Platforms offer insurance shot in the arm

04-Apr-2016

By Sarah Kendell

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A behavioural shift among consumers has led advice clients to demand more from their advisers, and opportunities to deliver on this lay with insurance via their platforms, according to Zurich.

In a recent netwealth webinar, Zurich head of sales strategies and research for life and investments Andy Marshall said that the group’s research had revealed a huge opportunity for advisers to satisfy clients with safety net insurance via a platform.

“Clients in the age range of 35 to 45 were found to particularly be looking for value and collaboration as well as cash-flow efficiency,” Marshall said.

“This age group also has the complication of self-managed superannuation funds, and baby boomer clients having more complicated tax and estate strategies.

“For all of this, insurance plays a role in satisfying and securing the outcome that these clients are looking for.”

Referring to recent Investment Trends data on insurance on platforms, Marshall said the research house analysis of financial advisers and their use of insurance found that nearly 40 per cent of new business was written via a platform.

According to Investment Trends, the percentage of risk premiums written by master trusts or wrap platforms had grown from almost zero in 2003 to head towards 45 per cent today, Marshall said.

“This was particularly significant when you think about it because of the limited range of insurers available on most platforms,” he said.

“As you move towards a greater range of insurers on offer, Investment Trends particularly believed that more risk business would start to be written via platforms because advisers believed this structure allowed them to get the best deals for clients.”

Platform data indicated that average life sums insured among people aged 36 to 55 were “woefully inadequate” when compared to what the Investment and Financial Services Association prescribed as suitable in case of death, permanent disability or trauma, Marshall said.

“So the story for the average non-advised Australian is incredibly poor and Zurich’s own research into the population, after speaking with over 400 working Australians, found there is absolutely a misalignment between their financial situation and their state of risk prioritisation,” he said.

“There is a significant lack of knowledge about either superannuation risk life cover, especially around what they were covered for, what the waiting periods were for income protection benefits, and the vast majority of respondents had never conducted an analysis of their individual life insurance needs.”

So, put into context, clients who had not had the benefit of advice were precariously positioned, Marshall said.

“This presented a big advice opportunity, not only with non-engaged Australians but also with the only one in two of them satisfied with their current advice provider,” he said.

“Things important to [this age group] included cash flow management, debt recycling and mortgage solutions.

“But the main game here is to provide a safety net in terms of the most cost-effective manner through insurance.”

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