Speaking after the release of the company’s half-year financial results, Suncorp Group chief executive Michael Cameron explained that without its Guardian Advice and Suncorp Financial Planning businesses, the company will now be focused on providing insurance products to consumers directly.
“The most important thing is what has happened to the customers, and they have continued to be well serviced and without any issues,” Mr Cameron said of the company’s decision to exit the advice business.
“Our focus is really on the direct channel, which we have seen significant growth of about 20 per cent period-on-period, and that seems to be where the interest is from a customer perspective and I think we have executed that process in a very diligent way,” he said.
Mr Cameron also added that the closure of the dealer groups will not affect the company’s earnings in the future.
“It certainly won’t hurt the earnings going forward as we have seen a fairly seamless transition as we have exited that business, and the majority of the planners associated with that business have moved on to new financial planning organisations,” he said.
Reporting its half-year financial results last week, Suncorp’s life insurance business reported a $53 million net profit after tax for the period, down 38 per cent on the previous corresponding period.
In a statement issued via the ASX, Suncorp said total in-force annual premiums are up 5.2 per cent, “reflecting life’s continued focus on retention and value over volume, [and] ensuring new business is written on a more sustainable footing”.
Not surprising Suncorp has exited. It does not care about advice and never has.
It has provided substandard advice for a long time. Is Suncorp exiting advice because their advice business is going to be exposed for their practices?
Geoff if that’s true it makes the existing data an unnecessary expense and not worth collating let alone talking about. On your point Mike didn’t ‘replacement product advice’ forms include reason back in the dim dark ages?
Mike, it goes further. We need a definition for policy lapse. We were advised by one insurer that our “lapses” included death claims. What????
Good point Craig. I think the data set will be constructed such that it meets the end result that they want regardless. None of the data I have seen so far shows any reason for a policy lapse so any lapse is basically treated as a churn. Until such time as a reason for each policy lapse is recorded then the data is meaningless when it comes to determining whether a “churn” has occurred. By the way, what exactly is a “churn” ?? Has anybody actually defined that yet. The whole industry is being changed on the back of “churn” and yet we don’t even know what a “churn” actually is. Unbelievable really !!
I have just returned from an information meeting where it was clearly identified that the lapse rate of Direct Insurance products was nearly 50% in the first year.This fact is well known.
This is because this form of insurance is an impulse buy with very little understanding from many of the customers as to exactly what they are purchasing and in most cases have no comparative data on which to base an informed decision around product quality versus cost.
The advertising model is specifically targeted around the impulse purchase process specifically focussing on speed, simplicity, low cost and immediacy.
The problem with this model is the customer has no “value relationship” with the product or an adviser and therefore it is simply a commodity that doesn’t represent long term value or benefit. Because it is an impulse purchase, the longevity of the ownership of the product is low.
My great concern is when ASIC commence requesting policy lapse data from insurers and this data is used to form a basis of analysis regarding the future direction of advised advice, will the direct insurance lapse rates be included within the same set of data from advised policies and therefore be totally misrepresentative of the actual policy movement or cancellations from advised business ?
If so, the AFA,FPA and the insurers who genuinely value the independent adviser relationship, should demand the data cannot and should not be combined to determine the average lapse rate of insurance policies within the first 1 or 2 years.
The data must be very clearly defined as either advised or direct business and the appalling lapse rate of the direct life insurance business should be given no consideration as to any future design or recommendation in relation to the advised space.
Quoting continued 20 per cent growth does not identify the fallout or lapsing of policies during the same period. It is a typical banking model where if enough volume continues to keep coming through the front door, it doesn’t matter what is leaving through the back door as long as the new business outweighs the lapses, it results in growth.
Good on you suncorp, flog your direct insurance to unsuspecting customers without any care or due diligence. Typical bank, greed without care.
I love the Banker approach to Life Insurance – lets get the costs out of the business and what is the biggest cost – well its the pesky advisers so if we go direct we do not have the costs. I wish this Michael Cameron the best of luck and as the cash flows crash his life as the CEO is going to be limited to about 6 months before the Board terminates him. Another MLC in the making one thinks. Life Insurance part of business then sold at large loss for shareholders due to stupid decision.
These guys never learn and most of the other insurers are bailing out of direct as its a really large loss maker.