Competition between life risk insurers is intense. A recent survey of 1300 risk advisers, the WA Taylor Report, found five life insurance companies wrestling for the highest rating with only the smallest margins to set them apart.
For the third consecutive year, intermediaries ranked Zurich first. In joint second place were Aviva, Tower Australia, Asteron and a composite of other providers.
Financial advisers - who write about half of the nation's $5.5 billion in annual premiums - are spoilt for choice.
Insurers endeavour to stand out from the crowd, secure planners' business and increase their market share by improving products and services, but it is not always enough to sway the planner towards them.
LOOKING BEYOND PRODUCT
For Tower Australia retail life chief executive officer David Callander, the battle for the financial adviser market broke out in mid-2005. The space was suddenly awash with new products and services, raising the bar for other product providers.
"Everybody's very focused on independent financial advisers. They can see the potential growth area in the market and they're all trying very hard to win over the support from the good advisers," Callander says.
Tower Australia seeks to differentiate itself through its relationships with planners and dealerships, product and service. "Relationship management is absolutely key to us. It means being very precise in terms of the adviser we want to partner with, dealerships that we want to partner with and then making sure that we have a very strong understanding of what their business needs are," Callander says.
Tower runs two schemes for advisers who work with its products to build their business. Planners who are relatively new to life insurance can enrol in the Tower Club, a year-long program tutoring them about the industry, products, building a client base and selling. Established advisers can join the Accelerator Program, where sales, cross-sales and marketing opportunities are identified.
Using feedback from an adviser-led product committee, Tower Australia and PrefSure products are upgraded twice a year, in April and October.
"My view . is there's not much that you can bring to the life insurance product sold through independent financial advisers that's mind-bogglingly new. People aren't going to think of something that hasn't previously been insured," Callander says. "In my view it's very hard to be sustainably ahead of the pack from a product point of view. So it's about relationship and service."
To speed up the insurance process, Tower Australia is piloting telephone underwriting. Consultant medical professionals strip the time taken to underwrite an application and the adviser gets their commission more speedily.
The insurer also uses electronic workflow management for greater office efficiency.
TAPPING INTO A WIDER MARKET
Aviva aims to broaden its cover so it can offer insurance to more people. Product innovation is sparked from adviser feedback sessions run in each state three times a year.
In a global first, Aviva doubled the maximum amount of total and permanent disability (TPD) cover from $2.5 million to $5 million. Advisers had questioned why TPD cover was limited when death cover was unlimited.
"We got quite a bit of pushback from advisers who said it was reasonably common to do a statement of advice for someone and find they needed more than $2.5 million cover. They wanted to know why they couldn't have more. And, to be honest, we couldn't come up with a good answer," Aviva general manager of marketing and public relations Tim Cobb says. Aviva supplies broader cover for more jobs. It created the new occupation class C, which covers bobcat drivers, hospital porters, concreters, carpet layers and other skilled workers who encounter a degree of daily risk.
Class C professionals can now have TPD cover, which was previously unavailable, and income protection up to $3000 a month for two years. "To me this gets to the real heart of the underinsurance issue. The industry can say people should have cover up to the age of 65 and they should have so many millions in life insurance, but when it comes down to it, what's important is some basic cover, rather than none," Cobb says.
At the other end of the scale, Aviva has closed a gap in the market for providing medical and dental professionals with cover in case they contract blood-borne diseases.
Research has found there is between a 1.8 per cent and 3 per cent chance of contracting hepatitis C from a needle-stick injury. On average, two out of five healthcare workers in each state are likely to acquire the virus each year after receiving a needle-stick injury.
For occupationally acquired hepatitis B and C, Aviva offers income protection and an option on their critical illness benefit that pays up to $500,000. Aviva has also removed the 12-month waiting period for cover to be reinstated following a TPD claim. Other providers are yet to follow.
CLEAR CUSTOMER FOCUS
While recognising the importance of rewarding adviser loyalty and efficient service, Asteron has a customer-centric focus. "Asteron drives product development from the end user," Asteron life product senior manager David Wright says.
It has redesigned its product disclosure statement to make it more customer-friendly and easier to use.
In an industry first, Asteron introduced an option allowing the insured to increase their level of cover without underwriting in the event of them becoming a carer. The move was triggered by research that one in seven people have the emotional and financial responsibility of caring for someone else.
STELLAR SERVICE AND BROADER OFFERING
"Where we're trying to make a difference in the marketplace is providing a product that's competitive and a service that's top notch across all of the value chain of life risk service," Zurich head of life risk Andrew McKee says. Superior underwriting administration puts Zurich ahead of the rest, McKee says. It has a team of four underwriters, each based in Sydney, Brisbane, Perth and Melbourne.
"Zurich makes sure our underwriters are accessible to advisers. If the underwriter has to make a decision to load on the premium or make an exclusion, it's about being able to explain our decisions to the advisers," McKee says. "You have to have a competitive product and a competitive price, but most important is the service that you provide to the adviser and to their customers. It comes down to underwriting process, underwriting decisionmaking, new business processing, customer service and claim management."
To reach a broader market, in July Zurich launched an online application for its EziCover Term product for advisers to put on their websites, enabling them to solve the needs of middlemarket clients. It is a simplified version of the adviser product with a capped sum insured and a limited number of underwriting questions.
An online version of EziCover Trauma will be available in February or March. This will be followed up with automated underwriting and income protection. "So it is about simplifying the process from the end consumer's perspective. In implementing this, it's also a growing recognition that Australian consumers are becoming more and more comfortable with purchasing services over the Internet," McKee says.
Focused on the middle market, in February or March, Zurich will launch Trauma Essentials, a product focused on the four main conditions that generate a trauma claim - heart attack, stroke, cancer or cardiac surgery. McKee says the aim is to provide a simple product that covers off the bulk of the client's needs.
In comparison, its adviser market product covers between 40 and 50 conditions and has partial trauma benefit payments on the early diagnosis of certain conditions, so it is a much more complex offering.
ADVISER FOCUS FOR RAPID GROWTH
CommInsure has introduced two new ways to help its advisers - a 1800 adviser technical hotline and an adviser sales centre. By calling the hotline, advisers can speak directly with a CommInsure technical manager and gain technical expertise in product, legislation and taxation.
The new adviser sales centre in Sydney is managed by phone-based business development consultants. Its aim is to strengthen the level of service to advisers across the country.
"We now have the best sales people in Australia servicing the needs of our advisers. This expanded team, coupled with the success of our new adviser quotation software, CALQ, positions us for rapid growth in 2007 and beyond," CommInsure managing director Simon Swanson says. CommInsure advisers benefit from a sophisticated underwriting and claims team, necessary to understand the increasingly complex medical conditions.
Including feedback from advisers, CommInsure substantially upgrades its product range twice a year in terms of product offering, pricing and remuneration services. "It's all about trying to leapfrog the competition," Swanson says.
SERVICE, TECHNOLOGY AND PRODUCT
MetLife institutional business head Michael Burke says: "Currently the market is really price conscious because there is not necessarily a lot of differentiation between insurer and insurer. MetLife wants to differentiate itself in three ways - client service, commitment to technology and product."
Good service is about aligning MetLife's interests with the client's and ensuring when their members have an insurance experience, for example, seeking further insurance or making a claim, that it is handled efficiently, Burke says. Technology is a key part of MetLife's business in the United States, where it dominates the institutional market.
The aim is to reduce cycle times, transparently show the client how the insurance process works and minimise periods of uncertainty, especially in death and TPD claims.
"The third thing is to have innovative products. Basically the insurance market has accepted that the standard products are there and we just sort of tinker with them. If you were to speak to most superannuation funds, the general feeling is the whole process of underwriting and application is very difficult. It's not very well understood," Burke says.
"The challenge for the insurer is to demystify the underwriting process to make it simpler. We see product innovation as being the way of the future to make that happen. Not only in the product itself, but in the process of getting it." MetLife also strives to stand out from the crowd through thought leadership.
It aims to invigorate discussion in the market on topics such as underinsurance, by sponsoring roundtables and helping to organise a national insurance symposium.
