Too many versions of life policies to count
With so much media attention on the life industry and how claims are handled, it got me thinking, ‘How many different retail life insurance policies are in force today?’
Putting pen to paper, within a few minutes, I was able to list more than 35 insurers that once competed in the Australian market but have either merged with another institution, changed name, folded and no longer operate locally. This may say something about my time in the industry.
These insurers include Armstrong Jones, Prudential, ANZ Life, Lumley Life, Tyndall Life, Capita, AVIVA, Tower Life, Security Life, ING, Mercantile Mutual, Norwich Union, Sun Alliance, Commonwealth Life, Guardian Life, Prefsure, Oceanic Life, City Mutual Life, Adriatic Life, Pacific Life, National Mutual, FAI, Australian Casualty and Life, Australian Eagle, Royal and Sun Alliance, Legal & General, Westpac Life, Macquarie Life, Colonial Mutual, AIG, MLC Life, Friends Provident, AXA, Occidental Life and Scottish Amicable.
I will be very interested if any reader can add to this list.
Imagine how many different types and versions of policies were issued by all these companies. They include whole of life, endowment, accident policies, and early versions of income protection and trauma.
It starts to run into the hundreds of legacy policies that have been issued, some quite recently that will have thousands of policyholders, and some issued decades ago that may have just a handful of current policyholders. Imagine how many different definitions exist.
Some of these policies were integrated with another insurer, some have been kept separate and intact. Some are managed by the central administration and claims handling, while others are managed by dedicated legacy teams. Sometimes, the insurer may not even be able to find their own original policy even though the client is still on the books.
I know for a fact that many of those policies do not have a guaranteed upgrade. This means you may potentially have one client who makes a successful claim for a certain event while another client may be unsuccessful with the same sort of claim with the same life company.
A very clear example of this is Australian Casualty & Life policies having been taken over by National Mutual. National Mutual was then bought by the global giant AXA, and subsequently the Australian business was merged with AMP.
There is no doubt the above situation contributes greatly to client confusion and their perception of insurers sometimes being unwilling to pay claims.
One way to eliminate this problem is ensure the insurer has a guaranteed policy upgrade to their life insurance products which will ensure that your client will have an up-to-date and current version policy.
All this just goes to reinforce the value of risk advisers thoroughly reviewing all of their clients’ policies, even those that have been stuck in the bottom drawer for many years. They may no longer be appropriate, may cost too much for what they cover and may not have the relevant ownership for the clients’ current circumstances. They may even be valuable and worth keeping or complementing with a more modern policy.
What this will do is strengthen your relationship with your client and protect against them reviewing their own insurance and being seduced by a direct channel that may be cheaper but not provide the sort of cover they need.
David Spiteri is the national risk manager at Centrepoint Alliance
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