Despite all the reform talk and legislative changes that are about to occur, I believe that there is tremendous opportunity within the financial services industry which applies to all advisers who share a passion for insurance.
Yes, there is an imbalance in this country in relation to insurance. As advisers, we don’t need to be reminded about the fact that many people prioritise their home or car above their income or family. But I believe there are a number of factors that are starting to influence or sway Australians back in favour of insuring the things that are truly important.
One of these factors relates to the growth of the direct insurance market. The general community shares a greater awareness of life insurance and the like, thanks to increased media exposure of direct insurance. Even though as advisers we are aware that the majority of the products are inferior, at least consumers are starting to have a conversation in relation to death and disability. This wasn’t the case 10 years ago so it provides an opportunity for the advice channel to properly educate and provide assistance to those that we come across with direct policies.
Given that a direct policy has already been purchased by the consumer, the two main objectives we tend to face, being a need for cover and affordability, have already been addressed. But you would think that once the advantages of retail cover over direct cover have been properly explained, a new client should be gained, all going well.
As with life insurance, estate planning has also been one of those items on the ‘to do’ list and another factor assisting our industry. Today estate planning is more relevant than ever thanks to mixed families and our increased reliance on superannuation. Discussions such as estate and non-estate assets, binding nominations and direction of lump sum benefit payments are closely related to financial advice. If solicitors and estate planners are doing their job correctly, this will lead to an increased demand for our services and advice.
Another point to note is that there have been two main developments within the life insurance industry over the last couple of decades. The first relates to advances in medical treatment and technology, enabling higher survival rates and increased mortality. On the flip side to this, there are thousands of new cancers being diagnosed each year amongst other serious illnesses such as heart disease.
This basically means that there is a higher likelihood of being diagnosed with a serious illness; however, we have a greater chance of survival in comparison to previous years. These statistics will in time rid us of one of our favourite sayings – being ‘it won’t happen to me’ – and hopefully get Australians thinking of their contingency plan. With this in mind, discussions around trauma or critical illness insurance should flow a little smoother.
Let’s not forget that 20 odd years ago the average person on the street didn’t know what superannuation was. Today, it is one of Australia’s main savings vehicles for retirement. I can envisage with each year passing that more and more Australians will have a greater understanding of life insurance and therefore ensure that they have properly protected themselves and family. This should be reassuring news to any advisers who still have a few years left in the industry.
Tom George is a specialist risk insurance adviser with South Australia-based financial services business Bernie Lewis
