Importance of risk advice to continue


By Elizabeth Somerville

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Financial planners have continued to focus on life insurance, in a trend which looks set to continue over the short term, according to new research from Investment Trends.

The “June 2014 Planner Risk Report”, which surveyed 885 financial planners, found the proportion of planners advising on risk had remained steady at 90 per cent over the past 12 months.

Those who were advising on risk were sourcing a greater proportion of their practice revenue from providing risk advice. This was up from 27 per cent last year to 29 per cent this year, the report found.

The trend was expected to continue, with risk advice predicted to account for 31 per cent of planners’ practice revenue by 2017.

“Risk continues to be a key component of many planners’ businesses,” Investment Trends senior analyst Recep Peker said.

“Providers can help facilitate planners’ intention to grow their risk business by addressing some of the planners’ key challenges, chiefly high premiums, administration issues and inefficient processes.”

Advisers had also increased the range of insurers they used, with the typical planner now using 3.7 insurers, up from 3.4 in 2013.

The level of planner switching remained high, with 40 per cent of respondents saying they stopped using at least one insurer in the past 12 months, up from 35 per cent the previous year, the report found.

“Planners are aggressively expanding the number of insurers they use, while cutting those who aren’t exceptional,” Peker said.

“There are great opportunities and risks for insurers to either benefit or lose out from this switching.”

Despite the changing nature of insurer relationships, it still paid to be a planner’s preferred insurance provider, with 59 per cent of premiums being written by insurance firms with that type of standing.

The study also identified underwriting as a key sector in which planners could differentiate their offerings.

And while participants’ attitudes were slightly less positive towards underwriters, due to the tightening of standards and increase in the average number of days it took to process underwriting submissions as a result, it remained the strongest indicator of planner satisfaction.

“The underwriting process is the strongest driver of overall satisfaction with insurers, so any falls in satisfaction with the underwriting process is noteworthy,” Peker said.

“Underwriting is very important for both acquisition and retention, and will be a key battleground for insurance providers over the next year.”

The survey showed the top five organisations determined by primary planner relationships were OnePath, AMP, AIA Australia, BT Life and TAL. OnePath, AIA Australia and BT Life had all improved their market share in the past 12 months.

Meanwhile, participants named Zurich, AIA Australia and Asteron Life as the top three providers from a planner satisfaction perspective.

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