The report, Future of Life Insurance in Australia: Profitable growth in challenging times, highlighted the impact of ‘the Asian century’.
It said that by 2050, 52 per cent of the world’s GDP will be in Asia, the majority of which will be in Japan and China.
It also noted that foreign players – particularly Japanese ones – are already having a significant impact on Australia’s life insurance industry.
“These entrants have access to large capital pools, are used to operating in a low-yield environment and possess extensive claims management expertise,” the report said.
“This, combined with their willingness to focus on longer term gains, suggests that the market dynamic could be shifting towards a greater emphasis on competitive pricing and increased customer churn.”
The PwC report cited its own recent fintech survey that showed almost a third of insurers did not deal with fintech at all even though 75 per cent believed that some part of their business was “at risk of disruption”.
Despite life insurers being traditionally slow to adopt new technologies, rapid improvements are transforming the industry and forcing participants to confront change, the report said.
“While regulatory and capital barriers limit the impact of ‘standalone’ fintechs, the marriage of such capabilities with a successful backer who brings in capital, willingness to meet regulatory hurdles, a recognised brand and customer trust could significantly disrupt the sector,” it said.
“Irrespective of the source of the disruption, in coming years, life insurance will make a fundamental shift from being a risk- and process-based business to one oriented around digital capabilities, data and insights, and one where digital plays a critical role in customer engagement.”
I suggest we all read the 18 page report (copy and paste it’s title into Google). Churn is certainly not the report focus (in fact it is mentioned only twice), while the link made to greater possibility of churn” is tenuous at best. The report is worthy of a DISTINCTION at University level
Clearly these clueless commentators cannot define or grasp what churn is. This stupidity is the real reason LIF was enacted, to protect no one other than insurers. Who paid PriceWaterhouse for their false report? If a client is in a better position I have done my job, simple. If the Australian insurers cannot keep up with the Asian entrants, get out!
I think the author requires some education, it is a common misnomer within FP circles that churn is attributed directly with advisers ripping a client out of a product and into a similar product in order to obtain financial advantage.
However, Churn, is purely a term in business commonly and simply known as an “attrition rate”. This is business 101, created by competition, which is the dynamic external system in which a business competes and functions. It will never go away.
AND… I agree with Researcher’s comments.
Funny how some Advisers conveniently forget about the 3 year non disclosure period but are quick to say the client has the SAME benefits for a lower premium. One BIG benefit that WILL NOT be the same with a new policy will be the client’s loss of the 3 year non disclosure period protection. Why is it that no one ever seems to mention this?
Agree – I have asked the question many times but have never had an answer. Is recommending a policy with same or better benefits at a lower cost meeting with best interest duty or is it churn
I churned a client out of direct cover this morning. Level premiums and quality cover and all at a lower initial cost with and additional sum insured. I’m a horrible person.
Funny how it is called churn when advisers find an alternative policy that is cheaper for the client as part of Best Interest Duty. Ask a client who get the same insurance cover and conditions with a lower premium whether they think “churn” is a problem. The only people worried about churn are insurers who want to keep clients locked into high premium policies without the option of reviewing alternatives.