‘Reimagining’ relationship with advisers could help insurers thrive

According to Adviser Ratings data, advice practices that include life insurance as part of their service are achieving better revenue than their counterparts at$1.57 million, compared with $1.23 million.

This fact is in stark contrast to what many may perceive as the “burning platform” of life insurance, and though $2.2 billion in losses from claims costs and significantly declining premium flows, practices that incorporate risk capabilities “maintain superior profit margins of 24 per cent versus 22 per cent for their non-risk counterparts.”

Adviser Ratings highlighted a number of reasons for thee numbers, including simply allowing another revenue stream into through a business. It also emphasised that “risk-focused advisers demonstrate sophisticated business models that other practices should look to emulate”.

Fee structure also reveals “impressive patterns”, with some risk specialists in the highest volume categories generating up to $2,786 per client. According to the data, even advisers in the lower volumes categories command higher fees and profit compared with the broader market, “demonstrating that protection advice commands premium pricing when delivered effectively”.

The data also revealed some ways insurers are helping to transform the industry, including by viewing the growing number of mental health claims not as a burden, but an opportunity to specialise.

Top ranked firms are investing in teams that specialise in psychological conditions, as well as providing advisers with support on how to guide clients through this process, positioning “advisers as genuine advocates for their clients”.

Top insurers are also developing technology beyond simple digitisation, reducing adviser workload and expanding market in what Adviser Ratings labelled a “genuine win-win outcome”.

Successful and sustainable partnership models between insurers and advisers are also key, as adviser satisfaction has been proven to deliver better outcomes for clients, with Adviser Ratings highlighting some insurers that enjoy adviser loyalty because of this:

“PPS Mutual particularly excels in understanding client needs, product quality, and comprehensive coverage options, while NEOS leads in operational efficiency, underwriting ease, and platform functionality.”

Collaborative product development is vital in this process, it added, with the top-ranked insurers actively engaging with advisers “to understand evolving client needs and market dynamics”.

Leading insurers also create “comprehensive support ecosystems that address practice management needs, client communication, and ongoing professional development”, rather than treating them as distribution channels.

“Addressing and supporting the current advice practice challenges will ultimately separate successful insurers from struggling ones based on their approach to adviser relationships,” Adviser Ratings stated, adding that insurers that continue to view advisers as a potential cost burden will continue to struggle.

At this stage, market leaders in this area are not the traditional large insurers, but new players in the field who are embracing “adviser-centric innovation”.

“The challenges for advisers providing life insurance advice are real,” Adviser Ratings stated. “But so are the opportunities for insurers willing to lead rather than merely respond to change.”