Re-thinking Risk Insurance Products – Poll

Do you support the idea of redesigning risk insurance products where the sole measure of success is determined by the lowest possible number of declined claims?
  • No (49%)
  • Yes (28%)
  • Not sure (23%)

Our latest poll asks you to take a leap – not a leap of faith, but of thinking – about an alternative solution intended to develop sustainable life insurance products and regain the trust of the consumer.

To a large extent, it’s all about claims – eliminating or at least significantly minimising the incidence of declined claims. This is the underlying benchmark being targeted in a new discussion paper released this week by specialist insurance risk firm, Retender, where it reasons the way to achieve the lowest possible number of rejected claims is to structure risk insurance products around:

  1. The ability to objectively measure claim criteria
  2. An actual financial loss having occurred

This is a departure from current product structures across the spectrum of Death, TPD, Trauma and IP products, where a claimant must usually meet subjectively-based criteria – often taking the form of detailed definitions of illnesses and incapacities – in order to claim successfully (see also: Call for Radical Re-think…).

There seems to exist an almost universal acceptance by all life insurance industry stakeholders that a sustainability crisis presently exists (as manifested, for example, in ASIC’s recent IP Intervention), and which is exacerbated by apparent low levels of confidence in the mind of the consumer that their risk insurance claim would actually be paid.

While APRA’s six-monthly claims data releases reinforce the fact that a very large proportion of all life insurance and living insurance claims are actually paid, this doesn’t seem to be the perception held by at least the unadvised and uninsured/underinsured consumer, who continues to lack confidence in the value of life insurance products.

The purpose of Retender’s paper is to develop new thinking and to spark fresh conversations about how to tackle the joint issues of sustainability and trust in the sector, and we welcome your own thoughts and ideas on this topic…