Insurers and super funds ‘overwhelmingly afraid’ to talk to members

Speaking at the AFR Super & Wealth Summit on Tuesday, Jack Standing, group head of advice at WT Financial Group, said there are simply not enough advisers to service the insurance needs of Australians.

“Consumers need to be able to get advice and education from the appropriate people. We can service there or thereabouts, 10 per cent of households in Australia. So, if we want to have a serious conversation around solving the advice gap, it needs to be expanded in those services,” Mr Standing said.

“I think the QAR’s [Quality of Advice Review] initial proposals around the distinction between relevant and non-relevant providers was a good first step. Our view is different to that, which is we have a solution to provide low-cost affordable advice. It’s called general advice, and it needs to really just be reframed and broadened.”

He added that with the current legislative restrictions, insurers and superannuation funds find it difficult to give their members and policyholders the information they need.

“We talked to insurers and super funds regularly, obviously more on the retail side than from an industry super standpoint, and they are overwhelmingly afraid to talk to the policyholders and members,” Mr Standing said.

“There are thousands upon thousands of retail clients over the age of 80 still in accumulation phase. There are loads and loads of policyholders that want to pick up the phone and call one of their life insurance companies to talk about something as simple as extending waiting periods to reduce premiums and they have no one to talk to.

“So, that has to be the core solution to solve any advice gap back in the risk space and also from the retirement income perspective.”

One of the biggest roles for advisers, Mr Standing said, is to “rattle clients out of inaction and into action”.

“It’s great that there’s been some very exciting product development in recent years, particularly the retirement income sector. I think that one of the difficulties or the problems that they will face is not dissimilar to what life insurance faces, which is they’re fairly complex products, and complex products generally need to be sold, not bought,” he said.

“The way to deliver that is to increase the number of people that can provide advice services around those products. I think, certainly from a retail life insurance perspective, and an adviser community standpoint, we’re limited in a sense by the amount of people we can service.

“I think until they are able to solve the advice gap that we have in this country, whether that’s through expansion of general advice, whether that’s through enabling super funds and insurers to get back to dealing with the members and policyholders, that’s really going to be a key.”

Christine Cupitt, chief executive of the Council of Australian Life Insurers (CALI), also speaking at the summit, added that there is a real need to improve the advice framework to get more advice, support, and customer service to the people that ask for it.

“For life insurance, there’s two things for us. One is that we stand ready to bring capacity into the market with the right appropriately trained people, the right compliance frameworks, the right guard rails,” Ms Cupitt said.

“We are the people that know our products really well. We know a lot about our customers, we stand ready to support them, understand what their insurance needs are and get them that help if that’s what’s appropriate for them.”

Ms Cupitt added that there are 13.5 million working age Australians who all need some level of advice about the risk protection that “suits them and their family”.

“So, that’s what we’re thinking about in terms of the gap in the advice market,” she said.

“But certainly, there are limits to the role that life insurers can play, but equally supporting our superannuation fund partners to provide more advice about life insurance to them and this is a huge priority for us and something that we’ve spoken to the government a lot as part of its stream two work.”

According to Ms Cupitt, this is something the government has been receptive to, particularly as it relates to the lack of advisers available to provide the services.

“There’s 4 million policies that sit outside of super and there are about a thousand financial advisers who regularly provide advice on life insurance, so we know that there’s a gap and we’re confident that [Financial Services Minister Stephen] Jones has heard that message from us,” she said.