Getting insurance to the masses has been a long haul. A big part of the problem has been the complexity of access to insurance products, not helped by many advisers' lack of knowledge and comfort with the whole insurance administration and processing system.
Technology would seem to be the obvious saviour, but the move of insurance into the electronic world has been sluggish thus far - even if most providers see the sense in it.
Currently the shift is being driven by wrap and master fund providers, which are either bolting their own in-house insurance products onto their platforms or partnering with other insurance providers to do so.
Macquarie has integrated Macquarie Life into its Macquarie Wrap, BT has a Westpac-based insurance product on its wrap platform, Navigator is using Aviva, and MasterKey has its own MLC insurance.
Smaller investment platforms that lack the resources or capability for in-house insurance are partnering with insurers to provide risk products through their platforms. For instance, Tower is providing white-label insurance to Asgard, IOOF and Skandia.
MLC platforms general manager Anthony Waldron says MasterKey has provided basic online insurance facilities since 2003 that allow advisers to review their clients' insurance arrangements online through AdviserCentral.
The technology is evolving every day, Waldron insists, but it is only now the platform is moving towards online insurance applications. The developments have been helped along by the fact insurance and investment are equal halves of the business.
"It's just been a natural extension of our existing business," Waldron says.
At Aviva/Navigator, marketing manager Tim Cobb says the company has been a pioneer in the field of integration of insurance into platforms, with insurance premium payment facilities incorporated on the Navigator platform since 2003.
Integrating insurance into the platform makes sense at a time when advisers are increasingly offering a holistic service, Cobb says.
"If you've got an adviser doing the whole financial plan and they can do everything from within the same platform, it just makes it really straightforward," he says.
In a world where clients expect an order to be executed in hours, if not minutes, the delayed processing of insurance for days can mean lost business, he adds.
"The longer the process the more likely you are to lose that application. If [through a platform application] an adviser can organise insurance in one or two steps, the more likely it is that insurance will be sold," he says.
For insurers not yet associated with platforms, technology is seen as an essential channel for future distribution. Axa has been investing heavily in electronic delivery, with a $30 million budget over the next three years, head of individual life Stephen Rosengren says.
"We see it as an incredibly important development for the future," Rosengren says.
Providing the capability for advisers to put applications through electronically, launched in February this year, increases speed and efficiency and reduces costs.
But technology is not a panacea. Axa points out electronic capabilities are just one element of the offer rather than the whole story.
"It's an enabler. But it has to be underlined by a culture of servicing and building a relationship with clients," Rosengren says. To Association of Financial Advisers chief executive Richard Klipin, the move towards electronic delivery and processing of insurance is a step in the right direction of addressing the underinsurance problem in Australia.
"Many non-risk-specialist advisers are not comfortable dealing with risk products, and embedding insurance tools in platforms and other financial planning software is a good and innovative development for producing ease of use and consolidation," Klipin says.
However, it would seem reasonable for advisers to expect a range of insurance products from their platform just as they do a range of investment products, he says.
"Having a mix [of products] means you can appeal to a broader section of the market. The fact is that some carriers are better at certain types of risk than others," he says.
Praxis Partners principal Kieren Dell says he expects a move right away from retail to platform delivery.
"It certainly seems the way of the future," Dell says.
But along with Klipin, he sees a sticking point in whether platforms will be able to provide the choice of insurance products that will invariably be demanded by advisers and their clients. "The issue is whether platforms can offer multiple insurers," he says.
Another model aiming to challenge the supremacy of platforms in this space is the one-stop multi-insurer hub integrated into financial planning software.
Among those most active in this area is Iress, whose AppCentral is an online application tool that provides access to most insurance providers through its Xplan financial planning software.
Iress has generated electronic application forms specifically for Zurich and Asteron, and is working with a number of other providers to develop application forms specific to their formats. Other providers will accept the general insurance prudential standard in hard copy.
To Iress senior business development executive Michael Kinens, master fund and wrap platforms are ill suited to the task of providing advisers with access to insurers.
"The problem is that platforms have a limited suite of products and in order to provide clients with the best term, TPD (total and permanent disability) or trauma product you might have to go through a range of providers to find one they are eligible for," Kinens says.
"If you're doing it through a platform and your client is knocked out because of some pre-existing medical condition, for instance, it doesn't really leave you with many other options within that platform."
Platforms were built for one thing, he says, "to deal with managed investments".
"They don't work very well for direct equities and don't work very well for insurance. It's not like sending off half a dozen managed fund applications and no questions asked - there is a very complex underwriting process and the back office at the average master fund is just not up to dealing with that." While Iress is working to standardise applications and other administrative tasks, it has recognised the need to develop systems tailored to each individual provider, he says.
"We realised it was important to have individual relationships with individual businesses," he says.
Zurich risk management national sales manager Kevin Goss says the decision to go with AppCentral rather than partner with a platform was based on a conviction that its one-stop-shop model provided the best option for advisers.
"It's challenging to find one insurance company that offers all things to all clients, and at AppCentral advisers can get access to a menu across the industry," Goss says.
"We want to eliminate the problem of advisers having to complete a number of applications, and AppCentral is linked into planning software, it streamlines the whole process. The way we see it, the least amount of keystrokes the better."
Dell says, however, that while he sees the value of stand-alone multi-insurer applications like AppCentral, he expects the master fund platform will continue to be the centre of most advisers' operations. The most likely future model is for an insurance master fund that is bolted onto the side of a platform, he believes.
"A stand-alone insurance application undermines the idea of the one-stop shop. What advisers want is one big umbrella covering all existing products," he says.
