\u201cThere are other factors at play (in relation to sustainability), that have been around for many years. And one of those is this never ending desire to have more bells and whistles than the next insurer. There is no way that that is driven by customers\u2019 needs. It\u2019s driven by a desire to get a higher score from ratings houses, which in turn gives a rationale for an adviser to move from one company to another. That issue, which has been around for many years, is one that the industry really needs to come to grips with,\u201d Mr Laughlin warned.<\/p>\n According to CommInsure Managing Director, Paul Rayson<\/strong>, part of the problem is that products have been improving while prices have remained flat.<\/p>\n \u201cIf you look back over the last eight or nine years, pricing of insurance has actually been relatively flat,\u201d Mr Rayson said. \u201cYet over that same period we have increased the benefits, both the type, and the quantum of benefits for that cover, quite dramatically. So it should come as no surprise that if you keep prices flat and benefits increase that profitability suffers.\u201d<\/p>\n He agreed that ratings houses had a significant effect on the product development process, suggesting that the focus should be on core products which are good value and affordable over time.<\/p>\n \u201cAt the moment they (ratings houses) rate the highly complex, fully featured products, but they don\u2019t put enough weight on value for money. Ratings houses need to rate products according to the majority of customers\u2019 needs, which are value for money and affordability over a long time.\u201d<\/p>\n Mr Rayson also questioned whether\u00a0advisers may be incorrectly assessing what is in the \u2018best interests\u2019 of their clients. \u201cThey often interpret ‘best interest’ to be ‘best product’, but it should be a product that\u2019s appropriate for a customer\u2019s needs, at a point in time, not only today but also in eight years\u2019 time, when they really need the product.<\/p>\n \u201cI think there is an issue around the way we rate and review products.\u201d<\/p>\n Mr Laughlin concurred: \u201cThat\u2019s the system –\u00a0unfortunately that\u2019s the world that we live in. But the idea of having nice, simple, easy to understand, basic life insurance products that are a lot cheaper, and better for the customer because they can understand them…\u00a0is a pretty good notion. How the industry gets itself into that position is another matter.\u201d<\/p>\n To solve the issue, according to Mr Rayson, the industry needs to fundamentally rethink how it builds and delivers products.<\/p>\n \u201cThe insurance industry is hurting right now. Our industry and the advice channel work on a client holding an insurance policy for eight years, to make money.\u00a0 That duration is no longer valid. \u00a0That model is not sustainable. We need to rethink our whole offer. We need to design products and offers with customers\u2019 needs in mind, and affordability in mind. It\u2019s going back to the drawing board and redesigning our products.\u201d<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Product providers who constantly tweak product benefits and definitions are putting the long-term sustainability of the insurance industry at risk, according to the Australian Prudential Regulation Authority (APRA).<\/p>\n","protected":false},"author":7,"featured_media":20092,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,241,4],"tags":[],"class_list":["post-20079","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-conferences-and-events","category-products"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/20079","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=20079"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/20079\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/20092"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=20079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=20079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=20079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/riskinfo.com.au\/news\/files\/2013\/03\/DSC_0742.jpg\")
<\/a>I think there is an issue around the way we rate and review products<\/h6>\n