did perfectly well right up until perhaps 2010. Since then, the regulators listened to industry heavyweights who wanted the balance of power brought back under their control. From 2014 particularly, in our industry and our businesses, the stitches have been fraying all over the place.
Even those who have the power to save our industry and yet still could, to them protecting their status quo and saving face are all important, so rewinding is the stuff of fairy tales – it isn’t going to happen. The FSC has been complicit here to be sure, but what have our associations been during all of this we might also ask?
Where to from here? I can’t see a profitable future for specialist life-risk advisers and have no answers.
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