AIA operates in 16 Asia-Pacific markets, making it “the largest publicly listed pan-Asian life insurance group,” the company said. Growth in VONB was positive in each of those markets, with the company making special note of the “excellent growth witnessed in Indonesia, Australia and the Philippines.”
“Each of our markets reported positive growth in new business, building on the record results from the prior year,” according to AIA CEO Mark Tucker, who emphasised the company’s competitive strengths. “AIA holds an advantaged position as the world’s leading pan-Asian insurer solely focused on the Asia-Pacific region,” Tucker said. “Our local expertise provides us with a deep understanding of the rapidly growing savings and protections needs of our customers across the region and we are exceptionally well-positioned to benefit from the expanding demand for our products.”
The company credited its strategic approach, along with those geographical positioning, for its strong quarterly performance. “This excellent performance has been driven by the powerful combination of AIA’s proprietary tied agency distribution and our profitable partnerships strategy,” the company said. “Agency is our primary distribution channel and a major source of competitive advantage for the Group.”
The company’s announcement included one negative note, a decrease in VONB margin from 42.1% in the first quarter of 2012 to 38.4% in 2013. According to AIA, a number of factors contributed to the drop. “The change in margin was mainly due to changes in the geographical mix arising from the strong volume growth achieved in our operations in Korea and other markets, as well as the consolidation of the newly acquired business from ING Malaysia and our prudent assumption that the corporate tax rate in Thailand will return to 30% for assessment year 2015 and onwards,” the company said.
Looking ahead, AIA sees a global economy characterised by “low growth and uncertainty,” but the company expects its regional focus to bolster continued growth. “Asian economies continue to present AIA with more resilient fundamentals than other parts of the world, and the demographic drivers of the life insurance industry remain robust,” the company said.]]>
“It has also been shown to increase muscle carnosine, a substance shown to be reduced in people with type 2 diabetes,” Nealon said.
Nealon hopes to see positive results for diabetics, especially in light of the importance of exercise to diabetes management. “The novelty here is that carnosine may help increase physical capacity in diabetic exercisers which may translate to improvements in insulin sensitivity and reduced blood sugar levels,” he said.
Exercise therapy can aid the management of diabetes, Nealon explained, because it helps to lower body fat, especially intramuscular triglyceride, which, in turn, improves glucose disposal and increases insulin sensitivity.
Exercise is not always an easy path to improvement, however. “Some people with type 2 diabetes find physical activity particularly difficult, and exercise therapy is often a slow process, which may impede a sufferer’s ability to perform exercise and lead to a loss of motivation,” Nealon said.
Nealon hopes that the use of a supplement that improves capacity will help to overcome that obstacle. “An aid that increases exercise capacity and enhances insulin sensitivity in type 2 diabetes sufferers would be highly valuable and may reduce the time taken to achieve good physiological outcomes,” he said.
Researchers have begun recruiting subjects with type 2 diabetes who are over 18 years of age and willing to take a beta-alanine supplement for 28 days. At the beginning and end of that period, subjects will have blood drawn and have their performance tested on a treadmill. The study asks that participants make no other changes to their daily behaviour.
In announcing the study, Southern Cross University notes that around a million Australians have diabetes, with type 2 diabetes accounting for 90% of those cases. Diabetes Australia calculates that 280 Australians develop the condition each day and that the cost of the disease, estimated at $10.3 billion in 2008, is likely to increase annually.]]>
According to Zurich, that hypothetical couple is covered against any and all risks that might affect them directly, but they are vulnerable to the serious consequences of an injury or accident that affects their children for two reasons. Parents might be forced to stop working for months or years in order to care for a sick child, and they may be faced with “substantial out-of-pocket costs associated with treatment, travel costs and medicines.” Zurich points to a U.S. survey that reported that, for families caring for a child with cancer, 37% were compelled to borrow in order to cover those costs.
In addition, people in their 30s and 40s are “generally at their most exposed financially.” The Australian Bureau of Statistics has reported that 93% of couples with children under 5 years of age carry household debt and that the amount of that debt is, on average, 250% of annual household income.
Zurich calls the lack of child cover “the Achilles heel” in a financial plan that is otherwise solid, “the one scenario that could bring everything crashing down.”
To drive home its point, Zurich points to the extent of the risk facing parents, noting that studies of underinsurance, plentiful as they are, focus on parental cover itself, not on the consequences of a child’s illness or injury. In 2009, according to the Australian Institute of Health and Welfare, some 7% of Australian children suffered from a disability, and 4% had “profound or severe core activity limitations.” In 2011, the Leukaemia Foundation reported that an Australian child “is diagnosed with blood cancer every 36 hours.” For those children, treatment time is two years for boys and three years for girls.
Zurich goes on to remind advisers that child cover is readily available and relatively inexpensive, with $100,000 cover costing approximately $10.00 per month. In addition, underwriting is not an obstacle. “There is generally little underwriting required, so that shouldn’t represent a barrier,” the company said.]]>
In Australia, most life insurance companies give reports on payouts in dollars. Stating the dollar amount of successful claims might seem impressive; most people are likely to take notice when news reports mention hundreds of millions of dollars. Though this gives some idea of the worth of life insurance, it’s not best way to show insurers’ willingness to recognise claims.
These figures do not give an accurate picture. For starters, the bigger the life insurance industry gets, the higher the dollar value of claim payouts will be. This doesn’t necessarily mean that a greater percentage of people with life insurance or income protection are having their claims recognised. Hypothetically, the dollar value of payouts could increase at the same time that recognised claims decrease, provided the life insurance industry is achieving high enough growth.
If you were to take a negative view of the situation, you might think that insurance companies use dollar values to skew perception about how many claims they pay to their customers. Whether they do or not, providing statistics in dollars doesn’t help life insurers combat the perception of dishonesty.
A better way
There is a simple solution to the problem of unhelpful statistics – use percentages instead of dollar amounts. It’s not like the maths is particularly hard; all companies would need to do is show how many claims are paid out in comparison to how many are made.
These results would go a long way to dispelling the myth that insurers avoid paying out claims. In my experience, life insurers are actually very willing to recognise claims. Being open with statistics would show the how many people benefit from having policies, and would improve the public perception of insurance companies, which are sometimes seen as overly secretive.
Personally, I’d like to see a standardised claim reporting scheme, in which all insurers use the same calculations. This would allow for even greater transparency, increased competition, and a public more willing to consider life insurance.
The views expressed are my own and don’t necessarily reflect the views of my employer.]]>
The IAIS conference is especially important, according to the report, because the Insurance Core Principles (ICPs) promulgated by the IAIS are expected to be significant drivers of industry regulation. KPMG contrasts the insurance and banking industries, noting that regional banking regulators have moved to implement Basil III principles. Since that kind of global standard is not yet available to the insurance industry, ICPs are likely to provide “the new international benchmark that country insurance regulators will be compared against.”
In addition, the report notes that the Australian Prudential Regulation Authority (APRA) is an active participant in IAIS endeavours and that many Australian insurers “are part of wider banking groups.” Both considerations lend support to the notion that ICPs will have significant influence on industry regulation, especially in the areas of risk management and capital requirements.
KPMG also sees changes in the region’s approach to consumer protection. “There are signs that approaches to consumer protection in Asia-Pacific may be starting to display a principles-based approach to customer-centricity,” according to the report.
Australia’s Future of Financial Advice (FOFA) reforms are seen as exemplary of this trend. Where regulation once focused on product approval and pricing, new emphasis has been placed on sales practices, mis-selling, conflicts of interest and the roles and compensation of intermediaries.
KPMG notes that some regulatory reforms may result in increased expenses for insurers, especially those with “large agent workforces.”
In Australia, the changing regulatory environment is only one part of a challenging time for the industry. “The market continues to focus on streamlining operations and increasing operational efficiencies to protect profitability, against a backdrop of strong competition, significant claims inflation for certain lines, and increases in reinsurance, regulatory and staffing costs,” the report said.]]>
ASIC’s announcement reaffirmed the commission’s commitment to a system of national examination, which it called “a very important initiative to ensure consistent national standards for advisers.”
In April 2011, ASIC began soliciting industry comment on a proposed system of professional training and assessment. That feedback, according to the announcement, “has been largely supportive.”
ASIC again sought industry consultation in June 2012, when it announced the proposed national system of examination. Industry groups have expressed generally positive views of professional development and assessment, but some groups believe that ASIC’s approach can be improved.
The Association of Financial Advisers (AFA), for example, sees the ASIC proposal as “too narrowly focussed on adviser knowledge assessment,” preferring a framework that would also emphasise skills and ethical behaviour. AFA notes that, in the past, training had focused unduly on issues of compliance, but that current training had moved away from this model and toward a focus on professionalism.
The Financial Services Council (FSC) also supports national testing, but it recommends that any proposal recognise a distinction between planners based on the provision of advice to retail clients. However, the FSC indicated its opposition to some of the proposal’s mandatory provisions, saying that those requirements were already legal obligations and that “they are either simplistic in design or cost prohibitive to business.” As the FSC sees the proposal, those costs will ultimately be passed on to consumers.
In addition the FSC was critical of the proposal’s inclusion of periodic examinations for existing advisers, preferring “strengthening of the current Continuing Professional Development (CPD) framework for financial advisers administered by the relevant professional bodies.”
The Financial Ombudsman Service (FOS) has also indicated its support of the ASIC proposal, noting, however, that its effect on adviser competence “will depend on factors such as the content, methodology and difficulty of the examination.” In addition, the FOS would like to see national standards extended to credit advisers and the addition of a mandatory tertiary qualification. That qualification would take the form of a bachelor of financial planning degree, a requirement that would apply to new financial planners as of 1 October 2018.]]>
All companies experienced growth during the 2012 calendar year, led by BT/Westpac Group at 21.4% and TAL Group at 17.8%. AIA Australia grew 13.7% and CommInsure grew 13.1%.
Results were mixed in terms of market share, with some leading insurers losing ground. Market share for AMP fell from 16.3% at the end of 2010 to 15.3% at the end of 2012. Despite the drop, AMP continues to hold first place in market share. The company also leads the competition in premium inflows, which amounted to $1.77 billion in 2012, but annual growth was only 6.2% for the year.
MLC, which held second place in 2010 with a 15.2% share of the market, slipped to fourth place in 2012, when it held 13.2% of the market. Premium inflows grew 3.6% from 2011.
TAL, with 13.5% of the market, now holds second place in market share, after rising from third place in 2010. CommInsure, with 13.3% of the market, rose from fourth place to third.
Plan for Life also reports on premium inflows for each sector of the risk market. For 2012, inflows for Individual Risk Lump Sum amounted to $5.5 billion, an increase of 10.3% from 2011. Inflows for Individual Risk Income totalled $2.1 billion, an increase of 9.6%. The fastest growth was seen in Group Risk, which grew 14.9% in 2012 and totalled $3.9 billion.
Growth rates for 2011 had been more evenly distributed among the three sectors, with each sector recording a rate between 10.0% and 10.8%.
New premium sales increased 6.3% for the year, according to Plan for Life. BT/Westpac, with a 43.9% increase in new premiums, showed the strongest rate of growth. TAL, with new premium growth of 24.4%, stood in second place, followed by MLC at 15.3%, CommInsure at 14.6% and OnePath at 11.0%.]]>
Calling SMSFs “the fastest growing sector of the superannuation industry,” Kell noted that, with more than 470,000 funds and 913,550 members, they now hold a third of all Australian superannuation assets. SMSF members, Kell said, “tend to be older, earn a higher income and have larger superannuation balances.”
ASIC is concerned, however, with the quality of advice provided to members, especially in light of “geared investment strategies and increasingly aggressive advertising.” Kell was also concerned about another consequence of the sector’s growth. “We have seen an increase in the targeting of SMSFs by less scrupulous operators, and we are keen to address this risk,” Kell said.
Kell explained that the ASIC taskforce had reviewed more than 100 investor files that it had determined to represent high risk for members. In doing so, it found that most, but not all, advice was adequate. Poor advice, according to Kell, was often associated with recommendations that members invest in real property.
Kell also expressed concern about advisers’ failure to warn investors of a broader risk. “Notably, we also found investors were not warned about the very real risk of not having access to a statutory compensation scheme in the event of theft or fraud,” Kell said. “Going forward, this will be an area of focus for us.”
Kell also touched on the replacement of the licensing exemption for accountants with the limited Australian financial services (AFS) licence. Under current regulations, accountants without AFS licenses are allowed to offer advice on SMSF establishment. As of 1 July 2016, this will no longer be the case, and Kell sees that change as a chance for accountants “to expand and diversify their business.”
Under the new regulations, candidates for the limited licence can apply for specific authorisations that allow for “class of product advice.” Such advice, according to Kell, does not recommend specific products. Instead, it covers classes of financial instruments, including general insurance and life insurance.]]>
About a month ago we ran a news story that reported that both individual and group life markets had experienced positive growth for the 12 months ending 31 December 2012. The main points from the article were as follows:
Clearly then, the Australian life insurance market is growing. Despite the sensationalist nature of the claims in the article, life insurers in Australia are healthier than they’ve been before.
Considering the statistics
What then, is the meaning of the statistics in the article I read? There are clues in the article itself.
Quoting Jim Minto of TAL, the article suggests that ‘consumer affordability’ and ‘price shopping’ are reasons for the drop in cover.
This casts some light on the statistics. Though the article states that many people are allowing their life insurance to lapse, there is no mention of comparative uptakes of policies over the same period. As a result, the article shows the negative side of the story without anything to balance it.
Though I can’t say without seeing the proper statistics, my guess would be that there are more people taking out policies than letting them lapse. This would account for why the life insurance market is growing.
Additionally, it make sense that if more people are taking out policies, there will be more that are left to lapse. This is not mentioned in the article.
Though the article is in some ways misleading, it does raise an issue for life insurance – price shopping. As I have written about previously, it’s important for insurers and brokers to combat the idea that price is the only determiner of a good life insurance or income protection policy.
By doing that, we may be able to reduce the amount of people letting their life insurance policies lapse. If so, we can look forward to even more growth in the industry.
The views expressed are my own and don’t necessarily reflect the views of my employer.]]>
The current results were obtained after measuring the height and weight of 1,494 women between 1993 and 1997 and 1,076 women between 2004 and 2008. Researchers focused on changes in body mass index (BMI) among those subjects, finding that average BMI rose from 26 to 27.1 and that the incidence of morbid obesity jumped from 2.5% to 4.2%.
According to Deakin Associate Professor Julie Pasco, the study’s lead investigator, research into obesity tends to focus on the prevalence of a BMI above 30, a focus that “masks the growing proportion of those who are morbidly obese,” according to an abstract of the study published in the journal “BMC Public Health.”
“What this fails to measure is the number of people who are morbidly obese, that is those whose BMI in greater than 40,” Pasco said, noting that the distinction is an important one. “It is important that we monitor the growing number of people who are morbidly obese as the adverse health risks amplify as the level of obesity increases.”
With the Australian Bureau of Statistics determining that 63% of Australians can be considered obese or overweight, the problem has a significant impact on the cost of health care. “Obesity-related health expenditure exceeded $8 billion in 2008 and we are seeing service providers increasingly having to invest in equipment designed to accommodate the morbidly obese,” Pasco explained. “It is therefore not unreasonable to expect that with rates of morbid obesity on the rise, the direct and indirect costs will also increase.”
No group was immune from the problem. According to Deakin’s announcement of the research results, “The increase in BMI and prevalence of morbid obesity were seen for all ages and across the socioeconomic spectrum.”
Pasco called for broad-based action in response to the problem. “The challenge continues to be to identify and implement effective strategies for the whole community that will shift the scales in the direction of lowering the rates of obesity and most particularly morbid obesity,” she said.]]>
According to figures by the Australian Institute of Health and Welfare (AIHW), national spending on mental health grew by $450 million from 2009/10 to 2010/11, reaching $6.9 billion.
Of this spending, 61% ($4.2 billion) was undertaken by state and territory governments, 35.2% ($2.4 billion) by the Federal Government, and the remaining 3.7% ($257 million) by private health insurers.
Per capita, the spending is roughly equal to $309 per Australian.
At first glance, these figures are worrying. A yearly increase of $450 million far outweighs any comparative growth in Australia’s population. The growth in claims is about 7%. Over the same period, Australia’s population grew by around 1.7%. Clearly, this is not a case of more people resulting in more claims.
Is Australia in the middle of a mental health epidemic?
I don’t think so.
In fact, these figures can be viewed in a positive light. With the tireless work of places like BeyondBlue, ReachOut and the Mental Health Association of Australia, in conjunction with events like Mental Health Awareness Week, mental health is increasingly acknowledged throughout Australia.
Though it would be preferable to see a decline in claims, more people claiming can be seen as a sign that they are acknowledging any problems they might have, and are seeking to combat them.
Given the stigma often associated with mental health problems, a more open, more proactive attitude has to be seen as a good thing.
Looking at both sides
Though increased recognition of mental health problems might eventually result in a healthier population, it is potentially problematic for life insurers, who have seen more mental health claims through income protection and TPD.
As it stands, mental health claims form about 16% of income protection pay outs, and 17% of TPD (according to one of our insurance partners, Asteron).
Had the awareness campaigns not occurred, these numbers may have been lower. As these campaigns continue, the figures may continue to grow.
But in my opinion, it’s not something to fear, and it certainly won’t be the death of the industry. Awareness campaigns do more than simply make people cognisant of a potential mental illness; they help people deal with their problems, creating ways to manage and overcome illnesses.
Hopefully, with the combined input of awareness groups, government and insurers, we can look forward to a happier, healthier Australia.
The views expressed are my own and don’t reflect the views of my employer.]]>
Superannuation life insurance works like so – when you sign up for superannuation, your fund will provide you with an option to take out a life insurance policy, paid for out of your superannuation savings. For many, this is seen as advantage, as you don’t see the monthly fee come out of your income.
Unfortunately, there are real problems with this system, which I will detail below.
Terrible for teens
Teenagers, who typically only work casual or part time jobs, do not have much income flowing into their super. This is understandable; 9% of a casual, $200 a week income is going to be much less than the same percentage of a full time wage.
However, this is not reflected in the super fund’s life insurance fees, which are generally standardised for everyone. As a result, teenagers and those working fewer hours see a greater percentage of their funds lost, funnelled out to pay for life insurance.
But this is not the only issue with having life insurance bundled in with superannuation. There are a host of other problems, starting from the moment you sign your policy.
Opt out, not in
At most superannuation providers, when you take out your policy you automatically take out a life insurance package as well. If you don’t want to have it, you have to tick a box to ‘opt out’ of the life insurance policy.
This practice is misleading. At the very least, life insurance should be offered on an ‘opt in’ basis, forcing people to choose it, rather than allowing them to sign up by omission.
Joining a superannuation provider can be complex, and though it’s important to read all the fine print, many people skim over sections that they don’t directly have to answer. Having an automatic signup for life insurance is unfair.
Giving medicals a bad name
The Age article points out that when taking out individual life insurance, as opposed to life insurance as part of your superannuation, “a medical examination may be required. With large super funds there is usually automatic acceptance.”
To suggest that automatic acceptance is a benefit is simply wrong, and represents a complete misunderstanding of the reasons for medical examinations.
Life insurance companies require you to have medical exams so they know who you are and what your health is like. In effect, they are assessing you before they take your money. If they find anything they deem too risky to cover, they will notify you of that. That way you can make an informed decision. By having a medical exam, you know exactly what you’re covered for.
Automatic acceptance may seem easier at first, but when it comes time to claim, you might find that cover is excluded because of a pre-existing condition.
Buying life insurance through your super fund costs only a small monthly amount. As a result, it can seem like a worthwhile expense. However, when you buy life insurance this way, you are not only losing the amount that is debited out of your account each week; you also lose the interest this accrues. Though this might seem negligible, over the course of the policy, it starts to add up.
By buying an individual policy out of your disposable income, you avoid this problem. The money that goes into your super fund stays there, accruing interest, awaiting your retirement.
Individual policies are simply the better way to go. They provide you with defined cover and can be purchased for a low monthly fee.
The views expressed are my own and don’t reflect the views of my employer.]]>
Laughlin cited industry data that indicated average group premiums had increased approximately 20%, a development “which shows the industry is starting to move towards becoming sustainable.”
At the same time, Laughlin expressed concern about the effect of old policies that are still in force, lapse rates and industry models of policy retention that may be out-dated.
“Old policies are not so profitable and this is a concern because it shows poor underwriting in the book over time,” Laughlin is reported to have said. While the risk may be mitigated because of lapses within those books, that does not mean that risk has disappeared. “Ultimately, many people have lapsed in old books but management should not be taking comfort from this because there are still many policies in place.”
According to the report, Laughlin was also troubled by poor life-industry lapse rates, but was uncertain if this was evidence of a long-term problem and not a temporary issue created by a difficult economy. “We are looking to see if this is just a blip due to the economic conditions,” he said. “We are urging insurers to monitor these lapse rates and look at pricing to see if this is having an effect.” Laughlin indicated that lapse rates would be monitored by APRA going forward.
Speaking at the same conference session, CommInsure Managing Director Paul Rayson expressed similar concerns, according to insuranceNEWS.com.au. Rayson reported that more than half of all lapses in cover were driven by affordability, especially in the case of stepped cover that becomes more expensive over time.
“We are seeing people switching to find cheaper cover,” Rayson said, adding that CommInsure was also concerned about “a small segment switching for no reason.”
In any event, Rayson said, a model that prices policies with the underlying expectation of eight years of retention was not a sustainable model. “We need a product that meets the client’s criteria yet is affordable.”]]>
In the interview, Minto highlighted the consequences of an illness that resolves within days as opposed to more serious events that can lead to longer periods of disability. As quoted by insuranceNEWS.com.au, Minto said, “This can result in significant hardship for the family.” He noted that the effects of the homemaker’s situation are felt throughout the family. ”There would be the cost of looking after children and a decline in earnings from the breadwinner as a result,” he said.
Minto noted that the problem is not necessarily solved when the homemaker has part-time employment and a group policy of insurance, since coverage may not be adequate even then.
Minto called for thorough evaluation of a family’s insurance needs by advisers: “Advisers need to start looking at the family and seeing what the biggest risks are. This includes evaluating what would happen if the homemaker became seriously ill.”
In making that recommendation, Minto referred to a recent study by the Insurance Information Institute (III), a U.S. organisation dedicated to explaining the insurance industry to the public, to the media and to government.
According to that study, only 43% of women have life cover, and the level of cover is frequently inadequate. The III reports that insured women today are “carrying roughly one-fourth of the amount that would likely be needed by their life insurance policies’ beneficiaries.”
Even when a woman is the primary breadwinner, the III reports that her level of cover is likely to be 31% less than the level carried by men in equivalent situations. “Today, women can protect their finances, but they aren’t buying the coverage or, if they are, it isn’t enough,” according to Loretta Worters, Vice President of the III.]]>
Before Google got as savvy as it now is, creating a successful affiliate site was fairly formulaic. Many affiliates engaged in a process something like this:
For a while this method worked. But the times, they are a changing.
Penguin & Panda Police
With the release of Google’s Panda algorithm update in 2011 came an increased emphasis on site content. The algorithm change was designed to weed out from the higher search rankings sites with content of little value, or a low ratio of content to advertising. As a result, thinly constructed affiliate sites designed for traffic not engagement, dropped in the rankings.
In 2012 Google released the Penguin update. Unlike Panda, which focused on user experience, Penguin looked at keyword stuffing, link schemes, duplicate content and content cloaking.
For many affiliates, much of what Panda and Penguin attacked was common practice. As a result, affiliates found their rankings and revenue dropping.
Google placed a few more nails in the coffin for affiliates. First of all, the search engine shows preferential treatment (knowingly or otherwise) to established brands. These are brands that can already afford to generate masses of content, to spend money on inventive designs.
Additionally, Google has started to evaluate how visitors use your site - whether they engage with the content, or whether they take one look and navigate away. For generic affiliate sites, this has proved to be a curse.
The increased emphasis on social media has also played apart. With social interactions affecting ranking, you’ve really got to be able to generate compelling content and spend time building and audience.
On top of all this, Google released an exact match domain penalty, targeting sites that seek to generate traffic through keyword specific domains.
Brave New World
So what does this mean for current and future affiliates? A more nuanced approach. If you look at what Google is trying to do, the appropriate action becomes fairly clear.
Essentially, Google is trying to make websites value customer experience over pure traffic. To avoid a situation in which substandard sites generate money for webmasters while infuriating users, Google has appointed itself the arbiter of quality.
Whether you agree with Google's crusade or not, the fact remains that affiliates must change their tact and treat their sites with pride. Below are some ideas to help you get your affiliate site working for you:
Just Do It
This is more work than what many ‘old style’ affiliates might be used to. But it’s worth it. With better content comes better conversions. And in a post-Penguin and Panda world, it also means higher rankings.
The views expressed are my own and don’t reflect the views of my employer.]]>
Life insurance in supermarkets might be a foreign concept in Australia, but it’s something I’m fairly well acquainted with. Having lived in the UK, I’ve seen supermarket chains such as Tesco expand their offerings beyond the traditional veg and meat you’d expect from a grocer. These days, Tesco has reached monolithic proportions, providing almost anything you could imagine. They sell groceries, clothing (from joggers to suits), beds, tech products, and much more.
They have also ventured into the financial sector with Tesco Bank. It is through this that they offer a range of insurance products, including life insurance. These products are available ‘off the shelf’ at the chain’s supermarkets.
For Good or Evil?
To some, it might seem undesirable to have massive supermarket chains entering the life insurance market. In Australia, where Coles and Woolworths already have a firm hold on the market, expanding into insurance could look like another step towards complete market ownership.
Personally, I don’t share the worry. Coles already offers car and home insurance, and other providers have not collapsed as a result.
But more importantly, offering insurance in supermarkets makes it more accessible. And for life insurance, accessibility is extremely important.
Battling the Underinsurance Bug
Australia has a chronic underinsurance problem, especially when it comes to life insurance. Part of the problem is the subject matter.
Unlike car or home insurance, which deal with possessions, life insurance deals with our lives. It is necessarily connected with death, which can be confronting for many people. A common reaction to life insurance is to ignore it; that way we don’t have to think about the inevitable. Though this is understandable, it is not the best way to prepare for the future, and contributes to the underinsurance problem.
By having life insurance in supermarkets, the subject becomes more approachable; even if people don’t immediately throw a policy into their shopping basket, seeing life insurance as part of daily life, as something normal, not something to cause anxiety, will be a great way to combat underinsurance. Life insurance will become more ingrained in the social consciousness, and with that will come more enquiries to brokers and insurers.
In my experience, when it comes to life insurance, familiarity breeds acceptance. Having life insurance in supermarkets will help bring about this familiarity, and in the long run, make insurers and the public better off.
The views expressed are my own and don’t reflect the views of my employer.
The study, which looked at 75 patients with probable dementia with Lewy Bodies diagnoses, discovered that a history of REM sleep behaviour disorder was five times more likely to precede the onset of dementia with Lewy Bodies than any of the other risk factors currently used to make the diagnosis. Results produced by the study did not suggest that these findings apply to women.
Dementia with Lewy Bodies takes its name from clumps of protein that gather in parts of the brain involved in thinking and movement, disrupting the brain’s normal function. Symptoms of the disease include memory and attention impairment, visual hallucinations and Parkinson’s-like symptoms. Cognition of those affected tends to fluctuate wildly, with the attention and awareness fluctuating significantly in a space of days or even hours.
In the past, it has been difficult for clinicians to differentiate between dementia with Lewy Bodies and Alzheimer’s, which share a number of characteristics. Adding to this challenge, a definitive diagnosis of LBD can only be made with a post-mortem brain autopsy. However, as the study indicated that only 2-3% of Alzheimer’s sufferers experience REM sleep behaviour disorder, researchers hope that it may make clear diagnosis of dementia with Lewy Bodies easier.
Even more importantly, the findings have the potential to allow earlier detection of the disease than ever before. The study showed that REM sleep behaviour disorder can be evident up to thirty years before symptoms of dementia with Lewy Bodies appear. Early detection is particularly important in the case of dementia with Lewy Bodies, as the condition can cause severe sensitivity to neuroleptic medications. Additionally, for those suffering from the symptoms of dementia with Lewy Bodies who hold trauma insurance policies, an earlier diagnosis could mean an earlier payout of their policy, allowing them to access funds to help with their treatment before the disease progresses further.]]>
Trapnell also noted that clients are routinely asked about existing life cover, the length of time the policy has been in force and whether it was being replaced, all as part of the standard policy application. In his view, insurers have not taken sufficient advantage of the information that can be gleaned from those applications, especially given the increasing use of electronic applications.
In February, Trapnell warned that the FSC was about to seek class order relief from the Australian Competition and Consumer Commission (ACCC) in order to advance its anti-churning agenda. At that time, Trapnell indicated that a proposed three-year clawback period was not necessarily objectionable in itself, but that the FSC “going behind closed doors and colluding” was another matter.
Trapnell advocated anti-churning policies based on “competitive practices.” He noted that a three-year period was in effect in the 1970s, before being reduced to a one-year period by the 1990s. "It was competitive practices that gave us the one-year responsibility period, and it must be competitive practices that takes it away from us,” Trapnell said.
Shortly thereafter, the FSC withdrew its application to the ACCC, a decision that Trapnell applauded. “The FSC in particular and the life insurance industry in general simply could not provide the statistical evidence that supported that a systemic culture of churning exists amongst advisers.”
Trapnell maintained, however, that Synchron would back measures that extended the responsibility period if those measures were shown to benefit consumers and if they did not hurt the businesses of advisers.
John Brogden, Chief Executive of the FSC, said the decision to withdraw its application was driven by the failure to achieve “unanimity on this approach” from the groups providing consultation on the new framework, including the government, consumers and industry participants.]]>
With $1 billion in funding behind it, the first stage of the NDIS is expected to launch on 1 July. In its initial implementation, Macklin says that it will affect some 26,000 people with disabilities. By July 2018, she said, the scheme will be fully implemented across New South Wales, where it is expected to include 140,000 people. The Government hopes to reach additional intergovernmental agreements that will allow a nationwide implementation.
Several other amendments, made in response to feedback from people with disabilities, their families and service providers and to decisions of the Council of Australian Governments, were part of the bill that ultimately passed.
Among those amendments is a provision that emphasises actuarial advice, described by Macklin as a means “to safeguard the financial sustainability of the NDIS.” Despite the new name, she sees the NDIS as a scheme that should remain grounded in the principles that govern insurance. “Actuarial advice will help the board adopt an insurance approach by providing it with detailed and accurate advice about the long-term financial implications of its decisions,” she said.
Other amendments were made to align the NDIS to the United Nations Convention on the Rights of Persons with Disabilities, a Convention to which Australia is a signatory, to clarify the relationship between the NDIS and the health care system, to confirm the availability of the scheme to those over age 65 and to provide compensation for legal representation on behalf of individuals with disabilities.
According to a joint statement released by Macklin and Jan McLucas, Parliamentary Secretary for Disabilities and Carers, “The NDIS will give people with disability choice and control over the care and support they receive, rather than exposing them to the cruel lottery that currently exists.”]]>
During that same period, cerebrovascular disease, a category that includes strokes, infarctions, blocked arteries and haemorrhages, was Australia’s second leading cause of death. Cerebrovascular disease accounted for 12,533 deaths in 2002 and 11,251 deaths in 2011, a decrease of 10.2%.
In its report, the ABS notes that, while the two leading causes of death remained the same regardless of gender, deaths related to heart disease were more common among males, who accounted for 54.5% of those deaths. Deaths caused by cerebrovascular disease, however, were more prevalent among women. Women accounted for 60.7% of those deaths, with 100 female deaths for every 65 male deaths.
While deaths from heart and cerebrovascular disease declined, deaths from dementia and Alzheimer’s disease, the third leading cause, were responsible for 7.0% of all deaths and showed a marked increase. There were 4,364 deaths from this cause in 2002 and 9,864 in 2011, an increase of 126%, which ABS attributes to the rise of dementia-related deaths from 2,513 to 6,877 during the relevant period. “Most of these deaths occurred in people aged 75 or over,” according to the ABS release.
Lung cancer, which accounted for 6.0% of all deaths in 2011, was the fourth leading cause of death, with an 11.1% increase in related deaths from 2002 to 2011.
Gender-related causes were also prominent. For men, the fifth most common cause of death was prostate cancer. For women, breast cancer was sixth.
The report also highlights a sharp rise in fall-related deaths among people over 75 years of age. Deaths from falls grew increased fourfold from 2002, increasing from 365 to 1,530. In 2002, accidental falls were not among the 20 leading causes of death, ranking 38th, but they were ranked 17th in 2011.
On the whole, 52.0% of deaths were attributable to one of the 10 leading causes and 67.2% attributable to one of the 20 leading causes.]]>
Although Australia ranks in the top third in 12 of the 46 indicators, it ranks in the bottom third in 13 of the 46.
Among the areas that provided good news were environmental conditions in the home, the only category in which Australia ranked first, smoking rates and some aspects of education and employment.
The good news is offset, however, by poor results in infant mortality, rates of asthma and diabetes, family joblessness and income inequality. While Australians fared well in education at age 15, school performance in the lower grades was below average in maths, science and reading.
Obesity is also a concern, with almost a third of young people between ages 15 and 24 overweight and 57% of them leading sedentary lives.
Australia ranked fourth in smoking rates, with daily smoking limited to only 7% of the relevant population, a significant drop from the 40% figure obtained in 2008. The use of illicit drugs was acknowledged by 18% of those studied, a slight increase from the 2008 finding.
Not all members of OECD provide data for all 46 of the indicators. In cannabis use, for example, Australia ranked 14th of only 26 members who furnished relevant data.
Australia’s worst showings were in the areas of education of children between ages 3 and 5, where it ranked 30th of 34 nations, and in emissions of carbon dioxide per capita, where it ranked 29th among 31 nations who provided emissions data.
Lance Emerson, ARACY CEO, found reason for concern. “The good news is we rank in the top third for 12 of the indicators but there are ominous signs that this achievement is fragile, particularly when you look at where we are performing poorly or moderately,” he said.
That concern was summarised by ARACY in its release of the latest results: “It highlights that in spite of much rhetoric about the wellbeing of our kids, in too many areas, we have not budged in five years.”]]>
At the moment, such a policy would be considered discrimination. The ‘community rating’ prevents preferential treatment for reasons such as health. Simply put, you can’t reward someone for being healthier than another person.
Looking at Life Insurance
Though the idea of preferential treatment might seem surprising, the system already exists in the life insurance sector, specifically in relation to smoking.
Every insurer charges higher premiums to smokers. As a general rule, people who smoke can expect to pay around double what the non-smoking population pay. Because smokers are more likely to suffer a range of illnesses and are at a higher risk of premature death, insurance companies need to charge higher premiums to account for the higher likelihood of claim.
But insurance companies recognise that quitting reduces these risks, and will reduce inflated premiums to reflect this. When you have been free from cigarettes for one year, your insurer will bring your rate back to that of the general population.
This is undoubtedly a positive system; it encourages people to quit smoking, and saves them money. But, personally, I think life insurance could do more. Like Mr Dutton’s proposal, I would like to see life insurers rates reduced below the average for those who take steps to improve their health beyond what is considered to be the industry average.
Pruprotect, a partnership between a South African insurer and an English financial provider, provides such a system in the UK. When members achieve certain things deemed to be beneficial to health, the company gives them certain rewards, including discounts on health and relaxation products and in some cases, reduced premiums.
Of course, this is not just blind altruism; insurance providers deal in risk, and healthier clients are less likely to claim. As a result, the insurer is likely to benefit from healthier clients.
But this doesn’t make it any less worthwhile. An insurance scheme that positively influences people to live healthier lives – that’s something to aspire to.
The views expressed are my own and don’t reflect the views of my employer.]]>
Research funding has not kept pace with the growth of the problem. In 2012 to 2013, for example, dementia research received $21.5 million, while $162.4 million was awarded to cancer research, $93.6 million to cardiovascular research, $63 million to diabetes and $55.1 million to mental health, according to a report from the National Health and Medical Research Council.
As evidence of the potential of further research investment, Glenn Rees, CEO of Alzheimer’s Australia, pointed to a recent study that found evidence of signs of dementia that appeared some 20 years before the disease develops, perhaps providing an opportunity for early intervention. “If doctors could do this, then we would have a chance of delaying the progression of the condition,” Rees said, noting that appropriate tests have not yet been developed to take advantage of those findings.
“We have no chance of doing this if we don’t have the research funds necessary to carry out the research,” according to Rees. “Worse still, I understand that the continuation of this study is now at risk due to lack of funding.”
According to Alzheimer’s Australia, the study underscores the need for research support and the fact that Australia has “world leaders in dementia research” who could make good use of research funding.
“We need an immediate injection of $200 million into dementia research in the 2013-2014 Federal Budget,” Reese added, calling projects with adequate funding “our only hope of generating a better understanding of the development of Alzheimer’s disease and the treatment of the condition.”
Alzheimer’s Australia National Research Manager Chris Hatherly explained to insuranceNEWS.com.au that funding for dementia research is at a disadvantage when competing with other medical funding. “Other research areas such as cancer, which have been around a long time, have huge expertise and capacity and get big grants, plus they attract new researchers,” Hatherly said. He called for increased efforts that involve “purposely trying to build up capacity, attract new researchers and recognise the importance of dementia as an issue.”]]>
Price comparators do exactly what their name says; they show you the options for a product and provide price listings for each one. This allows you to choose the listing that saves you money.
This puts comparators in competition with brokers, as brokers also provide price comparisons. With comparators committed purely to price considerations, they can give a streamlined, simple and easy to understand way for people to make decisions. Some commentators are concerned that this will make brokers redundant, with consumers choosing the specialised price option.
For the most part, this concern is unnecessary, as people do not purely make their decision on price.
Calm and confident
Though some people may decide on life insurance purely on price, it has been proven that when it comes to income protection, people prefer to pay more for better plans with more cover. Understandably, people don’t want a cheap plan that won’t pay out when it comes time to claim; in the long run, that would be more expensive.
This is not just wishful thinking on the part of a broker. At Lifebroker we have sourced independent research that shows that people are willing to pay more for better policies.
Lifebroker, like other life insurance brokers, deliver more than just price comparisons. When we personalise a quote for someone, we provide a detailed rundown of the ratings for each policy. That way our clients can make an informed choice.
All there is to it?
Of course, it’s not enough for brokers to simply ignore comparators and wait for clients to come to them. If price comparison is given enough market saturation, consumers could be convinced that price is the only thing to consider. To combat this, brokers need to remain in the public consciousness.
This doesn’t require thinking up new services or offering questionable giveaways. Though it might take some inventive advertising, brokers simply need to make people aware of what they’ve always offered – unparalleled insights into insurance and personalised advice to clients. If we can do that, we’ve got very little to worry about.
The views expressed are my own and don’t reflect the views of my employer.]]>
Lump-sum premiums in the individual risk segment, the largest of the markets segments in terms of premium value, increased 10.4% for the year, growing from $5.0 billion to $5.5 billion.
According to Plan for Life, all companies in the segment reported increased business, but TAL Group reported the highest growth among the five companies with the largest market shares. TAL saw premiums grow from $513 million to $570 million, an increase of 11.16%. OnePath and Comminsure reported similar rates of growth, increasing 10.93% and 10.73% respectively. AMP Group, with 17.76% of the market and $982 million in premiums, had the largest market share and reported that premiums increased 6.69% in 2012.
Total premiums in the smallest market segment, the income protection market, grew 9.64% for 2012, increasing from $1.89 billion to $2.07 billion. TAL again led the way with the highest rate of premium growth, reporting premiums of $164 million in 2011 and $193 million in 2012, an increase of 17.59%.
OnePath was another strong performer in the income protection segment, with premiums increasing 14.57% from $215 million to $246 million.
Premium inflows in the group risk market grew 14.9% as a whole, rising from $3.4 billion to $3.9 billion. Again, TAL reported the highest rate of growth, with a 23.28% annual rate and premiums of $787 million for 2012. That growth gave TAL a market share of 20.07%, second only to AIA Australia. Despite increasing its premium inflow 10.94%, AIA saw its share slip from 25.03% to 24.17%. TAL, on the other hand, garnered a 2012 market share of 20.07% after ending 2011 with a market share of 18.71%.
CommInsure also reported strong growth in the group-risk market. Premiums rose from $438 million to $533 million, an increase of 21.67%. Plan for Life notes that both TAL and Comminsure “recorded significantly above-average percentage increases.” Results for OnePath and AMP, companies with growth rates of 7.5% and 2.2% respectively, were characterised as “below-average” by Plan for Life.]]>
Speaking after the announcement Mr Rowe stated, “He has built a team and culture within the FPA that has produced significant outcomes for our professional association and our members.”
With the continued growth and success of the FPA, existing members will be reassured in the knowledge that the association will remain in the hands of a competent and experienced leader.
“Through his committed leadership, the FPA has successfully implemented a transformational strategy to move from an industry body with a broad church of members to become the first professional association for individual financial planning practitioners in Australia.”
Respected throughout the financial services industry, the FPA is a governing body which aims to ensure companies operating in the sector do so in an ethical and fair manner. Through developing codes of conduct for the financial planning industry, the FPA looks to protect the interests of consumers and safeguard the integrity of the planning industry as a whole.
In order to gain membership to the association, prospective members are required to adhere to an industry-wide code of practice. Should this code be broken by any member of the FPA, it is possible for them to be banned from the organisation.
Gaining membership to the FPA provides the opportunity to connect with other members through chapter meetings, allowing the association as a whole to create and maintain the guidelines that are designed to ensure all members of the FPA are working to the highest possible standards.
Becoming a member of the FPA means that a company will enjoy the credibility that comes with being recognised by the country’s most respected watchdog of the financial services industry. The ability to demonstrate to an existing or potential client that you are an active member of the FPA emphasises to the consumer you take pride in operating within the financial services sector in an ethical and fair manner.
Mr Rowe has said that the membership base has grown steadily without relying on events or sponsorship. “More than 1,000 new members joined our professional association so far this financial year and we currently have over 460 members studying toward Certified Financial Planner Certification.”
Lifebroker looks forward to watching returning CEO Mark Rantall move the FPA from strength to strength over the coming years.]]>
The average national score for the index created by TAL came in at a low 24.2. This gives a strong indication that the majority of Australians included in the study felt their current levels of cover were not comprehensive enough should they or their partner no longer be able to work.
30% of participants scored 0 as they currently hold no personal insurance, with only 8% achieving a score of 70 or above.
Jim Minto, managing director at TAL was surprised by the results considering the growth in life insurance cover through superannuation over recent years.
As a Broker it is vital to remain committed to informing your clients of all the insurance options available to them. It is imperative for you to spend time with your clients to ensure they fully understand the entire spectrum of benefits that having personal insurance may provide.
Whilst the survey developed by TAL provides an interesting insight into the ways in which Australians view their need to gain comprehensive cover, it is important to remain mindful of bombarding the public with statistics and facts that do not really resonate or impact on their daily lives.
Communicating effectively with a client means it’s time to move away from the habit of simply rattling off statistics on health. In an age where we’re constantly bombarded by statistics and figures, it’s vital to cut through the ether and bring the discussion of cover into a more meaningful context.
Through focusing on things like your client’s house, their child’s education and a desired overall quality of life, the need for comprehensive levels of insurance cover become a much more realistic issue and a more important problem to overcome.
Be wary of simply providing your client with literature or pamphlets and expecting them to understand completely all the benefits that comprehensive life insurance can provide. You’ll find you will have much more success with any prospective client if you take the time to work through the information with them, discussing openly any questions they may have. Ensuring your prospective client understands and is comfortable with everything you have spoken to them about.,
To discuss your current insurance cover or to find out what will best suit your needs, speak with one of Lifebroker’s dedicated consultants today.]]>
Dallas Booth, CEO of the National Insurance Brokers Association (NIBA) has confirmed that NIBA is also pleased to announce its support for the National Insurance Day.
In speaking on the ongoing need to inform the community about new developments in the insurance industry, Mr Booth stated “you can’t do enough work to promote the role of insurance; NIBA has always been keen to work across the (insurance) sector in promoting the industry.”
“We are more than happy to work with other organisations to promote the industry.”
Mr Booth believes initiatives such as a National Insurance day will do much to alter the current perception of the industry, making the industry an employer of choice for many Australians. At the moment, Booth sees many people ending up in insurance careers by accident.
“It needs to raise its profile so people want to join the industry, because it is a profession.”
“We need to tell people about joining employers that have potential worldwide job prospects.”
When interviewed by insurancenews.com.au recently, Financial Services Council CEO John Brogden spoke about what he sees as the chronic problem of underinsurance in a large majority of Australians, “if more Australians take out insurance to protect their properties, lives and incomes, the cost of insurance will be ultimately reduced.”
“A national insurance day that involves all insurers and industry groups would be a positive move towards building awareness about insurance in Australia. Insurance must be seen as an essential, not simply a nice thing to have.”
Matthew Rowe, Chairman of the Financial Planning Association (FPA), also supports the proposal for a National Insurance Day here in Australia. When asked about the positive effects a day such as this may have he stated, “I look at what the FPA does to promote the value of advice, so we would have no problems with a National Insurance Day to raise the profile of insurance in the eye of the consumer.”
Association of Financial Advisers (AFA) President Michael Nowak says that underinsurance “is an issue that has to be tackled and anything that increases the awareness of life and income protection is to be welcomed.”
“The AFA would be willing to go on board with an initiative such as a National Insurance Day, and is very willing to work in collaboration with the insurance industry.”
The idea for a National Insurance Day was first conceived by John Wilkinson, editor for Life+Health for insurancenews.com.au.
So far the Insurance Council of Australia has declined to comment on news of the announcement.]]>
The ability to identify people who are at risk of congenital disorders has to be viewed as a positive development for modern medicine. If you are identified as at risk of cardiovascular disease, you will be able to reduce the danger with specialised diets and exercise. Those at risk of emphysema will be aware that they, even more than others, should not smoke. There are countless other examples where prior knowledge will help save lives.
It seems as though the idea has caught on. According to a report by News Limited, Australian geneticists are working with the federal government to develop a national framework from which to implement genomic testing. This means that every newborn will have the benefit of a complete genomic sequencing. With this information added to people’s medical records, doctors will be able to look out for potential risk factors.
However, the other side of the coin might not shine so bright. When it comes to life insurance, genomic testing may have some negative repercussions.
The Dark Side
With medical records identifying risk factors and potential future diseases, people may find themselves the subject of higher insurance premiums. In order for insurance companies to indemnify themselves against the increased possibility of a claim – unclaimed policies are how insurance companies make money, after all – providers may require a client to pay more for his or her policy, if the person’s genomic test suggests potential future illness. Alternatively, the person seeking insurance might find themselves the subject of an exclusion.
One of the problems with this is that genomic testing only suggests increased risk factors; it does not guarantee an illness. Of course, higher premiums are a fact of life insurance. But with genomic testing many more people may have to pay increased premiums, even though they may never suffer the illness they are deemed at risk of.
Making It Fair
If insurance companies were to charge loaded premiums for those at higher risk, I’d like to see lower premiums for those for whom genomic testing shows decreased risk and a clean bill of health. These people are likely to live longer without claiming, and should be rewarded for that.
But given insurance companies’ current approach, I think that’s unlikely. These days, the lowest premiums are aimed at the ‘average’ person. Even if you are a supremely fit individual with minimal risk of disease, you are almost certainly going to pay the same as someone of average fitness and health.
Perhaps genomic testing could change this, with insurance companies taking a more case by case approach to coverage, with higher than average premiums for some, and lower than average for others.
Personally I can’t see it happening. But in this case, I’d like to be proved wrong.]]>
“We know that when they go to an adviser they’re far more likely to believe they have enough,” Minto said. “If more people went to advisers, we would see an increase in the index.”
As things stand, Australians as a whole scored 24.2 on a scale of 100, indicating that they were not convinced of the adequacy of their insurance. “Overall most people believe they do not have an adequate financial protection safety-net,” according to Minto, but people working with financial planners felt safer than most, with 70% asserting that they had sufficient cover.
Minto pointed out that people working with financial advisers account for some 60% of the $11 billion of insurance premiums currently being paid throughout the country.
More Australians have been insured through superannuation in recent years, but that has not been enough to resolve underinsurance concerns, and the low score was not what TAL expected. “The take up of life insurance over recent years has increased markedly through superannuation, so we were surprised that the national index score was just 24 out of 100,” Minto said, pointing to some weaknesses in the system. “While most Australians have some form of life insurance through super, some people are simply not aware of it, while many do not know if the types and level of life insurance cover they have are adequate.”
Given this combination of factors, Minto emphasised that the survey’s results might indicate a worthwhile opportunity for financial planners, especially as scores for those with the most to lose were only marginally higher than average.
To create the index, TAL retained Galaxy Research to survey 1,260 Australians between ages 18 and 69, and the results indicated significant differences in different demographic groups. People with mortgages and children, for example, tended to score higher on the index.]]>
In its report, APRA also provides a breakdown of performance according to the type of fund in question. There, retail funds generated the most premium income, with inflows of $662 million, along with $231 million in claims paid.
Industry funds collected $480 million in premium revenue but paid $315 million in claims, the highest claims value among the four sectors.
Public sector funds received $127 million in premiums and paid $55 million in claims, while corporate funds had claims revenue of $26 million and claims of $20 million.
On an annual basis, retail funds were the most profitable sector for insurers by far, paying $929 million in claims and receiving $2.5 billion in premium income for 2012. For 2011, retail funds received $2.3 billion in premium revenue and paid $768 million in claims.
For industry funds, $1.8 billion in premiums was offset by $1.2 billion in claims for 2012. In 2011, premiums amounted to $1.6 billion against claims of $1.0 billion.
Public sector funds and corporate funds respectively received $383 million and $100 million in premium revenue and paid $194 million and $71 million in claims in 2012. In 2011, public sector funds reported premium income of $327 million and $169 million in claims, while corporate funds reported $89 million in premiums and $68 million in claims.
In general, APRA reports that the total of superannuation assets grew 14.6% during 2012, reaching $1.51 trillion at the end of December. Industry funds recorded the highest asset growth of the four sectors with an increase of 4.8%. Retail funds and public sector funds also saw increases, growing 3.2% and 2.0% respectively, while corporate funds recorded a decrease in assets of 0.9%.
Self-managed funds were holders $474 billion in assets as of the end of December, accounting for 31.5 % of total superannuation assets, the highest proportion among fund sectors. At 26.4%, retail funds were second in assets held, followed by industry funds at 19.5%, public sector funds at 15.7% and corporate funds at 3.8%.]]>
"Lower testosterone has many implications for men's health, such as reduced motivation to exercise and lack of sexual function,” Wittert said. “It is also closely associated with type 2 diabetes, which is an enormous health burden for Australia.”
The project, called “Testosterone for the Prevention of Diabetes Mellitus,” or T4DM, is expected to last for two years. During that time participants, selected from men deemed to be at risk for diabetes, will receive injections of either testosterone or a placebo and will have access to the Weight Watchers program at no charge. They can access Weight Watchers online or by attending meetings.
Wittert expressed the hope that participation in the study would be a positive, even “life-changing,” event in the lives of the men who enrolled. “Older men who have developed a large belly and are at risk of diabetes now have an opportunity to do something about their weight, improve their lives, and provide us with all-important research results that could benefit many others in the future," he said.
As men age and gain weight, according to Wittert, testosterone levels often decrease. "By giving testosterone supplements to men in that critical pre-diabetes stage, and by putting them on a dedicated weight-loss program, we expect to see sustained reductions in weight and a reduced chance to develop type 2 diabetes," he said.
According to his university biography, Wittert is “a leading authority on the subject of obesity management” and has a specific interest in men’s health and their use of health services. He has served as Head of the Department of Medicine at the University of Adelaide since 2003.
T4DM, which has received $4.8 million in funding from the National Health and Medical Research Council, follows a 2008 study that found a connection between diabetes and low levels of testosterone in young men.]]>
This is something that Matthew Pietrzyk knows too well. The seven year old boy from Glenfield in England suffers from congenital nephrotic syndrome, a rare illness that causes the sufferer to develop protein in the urine, resulting in kidney failure. Matthew has had to have both kidneys removed, and relies on daily dialysis to stay alive.
In a bid to raise awareness about organ donation and in the hope of finding a match, Matthew’s mother, Nicola, launched a Facebook campaign, encouraging people to spread the word.
Through the many avenues of the internet, the campaign was seen in by the Scoble family in the Gold Coast. Five year old Jack Scoble received a kidney donation last year. Seeing Matthew’s struggle to find a donor, Jack felt compelled to provide his support.
With the help of his family, Jack sent back a video message of encouragement, telling Matthew, “Keep your head up.”
“My mum and dad have told me that you were waiting to find your new kidney. I want to tell you to hang in there buddy," he says. “I got my new kidney after a whole year and, even though I am little, I remember how hard it was living on the machine and having injections every day until my new kidney came.”
Speaking to This is Leicestershire, Nicola, Matthew’s mother, said “It just overwhelmed me and it was so heart-warming.”
A Timely Reminder
Matthew’s struggle is a poignant reminder of the trials that many people have to endure. Though kidney’s can be sourced from living donors, many people in need of kidneys – and a range of other organs – receive their donations from those who have died.
Almost anyone can register to be an organ donor, but many people do not think about donating. In death, no one needs their organs, so it makes sense to donate; that way, you can improve someone else’s quality of life.
For more information about organ donation, see Lifebroker’s infographic below.
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The most recent quarterly profits were also lower than those recorded for the December 2011 quarter, when profits were reported at $723 million.
Total revenue for the year increased dramatically, growing from $14.8 billion to $41.2 billion. Again, this represented a decline from quarter to quarter. Revenue for the December 2012 quarter totalled $10.5 billion, while revenue for the September 2012 quarter totalled $13.8 billion. Revenue for the December 2011 quarter was $8.1 billion.
A surge in investment revenue was largely responsible for the dramatic increase in revenue as a whole. For 2011, $12.5 billion in losses, both realised and unrealised, offset $14.2 billion of investment income, resulting in total investment revenue of $1.6 billion. For 2012, $10.3 billion in investment income and $16.4 billion in gains combined to yield $26.8 billion of investment revenue.
Other components of total revenue also contributed to annual growth. Net policy revenue grew from $10.6 billion in 2011 to $11.0 billion in 2012. Management service fees were unchanged at $2.4 billion, while other revenue fell from $245 million to $202 million.
Revenue growth was accompanied by an increase in total expenses, which grew from $11.5 billion in 2011 to $35.8 billion in 2012. On a quarterly basis, total expenses fell from $12.2 billion for the September 2012 quarter to $9.3 billion for December 2012. For December 2011, total expenses amounted to $7.0 billion.
Total industry assets increased slightly, growing to $247.3 billion from the previous quarter’s $245.5 billion, with current assets representing an increase of 7.5% from the total of $230.2 billion reported at the end of 2011.
On an annual basis, net premiums fell from $43.8 billion in 2011 to $42.2 billion in 2012, while policy payments grew from $42.2 billion to $43.1 billion for the year. For 2012, up-front commissions totalled $1.5 billion, a small increase from the $1.4 billion reported for 2011.]]>
Without more context it’s hard to say what Asteron is basing their expectation on. If they are equating life insurance ‘sales’ with ‘leads,’ then this makes sense. But with the current trends in the Australian market, it would be surprising if Asteron are expecting to get 50% of actual sales from social media.
From my experience at Lifebroker, customers are still fairly unsure about buying insurance through social media platforms. Of course, I can only speak to Lifebroker’s experiences, but the way our customers interact with brand via social media speaks to a broader Australian interaction with life insurance.
In the UK, where I worked for Lifebroker from April 2008 to February 2011, online purchasing has much greater traction. Customers there seem to be comfortable with the idea of doing all the purchasing without talking to an insurer.
This is not the case in Australia. Perhaps due to Australia’s underinsurance problem in life insurance markets, life insurance customers here tend to be more comfortable getting a quote electronically and arranging to follow up over the phone. There is not the same willingness to take it all on their own shoulders. Given that the majority of Australians don’t have life insurance, this reticence is completely understandable; perhaps if more people had it, others would be more willing to sign up through social media.
The Bigger Picture
Mr Hawke made his comments within broader comments on the need for the life insurance industry to modernise in order to survive. While I’m not sure whether I agree that the industry is in danger of being left behind, I do agree that we need to be aware of technological, societal and cultural change.
Keeping the industry in line with developments is integral to spreading the message of life insurance. Because of the uncertainties of everyday existence, life insurance is always going to be relevant. The challenge as we move forward is to continue to deliver that message in a relevant way.
The views expressed are my own and don’t reflect the views of my employer.]]>
The report, “Mortgage Insurance: Market Structure, Underwriting Cycle and Policy Implications,” notes that LMI is subject to “significant stress in the worst tail events,” calling particular attention to the sector’s difficulties in the wake of the global financial crisis that began in 2007.
The report makes several recommendations aimed at reducing that stress and mitigating the possibility of failure that could result from further large-scale financial difficulties.
According to the report, the interests of insurers and originators should be aligned, underwriting standards should remain strong and regulators should be especially sensitive to the possibility that behavioural incentives might cause those standards to deteriorate.
The Joint Forum also emphasises the value of adequate capitalisation, recommending regulation that requires insurers to build capital reserves while times are good, strengthening their ability to cover claims when the market takes a turn for the worse.
Regulators should also be aware of the dangers of “cross-sectoral arbitrage,” a situation that can arise when banks and insurers have different capital requirements and when different accounting standards are applied to banks’ loan loss reserves and insurers’ technical reserves.
Finally, the Joint Forum recommends that the “FSB Principles for Sound Residential Mortgage Underwriting Practices” should be made part of the regulatory framework, with the understanding that effective regulatory supervision will require expertise in both banking and insurance.
The report also provides some analysis of the sector’s health in different countries, finding that Australian mortgage insurers are in relatively good shape. It notes that individual LMIs have been adversely affected by catastrophic natural events and by regional variations, and that the deterioration of U.S. real estate has had repercussions in Australia, especially with respect to two insurers wholly owned by U.S. insurers.
“Notwithstanding these risks, the LMI sector in Australia remains robust” according to the report. The Joint Forum notes that tighter credit and underwriting standards have played a part, and that standards imposed by the Australian Prudential Regulation Authority have been effective in promoting adequate capitalisation in the sector.]]>
Previously the DSM excluded bereavement from the definition of depression. Though the bereaved often show signs of depression, the DSM classified it as an exception to the condition. The new edition will include bereavement within the definition of a Major Depressive Disorder (MDD), so those who have lost a loved one could be diagnosed with an MDD.
Though this seems minor, it could have broad repercussions. Some people have argued that it will result in an increase in antidepressant prescriptions, unnecessarily treating the natural grieving process.
The Dark Truth
Whatever the case, the inclusion has interesting consequences for those in the life insurance industry, and those looking to take out life insurance or income protection.
The DSM, compiled by the American Psychiatric Association, is regularly used by those in the insurance industry. Underwriters compile policy offerings with reference to the ‘psychiatry bible,’ working out whether a client is a higher risk, whether certain conditions should be excluded, or whether a policy should be refused.
In effect, the broader definition of depression provides insurance companies with an easier ‘out,’ allowing them to refuse cover in circumstances where they deem the risk of a claim too high.
Though the change could result in more refusals, in actuality, it probably won’t. Over the past 2-3 years insurance companies have dealt with depression fairly stringently. Most people who have depression find it excluded from their policy all together.
As with most exclusions, there is typically opportunity to review it after a period of time has elapsed. The review time used to bear a direct relationship with the period of depression (i.e. if you had suffered with depression for 2 years, there could be a review after another two years).
But these days, most insurance companies simply review after 5 years. The redefinition in the DSM is unlikely to affect this.
The Long View
In the long run, the changes to the DSM should not have too great an impact to those seeking to take out a policy. It is unlikely to amount to more refusals to cover. Though it may cause some uncertainty, with more people forced to accept exclusions, as with other depression exclusions, these will be able to be reviewed.
The views expressed are my own and don’t reflect the views of my employer.]]>
Below is a list of the GWS’s AFL fixtures for 2013.
Gold Coast Suns
West Coast Eagles
Gold Coast Suns
As proud sponsors of the Giants, the team at Lifebroker wish GWS all the best for 2013.]]>
At the same time, Whelan sounded a note of continued caution. “I note that many parts of Australia have not yet reached the peak of their local disaster seasons, and more cyclones, floods and bushfires remain a strong possibility,” he said.
The vast majority of claims, measured by number and by value, resulted from the Queensland storms and floods, which accounted for 53,711 claims with a combined value of $553 million. The ICA reports that it is working closely with local and state government in the area, and notes with particular approval Queensland Premier Campbell Newman’s commitment to flood-mitigation measures for vulnerable towns.
In New South Wales, flood and storm damage generated 8,000 claims valued at $20 million in losses. The ICA attributes the smaller scale of those losses to effective preparation in the area. “Without mitigation, Grafton could easily have been as severely affected as Bundaberg,” Whelan said, recommending that communities consider a variety of physical measures, including “levees, dams, barrages and drainage work” as possible means of protection. “A relatively small investment to build a levee around a mid-size town may be recouped many times over the life of the levee.”
Bushfires in the Coonabarabran region of New South Wales generated 1,500 claims valued at $12 million.
Tasmanian bushfires caused significantly more damage, resulting in losses of $89 million from 1,900 claims. Here, too, the ICA reports that it is working with the government to advance recovery efforts. “The Tasmanian Government has accepted the commercial arrangements for cleaning up these sites, which enables insurers to put every possible dollar of the claim into the recovery process,” Whelan said.
Whelan noted that the ICA has been active throughout the country. “ICA staff and industry representatives have been deployed across Australia to help at recovery centres,” he said, adding that the organisation has held two forums that brought insurers and policyholders together on a face-to-face basis.
ICR Chief Executive Alan Ashworth went even further. “The idea of developing old-fashioned chemotherapies is going out of the window,” he said. “None of this is science fiction. It’s happening in a number of places around the world but we feel it will be absolutely routine within the next five to 10 years for every cancer patient."
Two of the laboratories initiatives are particularly striking.
First, researchers aim to develop “liquid biopsies” that will analyse blood samples for cancer-related DNA, an analysis that may assist in matching specific sub-types of cancer to the drugs most likely to be effective.
Second, the laboratory intends to use “mouse avatars” to track a patient’s condition. After implanting samples of patients’ tumours into mice, scientists hope to track molecular changes and identify instances of resistance to therapy.
Researchers hope that those modalities will shed new light on problems that have proven especially challenging, including the treatment of cancers whose origin is unknown, called “unknown primaries,” and which account for 5 percent of all cancers.
The laboratory’s work may also have a major impact on how treatments are developed. Today, a proposed cancer drug goes through an approval process that may involve a trial with thousands of patients. According to Ashworth, the use of tumour profiling could allow those massive trials to be replaced by larger numbers of small-group trials, an option that may produce more useful results.
As both the cost and the time involved in genetic sequencing have fallen dramatically, sequencing has become a practical option for research and treatment. “There’s no doubt such genetic profiling tools will increasingly be used to help match patients to the most appropriate treatment,” Law said.]]>
Zurich General Manager Retail for the company’s life and investments business, Phillip Kewin, said that adviser sentiment was higher than it had been in previous surveys, with overall sentiment moving from 4.40 in June 2012 to 4.89 in the latest results. The survey asks advisers to rate their sentiments in five areas on a seven-point scale.
The greatest improvement, a 17% increase, was found in advisers’ view of the current regulatory environment. With Future of Financial Advice (FOFA) legislation due to be implemented in July, one-third of those surveyed said that they were “very” or “extremely” positive about their readiness for the change, while only 15% expressed negative feelings.
“I think we are seeing evidence that the FOFA readiness programs initiated by dealer groups and licensees are hitting the mark and that the mindset of advisers has shifted from one of ‘how do I comply with this?’ to one of ‘how can I use this as an opportunity to improve my business?’” Kewin said.
Despite that shift in mindset, sentiment toward the current regulatory environment received the lowest rating among the five areas covered by the survey, garnering a score of 3.56.
Advisers were also more positive about long-term business viability, with sentiment recorded at 5.90, an improvement of 14% from earlier results.
Sentiment toward current sales volume improved 11%, to a score of 4.98, and sentiment toward consumer demand scored 4.78, a 5% improvement. Sentiment toward next quarter’s sales volume scored 5.21, an 8.7% improvement.
Kewin sounded a note of caution with respect to advisers’ optimism about economic conditions.
“Ironically while the tide seems to be turning overseas, locally we are getting mixed signals about consumer spending and so there’s no doubt that the resilience for which advisers are famed will be put to the test,” he said. “But this isn’t new news, so for them to be feeling up-beat against this backdrop shows they are up for the challenge.”]]>
Speaking to insuranceNEWS.com.au, Simon Swanson, Managing Director of ClearView, called attention to the obligation of SMSF trustees to incorporate insurance into their plans. “There is a lot of underinsurance in this sector, despite trustees having an obligation to have an appropriate life insurance program,” he said, adding that the financial services industry had its own obligation to act. “Unfortunately, there has been a blame game throughout the financial services industry about tackling SMSFs. But this now has to stop and we must do something.”
Those sentiments were echoed by Michael Nowak, National President of the Association of Financial Advisers, who urged the industry to work together in order to break down barriers for the benefit of consumers. Like Swanson, Nowak emphasised the duty of trustees, calling on advisers to enlist accountants and related professionals to advise SMSF trustees on appropriate insurance holdings.
According to Nowak, “Advisers might have to look at forming strategic relationships with people such as accountants to provide advice on insurance for SMSF trustees.”
According to the ATO, there were 909,188 SMSFs with 478,579 members in June 2012, and the SMSF sector added 37,174 net establishments of funds that year.
The ATO itself emphasises the obligation of trustees to consider insurance, putting that obligation in the context of Stronger Super legislative measures introduced on 7 August 2012. Those measures, according to the ATO, “are intended to address potential risks and strengthen the regulatory framework in which self-managed super funds (SMSFs) operate.”
Along with the duty to make a regular review of investment strategy and to value assets of the fund at market value in order to prepare fund accounts, an SMSF trustee is explicitly required to consider including insurance as one component of the SMSFs investment strategy.]]>
In effect, the change means that policy underwriting for general insurance will be undertaken by AAI, rather than the previous underwriters. Taylor was quick to assure customers that apart from this change, current policy holders will not be affected. It will not have any impact on either the handling of the policy or any claim customers make under their policy, Taylor said.
The transfer is set to occur on or around 1 July 2013, but has to be confirmed by the Federal Court before it can proceed. If the transfer is confirmed, AAI will become the underwriter of all policies issued by Australian Associated Motor Insurers. The policies will still be issued under the AAMI brand.]]>
Barlow-Stewart acknowledged that some people may simply be filing the results away so that they never reach a health professional. “If there is no record in a health professional’s file, they may not feel the compulsion to disclose the results,” she added.
This runs counter to guidelines advanced by the Financial Services Council (FSC). While making no requirement that insurance applicants obtain genetic testing, the guidelines do require applicants to disclose the results of tests they have already taken. Once those results are disclosed, the FSC acknowledges that they may be used to assess an applicant’s level of risk, but FSC guidelines do not extend that assessment to assess risks applicable to an applicant’s family members.
In a 2008 report, “Genetic Testing and Life Insurance in Australia,” the Human Genetics Society of Australasia (HGSA) recommended caution, saying that the life insurance industry should forego “the use of predictive genetic information pending improved actuarial estimates of the impact of such information on adverse selection” of applicants by insurers. The HGSA report also advocated for legislation that would counter discrimination and maintain privacy for individuals.
In her interview, Barlow-Stewart expressed agreement with the cautious approach given the current state of knowledge. “I absolutely caution we are very much at the edge of understanding various test results,” she said.
In January, however, the FSC released a statement in which it indicated that genetic testing for haemochromatosis, the most widespread genetic condition among Australians of European descent, had reached an acceptable level of reliability. While a finding of genetic risk for the condition would not affect existing policies, such a finding could affect new policies if an applicant showed evidence of liver disease or other medical complications of the condition.]]>
Life insurance is also neglected, despite its ability to provide the comfort of knowing that the mortgage, school fees and other bills will be paid if the policyholder should die. Although many Australians carry life insurance through their super funds, Rice Warner Actuaries says that the level of cover maintained through super, estimated at 20% of the real need, is unacceptably low.
Shortfalls in insurance cover are not the only issues that people should consider in planning for the future. Wills, powers of attorney, guardianships and health-care directives are also necessary, if neglected, elements of an effective plan.
A will allows you to determine the distribution of your property upon your death. Without it, that distribution is determined by legal formula, and the formula may bear no resemblance to your actual wishes.
If you become incapacitated, a power of attorney and a guardianship appointment can allow someone else to make decisions that you may not be able to make. With a power of attorney in place, a trusted person can act in your stead with respect to financial matters. A guardian can make decisions on more personal matters, including health care, if you are unable to speak for yourself. Both powers of attorney and guardianships can grant broad powers, or, if you wish, they can be drafted to allow only specific and limited actions. In either case, you will have appointed a trusted person to act for you.
A related document, the Advance Health Care Directive, is becoming increasingly popular. It provides a written expression of your wishes with respect to medical care, an important statement if you should be unable to express those wishes for yourself in the future.]]>
TAL Managing Director Jim Minto indicated that the result was lower than expected. “The take up of life insurance over recent years has increased markedly through superannuation so we were surprised that the national index score was just 24 out of 100,” he said. “While most Australians have some form of life insurance through super, some people are simply not aware of it, while many do not know if the types and level of life insurance cover they have are adequate.”
TAL found that 30% of Australians scored zero on the index, 25% scored between 30 and 70 and 8% had scores above 70.
Results varied for different groups. When broken down by age, the index found that those between 35 and 49 had the highest score, calculated at 25.3, while those between 18 and 24 had a score of 17.6, the lowest of any age group.
People with children and mortgages tended to score higher than others. Parents with children under 18 years of age scored 27. Those with younger children scored 21. People with mortgages scored 32, higher than those who owned homes without mortgages, who scored 27, and almost twice the score calculated for renters, who scored 14.1.
In one unexpected finding, the index found that people willing to take the greatest financial risks were scored higher than their more conservative counterparts who avoided risks, with scores of 35 and 20 respectively.
“It seems there is a greater appreciation of the value of life insurance among those with the most to lose, particularly people with mortgaged assets,” Minto said. “But even among these groups, penetration is still low and they are only relatively better off compared to the average score.”]]>
According to Carnell, insurance companies refuse to offer life, income protection and travel insurance to people with mental illness, while rejecting claims that are filed. Beyondblue maintains that insurers engage in these practices despite the fact that they have failed to offer evidence that people experiencing or in treatment for anxiety or depression represent any increased risk.
“We believe this is at odds with the requirements of the Disability Discrimination Act,” Carnell said. “It also shows a basic misunderstanding of mental illness such as depression and anxiety and this is why we are interested in talking to people who believe they have been denied insurance on the basis of their mental health.”
The insurance industry takes a different view of the situation, pointing to the possibility of increased premiums in the face of uncertain additional risk. ICA spokesman Campbell Fuller noted that the working group had been trying to improve the tools available for insurers to assess risk, evaluate the likelihood of a condition recurring and identify levels of impairment. "The general insurance industry is focused on finding ways to improve the availability of insurance for Australians with mental illnesses," he said, adding that litigation is not the best way to accomplish that goal.
Carnell disagrees, claiming that the industry has refused to provide the data on which it bases its assessment of risk. “That’s why we believe that the data does not exist and that the industry is breaking the law that says insurance companies can only discriminate against potential clients if it is based on sound evidence,” she said.
Carnell sees new legislation as a chance to stop discrimination, especially if insurers are compelled to produce clear evidence of the grounds for refusing a claim or a policy. She appeared before the Senate’s Legal and Constitutional Affairs Legislation Committee in Melbourne on 23 January in order to address these issues.]]>
Amid that subdued growth, Rice Warner expects premiums to increase by an average of 5.0% per year for the next two years, a reversal of the recent trend in premiums, which dropped from 15.0% to 20.0% over the past four or five years.
Rice Warner spokesperson Thierry Bareau noted that recent premium decreases were accompanied by “a flood of people” adding insurance cover to their super accounts. Today, insurance is part of some 5 million of those accounts.
Richard Weatherhead, Rice Warner Head of Life Insurance, said that several factors will contribute to the increase in premiums, including higher claim rates and the increased capital requirements imposed by recent legislation.
Weatherhead characterised ongoing changes in the superannuation market as “seismic shifts,” and he made particular note of the convergence of different market sectors. “Over the past few years, there has been a convergence of product designs between the three key market segments: financial advisers, superannuation funds and direct distribution,” he said. Convergence is also narrowing the gap in pricing between retail insurers and super funds.
Despite that price convergence, Rice Warner expects the growth rate of risk insurance through super to exceed previous predictions, growing 5.5% per year and “reflecting the growth of bank-developed ‘low-cost’ superannuation products to compete directly with not-for-profit funds.”
In addition, Rice Warner’s 15-year prediction anticipates a significant shift between retail and wholesale business, which now account for 44.0% and 56.0% of the market respectively. By 30 June 2027, the company expects the market to be 53.0% retail and 47.0% wholesale.
Some industry executives expect premiums to rise even faster. Jim Minto, TAL Australia CEO, told the Herald Sun that some funds may see annual increases of 10.0% to 15.0% over the next three years, pointing to an increase in claims as one factor in the increase. "In some funds - particularly aimed at office workers - this can be as high as 50% but this is not unique to Australia," he said.]]>
Morrison runs RMS InControl on his tablet, software that connects him to his office and allows him to process client input on the fly. He brings the iPad to each client meeting. While he offers clients the choice of old-school pen and paper, every client has declined that choice in favour of the computer.
The software provides a comprehensive, step-by step questionnaire, a tool that, according to Morrison, makes it less likely that questions will be skipped and more likely that clients will understand their insurance needs. Morrison told IBO that asking those questions has driven sales of additional insurance sufficient to boost his income by 25%.
Information provided by the client is entered into the program on the spot and “automatically charted for visual emphasis,” eliminating the need for an additional appointment. That same information goes directly to Morrison’s office through his wireless connection, and his assistant can immediately start processing the data and obtaining quotations. Morrison can then email his client a summary of the meeting before he has even left for his next appointment. None of this requires a return to the office, so Morrison can get to his next client without missing a beat.
IBO calculates that Morrison saves almost eight hours each week by eliminating extra client appointments and the travel time they entail. That saving that could allow him to make up to six additional appointments per week. Assuming that two of those appointments are with new clients, that Morrison has a sales rate of 80% and that he earns a $1,400 commission from each new sale, he stands to make $126,000 over the course of a 45-week year. Subtract the cost of the iPad, the software and the Internet connection, which total an estimated $5,400, and Morrison is $120,400 ahead.]]>
A similar situation applies to other forms of risk insurance. Only 11% of Australians carry disability cover, a proportion that is half that of the region as a whole. Cover for critical illness is reported at 22% for Australia and 30% for the region overall.
David Mouille, Citibank’s Head of Retail Banking, attributed some of that lack of cover to Australia’s universal health care, social security and superannuation systems, which may leave Australians feeling less mindful of the financial risks they face. "The amount of personal insurance cover people take out is highly correlated to how vulnerable they feel," Mouille said.
The survey found that 41% of Australians thought that they and their families had sufficient insurance in place, but that response was balanced by the 42% who acknowledged that they had no insurance at all.
On the other hand, Australians are hardly optimistic about their finances, with 32%, one of the highest regional scores, saying they were worried about their financial futures and 30% saying that a job loss would force them to exhaust their savings in less than a month.
"It's concerning that many Australians continue to live on month-to-month income, particularly when they are acutely aware of their increasing cost of living and seek a secure financial future for themselves and their families,” Mouille said.
In general, Australia recorded a Fin-Q score of 48.5 on a scale that goes to 100, a drop of 1.4 points since 2011 and the second lowest score in a region with an average score of 53.2. Only 22% of Australians reported that they had formal financial plans in place, 39% had no confidence in the adequacy of their retirement plans and 44% either did not know their retirement needs or had yet to start a plan.]]>
On a national basis, 58% of survey respondents indicated that they would build up their savings, while 30% would pay off bills, 28% would pay off mortgages and 25% would pay off credit cards and other personal debt. According to those figures, “deleveraging” remains a priority for 85% of people surveyed. “It is clear that that the deleveraging taking place since the GFC is still a priority for consumers,” said TAL CEO Jim Minto, referring to the consequences of the global financial crisis.
In addition to deleveraging, Australians would apply extra funds to holidays, car and technology upgrades, shopping, dining out and additional study before they spent any money on insurance. Only 5% would purchase or upgrade personal insurance, including life, disability, illness and income protection, and 4% would purchase “another type of insurance.”
“We undertook this survey as part of our efforts to continue to better understand Australians’ perceptions and behaviour towards life insurance and societal changes,” Minto said. TAL noted in its announcement of the results that “95% of Australians have inadequate insurance in the event they could not earn an income.”
TAL also provided results on a generational basis. While only 3% of baby boomers - those between the ages of 50 and 69 - would upgrade personal insurance, 9% of those aged 25 to 34 would make that investment. Even for that younger age group, however, deleveraging was a clear priority.
“As an industry, we need to focus on ways of better demonstrating and communicating the value of the forms of life insurance - income protection, permanent disability cover, lump sum upon death and critical illness lump sum,” Minto said.
TAL, which calls itself “Australia’s major specialty life insurer,” commissioned Galaxy Research to perform the online survey.]]>
Similar tests designed to screen women for breast cancer and cervical cancer have been somewhat more popular, garnering response rates of 55% and 57% respectively. Cancer Council CEO Ian Olver acknowledged that those rates were consistent with government targets, but he indicated that a 70% rate would make a real difference in prevention, detection and cure. ''Early detection is important if you want to improve the cure rate for cancer,'' he said. ''If you are not participating you're robbing yourself of a chance of prevention.''
Olver attributed the disappointing response rates to Australians’ psychological difficulties with the bowel screening test, noting that the test requires subjects to collect their own samples. Olver noted that the rewards of a fully implemented program could be great. ''We estimate a decrease in deaths of one third among bowel cancer screening participants, compared to those who don't participate,'' he said.
Although a 55% rate for breast screening is an improvement over the rate for bowel screening, Breast Screen Victoria (BSV) reports that higher rates could be achieved if women did not put the test off. The organisation reports that, in a survey of women who had rarely or never been screened, 78% had put off screening even though they believed it was a worthwhile test. Another 18% maintained that their own bodies would let them know if there was cancer.
BSV CEO Vicki Pridmore emphasised both the risks of breast cancer and the benefits of screening. "Our message was that one in every nine women will get breast cancer, that 78% of all breast cancers occur in women aged over 50 and even women without a family history are at risk,” she said. With screening, mortality rates are up to 35% lower than they are for women who have not been screened.]]>
Even at that level, stress is an expensive problem for the Australian economy. Regus Country Head Australia Jacqueline Lehmann, citing a study by the Victorian Health Promotion Foundation (VicHealth), noted that stress costs the economy $730 million per year, a figure that “equates to $11.8 billion over the average working lifetime,” according to VicHealth.
“The heavy tolls of stress falls not only on workers and their families, but also on businesses as they find that their staff underperform, need more sick-leave and are less efficient,” Lehmann said.
When asked about the causes of stress, 49% of Australians blamed personal finances, 48% their jobs and 31% their customers. Other parts of life were reportedly less stressful. On a global basis, spouses, children and neighbours were named by 17%, 10% and 4% of respondents respectively.
While Regus did not analyse each aspect of the responses according to country, it did provide a breakdown of stress levels in the context of business size. Employees of large companies reported rising stress levels at a rate of 54%, while only 46% of small-company employees agreed. Those groups also differed in their views of the causes of stress. Only 20% of employees of small companies blamed management, but 40% of large-company employees saw management as a problem, a number second only to the proportion of workers who blamed the job itself.
Workers were also asked about possible solutions. Almost two-thirds of Australians, a number roughly in line with global sentiment, pointed to increased workplace flexibility as one option that would reduce stress by “giving employees more choice and power in how and where they work,” according to Regus. Flexibility is a potentially cost-saving measure in the eyes of 34% of those surveyed and a way to enhanced productivity for 74%. In addition, 71% of Australians see flexibility as “more family friendly.”
“This Regus research shows that through offering staff more freedom in the ways they work, and in turn reducing workplace stress, the benefits are clear for the employee as well as the business,” Lehmann said.]]>
“The reforms will move the sector towards a genuine all-hazards, all agencies approach and improve emergency management, with a strong emphasis on risk mitigation,” Ryan said.
The white paper calls for the creation of a single agency, Emergency Management Victoria, charged with overseeing and coordinating the efforts of all departments and agencies involved in emergency planning, response, management and recovery. An Emergency Management Commissioner “will assume the operational responsibilities of the current Fire Services Commissioner and oversee control arrangements for fire, flood and other emergencies,” according to Ryan.
Much criticism of the government’s past performance focused on the fragmented nature of its efforts, with little coordination among agencies, a situation highlighted by a review of government response to the Victoria floods. According to Ryan, the new plan calls for cutting the number of government emergency-management committees from more than 40 to four. In addition, the plan would create a new post, Inspector General for Emergency Management, charged with monitoring and reviewing emergency services.
While the white paper takes pains to acknowledge the contributions of existing agencies, local government and volunteers, its aim is a simplified system that aligns with contemporary conditions and that offers improvements in efficiency, coordination and flexibility.
The paper’s conclusions were influenced by 93 submissions that the government received in response to an earlier communication, “Towards a More Disaster Resilient and Safer Victoria,” released in September 2011. “Significant points of agreement” among those 93 submissions formed the basis for the current initiative.
According to Ryan, the reforms will be implemented in stages. ”Victoria’s current emergency management arrangements will continue to operate over the coming months with transition to the new arrangements commencing in 2013,” he said. More complicated reforms, according to the paper, “will require considerable consultation and planning.”]]>
“You’d hope we can get between three to six wins depending on injuries and how the season plans out,” he told reporters after a recent training session.
Though such a small win total would have most established clubs feeling the wrath of their supporters, as the newest club in the AFL, GWS have different expectations. One of the most important factors for the club is the development of its young roster.
“We ran out with the most first-game players (in 2012) in the history of footy, so that makes it hard to balance out where you're going to be the following year,” Sheedy said.
Whether GWS can achieve 6 wins or not is up for debate. But as long as the team does not regress in wins, chances are the season will be considered acceptable.
Perhaps a more important issue will be the continued building of a solid supporter base. GWS will have to try and avoid the fate that befell the league’s second newest team, the Gold Coast Suns. The Queensland based team suffered a drop in membership and crowds of around 20%.
Sheedy hopes to boost the GWS membership closer to 15,000, up from around 11,000 in their first year.
Always one to think positively, Sheedy does not believe that having a losing record will necessarily result in fewer members. He cites Richmond’s ability to create a strong culture, despite frequent on-field problems.
“It’s quite an amazing story,” he said. “It’s about how you create a football club. The best thing about this football club (GWS) is it’s a white canvas; we can create our own history.”
He believes that despite the perception of New South Wales as an NRL heartland, GWS is in a prime position to increase their supporter base.
“There’re 350,000 people in Sydney that barrack for AFL clubs,” he noted. “We need to find them and encourage them to build our game.”]]>
“While many may believe that the loss of the family home is due to interest rate rises and financial over-commitment, in fact the main reason people are forced to sell their home is as a result of illness, injury or death,” Sirianni said.
The fact that insurance is a component of many super funds may give borrowers a false sense of security, since the amount of cover may prove to be inadequate. Most Smartline clients, according to Sirianni, hold no more than $300,000 within super, an amount approximately equal to the average Australian mortgage. “When you consider the average Australian mortgage is about $300,000, it’s obvious that more coverage is needed,” he said.
To compound the problem, insurance within super may lapse if contributions are not made during a period of unemployment. Even if such insurance remains in force, Sirianni urges borrowers to consider additional cover outside super and to look closely at the appropriate amount. “It’s also important to get advice on how much insurance is enough,” he said.
Mortgage debt is not the only thing that borrowers should consider. Sirianni would encourage borrowers to look at a more comprehensive financial picture. “There are many more reasons to think beyond home loan debt,” he said, pointing to the financial and personal costs associated with death. Those costs must be understood, according to Sirianni, despite that fact that it may be “unpleasant to speak about these things.”
"It’s important to take a holistic approach to your entire financial situation, and this includes ensuring you put appropriate insurances in place to protect you and your family should the worst happen,” he said.]]>
According to Rael Solomon, Manager of Marketing and Product Development for Plan for Life, the SMSF sector has been neglected by insurers. “There don’t appear to be insurance policies advertised as specialising in the SMSF sector,” he told insurancenews.com.au, other than “package deals.”
“The potential for selling risk insurance to the wider community of SMSF members seems to be huge,” Solomon added.
According to Solomon, the lack of a marketing focus on SMSFs is especially striking when data from the Australian Taxation Office indicates that 38.5% of their members have yet to reach 55 years of age, a group that would seem to present opportunities for the marketing of both life insurance and income replacement cover.
Solomon says that there are more than 350,000 members of that under-55 group, and he points out that, for those younger members, “Protection against early death or loss of income through disablement are fairly high priorities.”
Older members, some 560,000 strong, also represent a sizable opportunity. For that group, Solomon notes that spouses can benefit when life insurance is available since it allows them to pay off debts and to discharge any tax obligations that a super fund may have created.
Solomon notes that, according to ATO figures, insurance policies make up 0.4% of fund assets, but he takes this percentage to refer to policies that are tied to pensions, annuities and investments. In any event, insurance is hardly unavailable to retail fund managers. “For SMSF administrators in the report, no fewer than eight providers include life, life and total and permanent disability and – in one case – salary continuance,” Solomon said. “Clearly the retail managers are taking advantage of access to fund members in selling life cover.”
Plan for Life has been a part of Asset International, Inc. since 2010. Asset International is a privately owned company that supplies information and technology services to public and private financial institutions, including financial advisers, pension funds and asset managers. Plan for Life calls itself “the leading independent supplier of Australian managed funds and life insurance market information,” operating in that sphere for more than 20 years.]]>
Wright, speaking to online news service riskinfo, indicated that the survey results contradicted at least one of Munich Re’s assumptions about the role of the online application. “We used to think that advisers were more likely to use an e-app for smaller cases that were below non-medical limits, but what we tend to see now is that if an adviser is comfortable and familiar with using an e-app, they’re likely to use it for all their cases,” he said.
For larger cases that require financials or medical examinations, Wright acknowledged that electronic applications might not provide the same benefits they provide for smaller cases. Advisors might still prefer to apply electronically because an interim policy can be issued immediately, according to Wright.
The survey also revealed that electronic applications have helped to speed the issuance of policies. With an electronic application, a policy issues within 19 days of application, 10% faster than the time required for a paper application and a 10% improvement over electronic processing in 2011.
Munich Re Head of Life Nico Conradie said that policies issued at standard rates now account for some 75% of underwriting decisions, a 10% increase over 2011.
At the same time, according to the survey, the rate of straight-through processing (STP) fell to 17% from 24%, indicating that more applications had been referred to underwriters for evaluation. Wright, while surprised by the decrease, attributed the fall to market factors, especially given the wide variation in STP rates among companies, and sees it as a temporary phenomenon. “All companies have indicated that they are planning to increase their STP rate by 15%, so we expect that the average will go back up this time next year,” he said.]]>
Though there was a mild reprieve over the weekend, temperatures are set to climb again over this week.
Victoria is experiencing its worst extended patch of weather since that which caused the Black Saturday bushfires in 2009.
The heatwave comes at a time when many people are heading back to work after time off over the Christmas period to spent time with their families. Though many people will be worrying about the threat of fire and perhaps the potential to lose their belongings, health authorities have urged people not to simply focus on external threats. Huw Colechin, Ambulance Victoria paramedic team manager, has highlighted the need to be aware of the effects hot weather can have on the body.
“Drink plenty of fluids, take a moment to check on friends and neighbours and relatives,” he said.
Colechin also made it clear that not every is as suited to dealing with hot weather as others.
“The elderly or people with chronic illnesses don't manage well in high temperatures.”
His comments have some weight. The European heatwaves of 2003 claimed the lives of approximately 70,000 people, most of them elderly.
The heatwave brings into light the need to focus on personal health, rather than just the safety of personal property. Interestingly, it comes a time when many Australians do not own personal insurance policies to protect themselves in the event of injury or illness.
If there is anything positive to come from the most recent heatwave, perhaps it will be a reminder for people to look after themselves and their families. That way, they can enjoy the cooler weather when it arrives.]]>
“At the end of the day if you are able to help communities cope and manage risk in a more resilient way, then you are also making communities more resilient and making economies more resilient,” Bacani said. “You’re also making insurance more acceptable and more affordable,” he added.
Bacani sees a place for greater industry involvement with different constituencies in devising risk-management strategies like improved building codes and better mapping of flood zones.
He would also like to see a “holistic” management of risk across geographical areas. “Obviously,” Bacani said, “Australia has its own risks that are peculiar to the country, but there are also risks that are common across regions.” He identifies access to affordable insurance and a better understanding of climate, including earthquake risks, as issues that “are being put on the table.”
While there has been significant evolution in insurance for low-income populations over the years, we are still learning how to help those communities manage and cope with risk, according to Bacani, and there continue to be markets in developed countries that are underserved.
While some communities are unfamiliar with the concept of insurance, Bacani and Whelan agreed that trust is fundamental to the business everywhere. “The whole business is founded on trust between the client and the insurer, and that is something that has to be maintained,” Bacani said. “If you are dealing with markets that are unfamiliar with the concept of insurance, we need to make sure that they understand the principles of insurance, what the business is all about and what it can and cannot do.”
Bacani would like to see insurance explained in simple, understandable language, with an emphasis on what communities can afford and whether insurance is the right tool.
Whelan agreed that communities may not always understand how insurance works. Consumers need help understanding insurance at a very basic level, he said, and the Insurance Council plans to launch a website that it hopes will improve that understanding.
The UN program, launched in June, does not intend to confine its view to the global scale. “At the end of the day, implementation will be utterly local,” Bacani said. “While many issues will be global, solutions will be done at the local level.”]]>
The change was particularly striking among respondents under 25 years of age, 35% of whom reported that they were now more likely to obtain income protection insurance.
Nadine Tereora, Asteron Executive Manager of Claims and Underwriting, sees the survey results as an opportunity for the industry, but Tereora cautions that the popular attitude of “she’ll be right” presents an obstacle to moving beyond self-insurance. “We are more likely to insure our physical assets such as house and car than ourselves, putting us and our family’s financial security at significant risk in the event of a crisis,” she said.
Though people are more likely to consider income protection, this interest has not yet made itself obvious in figures compiled by the Financial Services Council (FSC). At the end of June 2012, income protection premiums stood at $263 million for the preceding 12 months, a modest increase from the total of $252 million in premiums for the period ending 30 June 2011, and $14.6 million of that growth was attributed to contractual increases. New business amounted to premium income of $30.7 million, a number marginally lower than the previous year’s new business of $30.9 million, while lapses, surrenders and cancellations rose from $34.0 million to $35.8 million.
Asteron says that it is “investing heavily” in claims and underwriting, with Tereora calling claims “the reason we are in business.”
“There is already a very strong sense that we do this very well, but we want to build on that to ensure we continue to have a real meaningful impact on our customers’ lives,” she said.
Asteron Life is a member of the Suncorp Group, one of the largest financial services companies in Australia and New Zealand. In New Zealand, Asteron Life serves over 200,000 clients and has more than $800 million in funds under administration.]]>
You can find out more about the dangers that Santas faces in this infographic.
The statistics paint a worrying picture. With over seven billion people worldwide, there are a vast number of households which Santa must visit. Of course, people of various faiths are not visited by the man in red, but even with this number accounted for, estimates suggest that nearly half the world’s population need their stockings stuffed.
It is not just the well behaved that receive presents; Santa’s commitment to delivering coal to those that misbehave keeps his work level at astronomical levels.
Health experts say that given the massive workload, Mr Claus is at an extremely high risk of stress-induced injury and fatigue.
However, this is only one of the smaller, controllable risks involved in his profession; there are numerous potential accidents waiting at each stop.
Dog attacks are a constant threat, with Santa forced to navigate past over-zealous canines. He must also deal with region-specific animal threats. In rural Spain, the man in the red suit has to avoid being gored by enraged bulls, while in northern USA and Canada, his team of reindeer are known to attract grizzly bears.
The danger of physical injury does not end there. With chimney abseiling Santa’s chosen method of entry, there is a very real risk of becoming stuck, asphyxiation through smoke inhalation, and burns. Health professionals warn that even after he navigates into houses, without proper refrigeration the food left out for Santa could be carrying dangerous and debilitating bacteria.
These are only the tip of the iceberg. Other risks include:
With such a high exposure to risk experts in insurance have suggested Mr Claus talk to a broker about taking out comprehensive life insurance and income protection. With policies tailored to his specific situation, he would be able to protect himself from the dangers inherent in his chosen profession.
By investing in the right policies, he can be sure he gets given peace of mind this Christmas.]]>
Senn also reiterated Zurich’s commitment to several other goals that it had recently announced, including a 3% to 4% improvement in combined ratio relative to the competition, a $500 million reduction in costs by 2013 and a continued ranking among the five Europe-based companies with the greatest value of new business.
“These are very ambitious targets given that the environment in which we are operating has become even more challenging in 2012,” Senn said.
Senn also reaffirmed Zurich’s commitment to derive 30% of new business value from Latin America, the Middle East and the Asia-Pacific Region, including Australia, telling investors that the company expects to meet that goal handily.
On November 15, Zurich announced that its third-quarter net profit had dropped 62% in comparison to the previous year’s third-quarter profit. Profits for the nine months ending 30 September 2012 were $2.7 billion, 16% below the company’s profit of $3.2 billion for the corresponding period in 2011.
Zurich attributed the disappointing results to “reserve adjustments” in its German operations. Losses caused by a drought in the United States earlier in 2012 also affected performance, and those losses may continue to be felt during the fourth quarter of 2012. In addition, the impact of Hurricane Sandy on the company’s results has yet to be determined, according to Zurich Head of General Insurance Mike Kerner.
Nonetheless, Zurich maintains that its capital position remains strong, and Senn expects the company to continue to pay “an attractive and sustainable dividend” for 2012.
Zurich has been a presence in Australia since 1961, when it took over Commonwealth General Assurance Corporation. Today, the company’s Australian arm calls itself “the only global financial services company operating in Australia under a single brand in our core lines of business - general insurance, life risk, investment and superannuation products.”]]>
Customers who take out a loan through the service will pay a fee capped at 1% of the loan.
The launch comes after Google suspended its earlier mortgage comparison tool at the beginning of this year.
In the new comparison service, users can choose to look at general, best-value results for a number of differing mortgage types, or will be able to get a more specific quote by providing Google with some information about their requirements and circumstances.
The company maintains that any information they gather will be in order to improve user experience: “We will ask sufficient questions to allow the user to get meaningful search results.”
Google also stated that if users clicked through to a direct lender, the search engine will not record any personal data. If the user wants to get through to a broker, Google will only hold enough information to allow the broker to get back in contact.
In addition, the search engine requires that all companies involved in the mortgage comparison tool satisfy a code of conduct that provides for fair treatment of customers.
The launch follows hot on the heels of Google’s offering of car insurance comparisons, which launched in the UK in September this year.
Mortgages are now one of a host of comparison services now offered by Google. “Over the last few months we have launched new comparison services for credit cards, current and savings accounts and car insurance. We are now adding mortgages to our comparison family, making it easier for customers to find the best deal for their individual circumstances,” said John Paleomylites, a product director at Google.]]>
Roberts was one of four senior insurance managers who spoke at a concurrent session of the conference, “Setting a strategic direction for insurance: The elephant in the room for trustees.” The session focused on the role of insurance in super funds, covering topics that included pricing of risk, disability-forced retirement, insurance diversification and the question of whether premiums might eat away at retirement savings.
According to Roberts, a fund must look at insurance as more than a way to simply transfer risks. “The fund needs both short and long-term sustainability of the insurance,” she said. “The trustees have to think about the demographics of the fund members and that there is not one solution. “
Roberts believes that insurance, often the biggest financial contract for large funds, is not a responsibility that can be outsourced by the trustees. Instead, insurance within super requires a dedicated team within the fund. In Roberts’ view, that team must understand “the design of the insurance and its impact on members of the fund.”
Superannuation funds are structured as legal trusts in which fund trustees are charged with managing funds for the benefit of the trust’s beneficiaries, its members. Trustees must manage both investment and insurance components of the fund in the members’ best interests. Their responsibilities are governed by the common law of trusts and by a variety of statutory enactments, including the Superannuation Industry (Supervision) Act of 1993, which codified many of the duties and powers of trustees.
In any event, the trustees must act within a coherent investment plan that allows them to weigh the risks and returns of different uses of fund assets. Insurance is generally part of that plan and, when that is the case, trustees must see to it that the fund’s insurance component is appropriate to the fund’s goals and that it truly serves members’ best interests.]]>
Speaking to Lesley Parker of the Age, Insurance Industry researcher Mark Kachor says that over the past 10 years, life insurance premiums have fallen by an average of 10%.
Despite this, he says that there can be downsides to price competition.
“Competition is good provided it doesn’t go beyond a certain point – then it becomes almost detrimental to the consumer.”
This is because insurance companies must still make a profit. Sometimes, if the policy allows it, companies may sharply increase the premium cost in later years.
Alternatively, in order to make up for income lost from cheaper premiums, companies may make it harder to claim. This is done by narrowing definitions which give rise to claims, or excluding more potential life events from policies. As a result, when it comes time to claim, policy holders may find that their cover does not provide for them.
In order to combat this situation, Duncan West, executive general manager of MLC & NAB Wealth, suggests that getting expert advice is paramount: “Price on day one is important, but you should be equally as interested in the price in the future. This is where the customer needs good advice.”
West believes that an integral part of good advice is taking a broad, long view.
“Good advisers will be able to look at different companies and their approach to pricing over a really long period of time,” he says.
As pointed out in Parker’s report, rather than trying to compare all the different insurance options, a good way to get informed is to consult with and adviser or insurance broker.
Importantly, people looking for insurance should not feel inadequate for turning to experts to help them decide. “There are a lot of people out there who need advice,” says West.]]>
In addition to those factors, Riemer noted that consumers may derive a false sense of security from the fact that insurance is one component of superannuation. “People think their families are covered and that's not right," she said.
To make matters worse, Riemer said, “It is startling to see that 64.6% of Australian women’s partners have no life insurance.” In the end, the combination of factors leaves 95% of Australian families underinsured.
Of those women who have no life cover, 68% have no interest in obtaining life insurance. For those with life insurance, levels of insurance may still be an issue, with 53.1% maintaining cover between $50,001 and $500,000.
Generational differences are also apparent. Among Australians under 29 years of age, the group known as “Generation Y,” 36.1% tend to think that insurance is unnecessary. Only 25.7% of older Australians share that belief.
Holly Dorber, spokesperson for the Lifewise campaign mounted by the Financial Services Council, sees the situation as one in which Australian priorities are misplaced, with 83% of Australians insuring their cars and just 23% taking steps to protect their incomes, a much more significant financial risk.
Riemer agrees. “It is surprising that so many people insure their houses, contents and cars but not themselves,” she said. Finding the right insurance, Riemer added, can bring other benefits. “If women take proactive steps to make certain they have the right insurance in place for them and their families, it should actually lessen financial stresses.”
In addition, affordability may not be the obstacle that many consumers expect it to be. By obtaining cover through a super fund, the burden of premium payment can be shifted from the family to the employer, and the family budget does not have to stretch to meet a new expense.]]>
The report puts “competitiveness of cover definitions,” at least with respect to income protection, in second place, far above the ranking of competitive definitions that apply to TPD and other forms of risk cover, which ranked 14th. Here, TAL, BT and Asteron led the field.
“The extent to which the provider is easy to do business with” is ranked third. TAL, Asteron and Macquarie were named as the companies easiest to work with.
While customer focus was unchanged in its first place ranking from 2011, both the second and third place finishers received higher rankings than they had in the past.
“Timeliness of receiving commission statements,” which occupies fourth place, declined as a driver of satisfaction from its previous ranking, as did the ability of underwriters to “communicate decisions clearly,” a factor which appears in 13th place.
Other drivers of adviser satisfaction include online access to sales support, timeliness in resolving commission enquiries, the quality of product information available from providers, pricing competitiveness, fairness of claims decisions and, in last place, timeliness of claims payment.
When the results of CoreData’s company rankings were consolidated in order to determine “he provider with the highest weighted satisfaction,” TAL took first place, ending Asteron’s three-year reign atop the list. Asteron fell to third place in the 2012 listing, with Macquarie in second.
Kristen Turnbull, Head of Advice, Wealth and Super at CoreData, emphasised the power of branding in adviser recommendations. “We do find image and reputation are drivers when advisers are researching which life companies they want to use,” she said.
Another subject of the report may be equally important to advisers’ understanding of the industry. There, CoreData analysed sources of adviser income and found that “Australia’s financial planners are becoming increasingly reliant on risk advice for business income.” Insurance advice now accounts for 52.8% of business income, growing from 40.4% in 2010 and 47.1% in 2011. In other words, the industry’s advisory focus has steadily turned to asset protection from investment advice.]]>
Total revenue was also strong, more than doubling from the previous year’s $15.5 billion to $38.8 billion. That strength was also apparent on a quarterly basis; revenue for the June quarter of $3.0 billion increased to $13.8 billion for September. The turnaround was even more striking when compared to the September 2011 quarter, when revenue stood at -$4.3 billion.
Much of the volatility in total revenue is explained by dramatic swings in investment revenue, which totalled $24.6 billion for the year, including $10.8 billion in investment income and $13.8 billion in realised and unrealised gains. For 2011, total investment revenue amounted to $2.5 billion, with $14.1 billion of income offset by realised and unrealised losses of $11.6 billion.
Components of total revenue that were not related to investments were substantially less volatile. For the year, non-investment revenue stood at just over $14.0 billion, including net policy revenue of $11.6 billion, management service fees of $2.4 billion and other revenue of $201 million. For the same period one year ago, non-investment revenue totalled slightly less than $13.0 billion, including revenue of $10.4 billion, $2.4 billion and $220 million in those same categories respectively.
On a quarterly basis, death and disability claims rose to $1.45 billion from the previous quarter’s $1.35 billion. Claims for the September 2012 quarter also exceeded those for the September 2011 quarter, when they stood at $1.27 billion. On an annual basis, death and disability claims rose from $4.71 billion in 2011 to $5.38 billion in 2012.
Surrenders and terminations were unchanged from the June quarter at $137 million, but decreased from $611 million to $556 million when determined on an annual basis.
Upfront commissions grew slowly over the year, totalling $395 million for the September quarter, a drop from the September 2011 tally of $409 million. For the year ending 30 September 2012, upfront commissions decreased slightly, from $1.48 billion to $1.47 billion. Trail commissions grew from the previous quarter, however, climbing from $533 million to $548 million. For the year, trail commissions grew from $1.91 billion to $2.13 billion.
In terms of financial position, return on life insurers’ assets improved from 9.4% to 15.0%, with total assets growing from $237.4 billion for the previous quarter to $245.5 billion at the end of September. This marked a 7.5% increase from September 2011, when total assets were reported at $228.4 billion.]]>
Widespread adoption of the technology still faces challenges, however. According to Mattick, sufficient data storage capacity may be a problem, and some hospitals may not have “the knowledge to interrogate this information.”
The Garvan Institute began as a research department of Sydney’s St. Vincent’s Hospital. While remaining a part of St. Vincent’s, it is now affiliated with the University of New South Wales. The institute has grown to be one of the largest medical research institutions in Australia, with a focus on medical genetics and related methods of prevention and treatment.
Mattick became Executive Director in January 2012 after serving as Professor of Molecular Biology at the University of Queensland. He is perhaps best known for his work on “junk” DNA, a type of genetic material that, unlike ordinary DNA, does not code for proteins.
Mattick announced that the Garvan Institute has recently completed genetic sequencing of 100 pancreatic tumours, an undertaking meant to identify the genetic changes that resulted in cancer. Now that specific genetic information is available, mutant cells can be targeted with drugs that match the specific mutations in question. As a result, inappropriate drugs can be avoided. “Cancer genome sequencing will be the new standard of care,” Mattick said, adding that genetic advances have now made half of all cancers treatable.
Other areas of medical practice will also be targets of sequencing. In rare genetic disorders, for example, diagnosis can now be made in weeks instead of months. Mattick sees this as a sign that “we are rushing forward to e-medicine.”
He expects genetics to play a growing role in the future of health care, with doctors able to advise patients on how to stay healthy from childhood. “I can see the time when genome sequencing will be done at birth and that will tell people what to do throughout their lives,” he said.]]>
The two franchises have hit the ground running, with Sydney-based Fairien Azeem and Brisbane’s Kayla White already building a customer base and writing businesses. It is a positive start for the fledgling offices.
In an interview with Mortgage Mix in Sydney, the CEO of Mortgage Choice, Michael Russell, outlined how Mortgage Choice Financial Planning would differ from the competition. Though linked to Mortgage Choice, the new group will be a separate franchise business. Rather than diluting skill sets, customers will receive specialised advice from experts in the financial sphere.
Tania Milnes, GM for Mortgage Choice’s new financial arm, says that financial planners will need expert training to be employed by the business.
“Our stringent recruitment standards require our planners to hold a Diploma of Financial Services (Financial Planning) and have solid financial advice experience,” she said.
She added that the company would not rest on its laurels when it comes to employee knowledge.
“We will continue to assess the quality of their advice against a best practice checklist,” Ms Milnes stated.
Ms Milne also made it clear that the new business will operate under the ‘paid the same’ philosophy — in which advisers have no financial incentive to recommend one broker over another — that underpins Mortgage Choice.
Though the company has just opened its first two franchises, Ms Milne has high hopes for future growth. Over the next three years she expects the company to be employing 60 financial planners throughout the country.
The company will be assisted by a variety of industry experts as it seeks to develop a strong foundation and attractive propositions for both consumers and franchisees.]]>
Among the speakers was Malcolm Sparrow, Professor of the Practice of Public Management at Harvard University’s John F. Kennedy School of Government. Sparrow, who rose to the rank of Detective Chief Inspector in the U.K. before moving on to academia, counts the detection and prevention of fraud, particularly in health care, among his research interests.
Sparrow’s remarks, according to a report by insurancenews.com.au, characterised the situation as one that forces managers to meet a constantly changing array of problems. Almost every development has the capacity to qualify as “bad news.”
Managers who find no evidence of fraud must consider the strong possibility that they “are missing something,” according to Sparrow. Once fraud is detected, the news is just as bad. “Fraud is a white-collar crime and managers don’t know how it happens until after it is detected,” Sparrow said.
Detection itself poses a problem because it can give managers a false sense of security. In fact, insurance fraud is an arms race in which preventive methods must constantly adjust to meet new strategies used by perpetrators. “Fraud control is dynamic because people are always testing the system to find holes,” Sparrow said.
Perpetrators have also developed considerable sophistication in the claims process, researching their claims and ensuring that documentation is correct. In that context, perpetrators appreciate quick payments that minimise the period of time during which fraud can be detected.
Sparrow also pointed out two additional dangers: the increased automation of payment and claims processing, and institutional reluctance to criticise valuable systems on which organisations have come to depend.
According to Sparrow, “Companies have cut the human involvement to improve administration efficiency and cut costs.” While insurers need to examine their methods of separating fraudulent and legitimate claims, Sparrow acknowledges that a return to the days of manual processing is unrealistic.
He also made the case for an organisational culture that does not foreclose the possibility of criticising its own systems, no matter how valuable those systems may be. Otherwise, managers dismiss concerns about fraud as "attacks on the program," and no changes are made.]]>
In essence, the study first divided funds into two groups, retail and not-for-profit, in order to examine any impact of a relationship between the trustee and the insurer providing coverage. It then removed the 72 not-for-profit funds from consideration, since none of them used related providers.
Of the remaining 52 funds, all in the retail sector, 20 were funds in which the trustee and insurer were related. Coverage was less costly, as “measured by the difference between the premiums paid and the benefits received,” when trustee and insurer were unrelated.
Arnold and Liu found that the best account for the difference was to be found in trust deeds that required the trustee to use a particular insurer, a requirement that applied to eight of the funds in question. When compared to funds without such an instruction, the difference, according to the study, had “both statistical and economic significance.”
When the funds were evaluated in those two categories, “bound” and “non-bound,” the study found that the difference affected both the amount of insurance purchased and the cost of insurance products.
Members of bound funds pay, on average, $252 per year in premiums, twice the amount paid by members of non-bound funds. However, they receive benefits that are worth only 20% more per capita than the benefits received by members of non-bound funds.
The study’s authors note that other factors may influence higher costs. “We acknowledge that differences in the cost of insurance may be attributable to different policy/channel types, and perhaps to different levels of service or other non-insurance benefits,” they write. That view was echoed by Pauline Vamos, CEO of the Association of Superannuation Funds of Australia, who noted that the study was not the product of exhaustive research, especially with respect to the operation of a retail fund, which “has thousands of different policies, tailored to different circumstances, and as a result, retail funds are a very different structure compared to industry funds.''
The APRA study reminds readers that fund trustees, whether in bound or non-bound funds, must act “in the best interest of members.” Regardless of the factors that may be at play in higher sales of more costly products, “best practice requires that the value proposition to fund members be transparent.”]]>
Howes argued for “a national pool of funds to provide financial incentives for flood mapping and mitigation actions,” a step that would also help to moderate “high insurance costs of people living in disaster-prone areas.” Mitigation strategies could be implemented over a 15-year period, supported by “a temporary pool of funds,” Howes said, adding that current government efforts, while moving in the right direction, had yet to address issues of affordability.
Improved pricing was named as the biggest weather-related issue by 37% of respondents. The creation of national flood maps was seen as the greatest priority by 21% of those surveyed.
Natural disaster may have topped the list of actuaries’ concerns, but man-made challenges were not forgotten, with 18% of those surveyed saying that the industry’s biggest risk stems from “mounting regulatory pressures, including higher capital standards.”
When asked about future industry trends, respondents named social media, technology and product distribution as significant forces.
According to the Institute, 63% of survey respondents believe that social media will have at least a moderate impact on the industry within the next five years. According to 92% of those surveyed, brand management is the area that will be most affected by social media. Other areas of impact were product distribution, named by 53% of respondents, and customer education, named by 52%.
Almost half of those surveyed thought that the industry “should better leverage Big Data,” and Howes named data analytics as an area that was well suited to the application of the analytical expertise of actuaries. “Insurance companies should use this expertise and apply it to available data to offer tailored pricing and products at more granular levels than currently possible,” Howes said.
The growth of online sales will also have a significant impact, especially on personal lines. Within five years, according to 70% of survey respondents, at least half of personal insurance will be purchased online. Commercial lines will not follow suit. According to a majority of respondents, online transactions will account for only 20% of commercial sales within the next five years.]]>
The current market is characterised by price competition along with continuing growth, but those two trends are countered by lower margins and higher capital requirements.
According to Rice Warner Head of Life Insurance Richard Weatherhead, those competing factors are bound to lead to changes. Noting the 4.7% drop in the median price of life cover over the last two years, he said, “In the context of cost pressure facing insurers, such reductions, year after year, were never going to be sustainable, and we are now seeing the emergence of more rational market pricing.”
Higher pricing can lead to slower growth, but here Rice Warner sees the well-known problem of chronic underinsurance as a potential benefit to the industry. With current default death cover typically providing less than 40% of subsistence needs and less than 30% of income-replacement needs, underinsurance stands to be one of the primary drivers of growth going forward.
In addition, Rice Warner expects growth to come from “increasingly sophisticated customer communication and engagement strategies,” including a growing reliance on technology to increase the availability of cover, improve data quality and enhance levels of service.
Technology becomes particularly important, according to the report, in today’s highly competitive market, where eight insurers took in 97% of all revenue and the four biggest companies increased their market share from 57% to 68% over the last two years.
Profit margins have dropped from 8.1% of premiums in 2011 to 4.1% in 2012, a drop attributed by Rice Warner to “price reductions and some deterioration in claims experience.”
The regulatory environment provides its own challenges, according to the report. Rice Warner highlights two developments. First, the firm predicts that risk insurance may play a smaller role inside superannuation, given “the continuing erosion of the tax benefits of superannuation.” Second, the industry must adapt to the changes incorporated into “Stronger Super,” especially those introduced by MySuper.]]>
Two Australian companies with insurance operations appear in the top 100: Macquarie Bank, 66th on the list with assets of $257.7 million; and Commonwealth Bank, 100th on the list with assets of $139.3 million.
Three other Australian companies appear among the top 200 managers. AMP, with assets of $120.6 million, ranked 105th. NAB/MLC, with assets of $74.3 million, ranked 143rd. Westpac/BT appeared in 147th place with assets of $72 million.
Great-West Lifeco of Canada led all insurers in terms of growth. Between 2006 and 2011, the company increased its assets by 97.57%, moving 45 places in the rankings, from 93rd to 48th place. During that same period, Nippon Life Insurance moved 22 places, from 39th to 17th, as the result of asset growth of 57.69%.
On a global basis, Towers Watson reports that the 500 largest fund managers saw assets under management fall approximately 3% during 2011, putting assets below 2006 levels. That decrease runs counter to the trend for 2009 and 2010, when assets rose 16% and 4% respectively. The top 20 managers experienced the greatest decline, with assets dropping 7% for the year. Assets under management by European and U.S. managers dropped 1% and 7% respectively, while their Japanese counterparts saw assets increase by 6%.
According to Towers Watson, Australian managers made a strong showing for the year, with 23 managers among the top 500 and total assets under management topping US$1 trillion for the first time. Responding to that strong Australian performance in the face of weak global economic fundamentals, Towers Watson Head of Research Hugh Dougherty said, “These outcomes shine a positive light on the relative strength of the Australian industry.” He noted that Australian performance was especially noteworthy given the “patchy” performance of fund managers in general.
Dougherty also noted that asset growth in Australia was not driven by currency appreciation. “Rather, the growth reflected a mix of other factors that could best be described as organic growth, acquisition growth and market valuation shifts,” he said.]]>
NAB Wealth, the company division that includes insurance operations, reported a 3.0% increase in cash earnings, which improved by $15 million to $519 million. According to NAB, the growth was attributable to an increase in funds under management, higher revenue from direct asset management and the positive performance of the company's annuities portfolio. Funds under management grew by $4.5 billion, a 3.8% increase for the year, and amounted to $120.8 billion in total.
Net cash earnings, calculated after deducting tax of $72 million and $241 million of operating expenses, were reported at $169 million. After applying NAB’s method of discounting those earnings, insurance operations accounted for a loss of $6 million. By that same formula, NAB had reported a profit of $14 million in net cash earnings for the September 2011 period.
NAB reported a slight decline in market share for the period, a drop that it attributed to “a competitive environment.” In response, according to the bank’s announcement, it “has recently refreshed its offering with re-pricing and the launch of new products to ensure it continues to attract advisers and customers.”
To that end, NAB reports that it has significantly increased the number of advisers in the aligned channel, an increase attributed by NAB to its own ability to attract competitors’ advisers. Over the course of the year, the number of aligned advisers grew from 1,014 to 1,096. The bank has simultaneously thinned the ranks of salaried advisers “as advisers with lower productivity left the business.” The number of salaried advisers dropped from 850 to 802 during the year.
Salaried advisers, who accounted for 39.0% of insurance sales as of September 2011, accounted for only 33.0% in the most recent analysis. The contribution of aligned advisers grew from 20.0% to 22.0% during that time.]]>
Australia, one of the 62 countries included in the report, was ranked 22nd in life insurance density and 28th in non-life density.
In terms of penetration, which the WEF defines as “the ratio of direct premiums from domestic sources to GDP,” India’s performance was less remarkable, putting it in 17th place in life insurance and in 52nd place in non-life insurance. Ireland and the Netherlands were the respective leaders in those two categories. According to the penetration metric, Australia placed 21st in the life category and 14th in non-life.
India also lags in real growth of direct premiums, defined as the percentage growth in both life and non-life measured in local currency, where India fell 5.5% and ranked 50th. Argentina led the way in growth with a 21.9% gain. Australia, with growth measured at 5.4%, ranked 21st.
The potential for further growth in a largely untapped Indian insurance market has not gone unnoticed. According to the Indian Express, Malay Ghosh, President and Executive Director of Reliance Life Insurance, said, “The percentage of young people, the number of people likely to be in their work life in the next few years and the spread of literacy are all set to give a significant fillip to the domestic insurance sector." His sentiments echoed those expressed in a McKinsey report that predicted that higher incomes and premiums would foster exponential growth in the Indian market.
To compile its report, the WEF evaluates “the world’s leading financial systems and capital markets,” ranking those markets according to factors which it calls the seven pillars: institutional environment; business environment; financial stability; banking financial services; non-banking financial services; financial markets; and financial access.
The pillars are further divided into “subpillars,” with insurance included under the pillar of non-banking financial services, a category that is chiefly concerned with mergers and acquisitions, initial public offerings and securitisation.
Insurance is included because of “a strong positive relationship between insurance sector development and economic growth” in both developed and developing nations. In addition, according to the report, it has special value because it “creates liquidity and facilitates the process of building economies of scale in investment.”]]>
At the same time, factors outside the industry, including catastrophes, reinsurance costs, global credit difficulties and currency fluctuations, have caused further complications. This combination of factors, according to Kelly, has made it harder to manage clients and harder to place risk.
According to Kelly, brokers must effectively manage cost pressures and changing conditions, doing business more efficiently while mitigating risks, and this must be accomplished while making a profit. The options for brokers today are “survive or perish.”
Kelly recommended that brokers respond to these challenges by increasing the extent to which business is automated, saying that Australian brokers should automate their practices to levels more common among brokers in the United States, where automation has become pervasive.
Automated broker platforms are especially important, according to Kelly. Through platforms, clients get solutions relevant to their needs and brokers gain access to a wider array of products. The platform becomes a tool that allows brokers “to guide clients through the minefield of insurance using their qualifications, training and experience,” Kelly said. He also pointed to the advantage that comes from the broker’s ability to access different underwriting offerings from a single point of entry.
In addition, the broader marketing facility that platforms provide helps the broker to make a profit. In that context, Kelly noted that insurer profits have themselves been under pressure. In March 2004, insurers made a profit of $3.6 billion on $25.51 in gross written premiums, a return of 14.15%. In March 2012, insurers increased premiums to $34 billion, but profits actually decreased to $3.187 billion, a return of 9.2%.
Speaking to insuranceNEWS.com.au, Kelly characterised automation as a supplement to the broker’s traditional role: “The role of the broker is to have a personal and direct relationship with the client and that would not change. But the role of marketing the client’s information – the information required to place business – from client to broker and broker to underwriters who may bid for the business needs to be automated.”]]>
Importantly, the company will openly provide their cover on a case by case basis, granting approval based on a series of parameters designed to measure the severity and progression of the disease.
As James Markwick from Lifebroker notes, this is a valuable part of the offer. “This finer detail is great for the consumer. They are fully aware as to whether the insurer is even willing to entertain an insurance application.”
As Marwick explains, disclosure of the criteria is designed to provide transparency to the application process and to avoid disappointment in the event of rejections. By having access to the guidelines clients are able to inform themselves about their prospects for cover.
This approach is in stark contrast to that in the United Kingdom, where the announcement of HIV insurance resulted in a massive influx of applications. Many were rejected, understandably leaving applicants angry and confused.
By making its requirements easily accessible the Australian company offering the insurance hopes to counter this disappointment.
As a preliminary guide, the company has stated that it will favourably consider clients who are undertaking HAART treatment, have a viral count lower than 1,000 copies per ml and a CD4 cell count greater than 350. In addition, insurance is more likely to be considered where there are no significant comorbidities, no detrimental psychiatric history and no major AIDS indicator conditions.
Those who chose to take out cover will also be subject to a premium that will depend on the facts of the case.
Life insurance is always a sensitive issue, and even more so when illness is involved. This new approach to insurance for HIV sufferers acknowledges this sensitivity and demonstrates a way forward for the insurance industry.]]>
Though it would be considered a minor miracle if the AFL’s newest side can beat the reigning premiers, the Giants will be hoping to improve on the 63 point margin they lost by in round 1 last year.
Round two will be more of an opportunity for a win with GWS taking on Port Adelaide. The Giants recorded their highest score of last year against the Power, beating them by 34 points in round 19.
GWS will meet Port Adelaide again in round 12, before being treated to a bye in the following round.
Other teams the Giants will meet twice during the season are Essendon, Gold Coast, Melbourne and Sydney. Fortunately for GWS this means that the team will only play one of the 2012 finalists twice.
The fact they play more games against those who finished outside the top eight is no guarantee of success. Of the teams they play twice GWS has only beaten the Gold Coast Suns, defeating the AFL’s second youngest team in round 7 last year. However, with increased experience and greater team chemistry, the Giants will fancy themselves to win a few more games.
The final game of the year comes against the Suns, and with both teams having notched up another year of experience, round 23 will be a must-see for Giants fans and Suns fans alike.
In an effort to expand their supporter base the Giants will again play three of their home matches at Canberra’s Manuka Oval. They will host St Kilda in round three, Gold Coast in round 5 and the Western Bulldogs in round 15.]]>
Folau made a high profile switch to AFL after starring in the National Rugby League for both the Melbourne Storm and the Brisbane Broncos.
Along with Karmichael Hunt, Israel Folau’s conversion from rugby was a major talking point in the formation the AFL’s expansion through the addition of two new teams – the Gold Coast Suns and the GWS Giants. With Greater Western Sydney operating within a rugby league centric area, attracting Folau to the code was an important part of the club building a fan base.
Though Folau’s decision to leave comes only halfway through his 4 year contract, he denies that the decision to join GWS was a mistake.
"It definitely wasn't a mistake, because the last two years I've really enjoyed. I've learned a lot about the game and about myself, so I wouldn't change the experience for anything."
Though his on field achievements were disappointing – he played 13 games, kicked only two goals and averaged just over 6 disposals per game – many within the league share the sentiment that the experiment was worthwhile, with AFL chief executive Andrew Demetriou noting the contributions Folau has made off the field.
"Israel Folau has been a terrific ambassador for our game in the past two years and his courageous decision to give AFL football a go has helped inspire many children, particularly in NSW and Queensland, to play and watch Australian football."
At the press conference announcing his decision Folau was unwilling to make any concrete decisions about his future.
"My future, at the moment, is uncertain and I still don't know what to do.”
Despite the uncertainty, Folau is widely tipped to return to the NRL and sign with the Parramatta Eels.]]>
AIG made headlines in 2008, when news of a credit downgrade put the company at risk of bankruptcy, and the U.S. Treasury responded with an initial $82.8 investment in the company. That investment, which bought the government a 79.9% stake, increased to $177.6 billion as the rescue proceeded.
The U.S. investment in AIG has returned a profit of $14.6 billion so far on share sales of $189.7 billion, and stands to generate an additional $7.9 billion profit on its remaining shares.
As the government’s stake has been sold, AIG has been one of the shares’ major purchasers, investing almost $13 billion since May 2011.
In announcing the most recent sale, Robert Benmosche, AIG President and CEO, said, “Everyone at AIG is deeply proud that we kept our promise to make America whole plus a profit.”
“I believe where we stand today is a testament to the strength of the AIG franchise, to the faith of our employees, customers, partners, and stakeholders,” he continued, but the AIG franchise, like the AIG brand, has not always been a blessing for the company throughout its areas of operation. AIG Australia was put at risk of losing significant business when the spotlight was on the troubled American operation, despite the fact that the company’s Australian arm was separately capitalised and regulated under the more stringent standards of the Australian Prudential Regulatory Authority.
In addition, AIG’s problems stemmed more from its forays into real estate and mortgage lending than from its core insurance operations.
By focusing on a more local perspective, AIG Australia weathered the storm, retaining 90% of its customers through the crisis, and the company is ready to resurrect the AIG brand, which had been replaced by Chartis for worldwide general insurance operations. Chartis Australia CEO Noel Condon told insuranceNEWS.com.au that the Chartis brand will be retired now that the U.S. government no longer holds a majority of AIG’s shares, referring to the rebranding as “independence day” for the company.]]>
The report notes that, while no business is immune from fraud, the insurance industry is second only to major banks in terms of vulnerability. Policyholders were responsible for 80 percent of the fraud experienced by insurance underwriters, but the report acknowledges that people “external to the insurer,” including policyholders, sometimes collude with insiders to perpetrate the fraud.
KPMG notes that “insurance fraud” encompasses many different activities, all having in common “some form of manipulation of an insurance claim in order to obtain a financial advantage.” Within that broad definition, fraud can include a false or inflated claim, and it can be part of an organised criminal enterprise or an opportunistic event, but the most common Australian insurance fraud is the exaggerated personal claim.
Relying on data from the Association of British Insurers (ABI), KPMG reports that inflation of claims by individuals is both the most common and most costly general insurance fraud, followed by frauds in which the claim has been entirely fabricated.
While businesses surveyed claim to detect one out of every three frauds, KPMG asserts that the real rate is significantly lower. At the same time, the report commends insurers for improving their detection rates, an improvement attributed to the use of dedicated fraud teams, better application of technology, better interviewing techniques and increased awareness.
KPMG acknowledges that “as long as there is insurance there will be insurance fraud,” but it offers a series of recommendations for deterrence, relying on data from a 2010 ABI study. Most opportunistic frauds are committed because the financial position is seen as unfair, and fully 40 percent of people find it acceptable to inflate claims, while only 5 percent can accept complete fabrication. In addition, only 8 percent would blow the whistle in the event of fraud, even though 80 percent are aware that the costs of fraud are borne by all policyholders. Despite that finding, the imposition of those costs was seen as the primary motivation of whistle-blowers.
KPMG sees the situation as “an opportunity for insurers to educate customers about insurance fraud,” an opportunity that could well be seized by insurance brokers, the industry professionals who are in the best position to have a personal influence on their customers.]]>
The study notes that these insurance levels were in effect even though insurance was often provided as a benefit of employment.
In addition, MetLife questioned the adequacy of levels of cover when insurance was in place. For employees with or without children, life insurance cover generally represented approximately three times the amount of annual household income.
According to MetLife Group Life Products Vice President Stephen Pontecorvo, people may not fully realise the need to increase cover when circumstances change: “Marriage is a significant life event, and clearly, couples recognize the importance of putting life insurance on the to-do list. However, as busy as couples are when children arrive, it is critical to take the time to increase their life insurance protection because the number of dependents relying on their incomes has also increased.”
World Financial Group (WFG), a financial services company operating in Canada and the United States, responded to the MetLife study with a statement that emphasised the importance of keeping insurance current as family circumstances change. "It is important for families to understand how critical it is to re-evaluate their life insurance coverage for every significant life event," the statement said. “Families should not only re-evaluate their life insurance needs, but they should do so as promptly as possible."
The study also revealed that some 60 percent of married people with children are not very confident about making correct financial decisions for their families. MetLife sees that lack of confidence as one reason that insurance cover might not keep pace with family needs. In addressing ways to counteract this lack of confidence, the company pointed to the ready availability of a variety of tools that can calculate insurance needs, along with the value of good financial advice.]]>
But showing a willingness to learn and a positive attitude from week to week, the Giants came away with two wins in their first season. The team had only to wait until round 7 for their first, beating the league’s sophomore side, the Gold Coast Suns, by 27 points at home.
It took until round 19 for their second win, where the young team defeated the hapless Port Adelaide by 34 points in a powerful performance at home. The win marked another milestone for the fledgling club, being the first time recording a score over 100 points. It was also a historic game for coach Kevin Sheedy, marking his 1000th match as a player and coach.
On an individual level though the youthful team were expected to spend much of the season finding their feet, there were standout players in a list, which with experience, looks like it will be dangerous.
Co-captain Callan Ward dazzled in the midfield, averaging over 24 disposals per game, and was awarded the Kevin Sheedy Medal as the club’s best and fairest. Toby Greene, who would have been favourite for the NAB Rising Star Award were it not for his suspension, also had a great season.
Other players that made their mark were Jonathan Giles, Jeremy Cameron, Stephen Coniglio, Tomas Bugg, Adam Treloar and Devon Smith.
With such a broad range of young talent, the signs are good for the coming years.
Of course, it wasn’t all good news. High profile code convert Israel Folau failed to prove his worth, but given his recent introduction to AFL, it will take some time for him to adjust. His performances towards the end of the year showed promise and he will be looking to build on them in the coming season.
The departure of assistant coach Mark Williams to Richmond was a blow to the young team, but with Kevin Sheedy still at the helm, things still look secure.
Having settled into the AFL, expect even better results from the Giants in 2013 when the young players will be bigger, more experienced and more able to live up to their club’s name.]]>
By 1924, he had returned to England and joined Guardian Assurance. The elder Cleese was the company’s top salesman, and the reason for his success was simple. “He was a kind and decent man and all the solicitors and bank managers in Somerset liked and trusted him,” Cleese writes.
As a result, they were happy to refer their clients. Cleese provides a sample of the kind of recommendation that would introduce customers to his father: “Oh, give old Reg Cleese a call. He won’t try to sell you too much.”
With that background, it is no surprise that Cleese grew up with the unwavering conviction that insurance represented a “good thing,” but that belief, he says, has only been strengthened by the realisation that life is full of the unexpected.
While his fondness for insurance continues, he does have some unkind things to say about two other parts of contemporary life.
The first is the business guru – or, as Cleese would have it, the “complete prat” – who counsels us to “expect the unexpected.” To Cleese, this advice is not useful: “The moment you expect the unexpected, it ceases to be unexpected. It is now expected, and so becomes exactly what you are expecting.”
With the unexpected lurking around every corner, “the only way to sleep at night is to get insurance,” according to Cleese.
The second object of the author’s displeasure is the American medical establishment. Cleese recommends that travellers take special care to be adequately insured when visiting the United States, “where becoming a doctor is a quicker way to inconceivable wealth than starting a hedge fund.”
Of course, nothing is perfect, and Cleese does suggest that insurers consider his one suggestion for improvement. “I wish insurance companies would offer a policy that would cover me in the event of my forgetting to take out a policy,” he writes. ”That would bring real peace of mind.”]]>
The insurance industry is by no means immune. In the British market, quote aggregators spend more on TV advertising than the insurance companies themselves, and aggregators account for some 25% of transactions. By 2008, according to EMB Consultancy, now part of Towers Watson, aggregators were originating 40% of new UK motor policies and their share was growing.
Australia has yet to experience that level of market penetration by aggregators. According to Insurance Business magazine, comparison sites account for less than 2% of Australian transactions, but that may change given the aggressive growth strategies of many aggregators. In 2011, the Sydney Morning Herald reported that, according to an internal JP Morgan study, “the growth of ‘online aggregators’ poses the ‘greatest risk’ to insurers’ commercial premiums,” estimating that commercial and personal insurers could lose $1.8 billion in premiums.
Brokers are understandably concerned that a new regime of online price comparison will cut into their business, but Kuiper, in an interview with Insurance Business, said that their concern was unduly pessimistic. “It is a common misconception that the massive growth of price comparison sites in the UK has led to the demise of the brokers,” Kuiper said.
Kuiper points out that, even in the face of aggressive growth by online aggregators, brokers were increasing their market share. He attributed that success to the willingness of brokers to engage with the new process. “British brokers played an active role on price comparison sites themselves,” he said.
In vehicle insurance, an area of particular strength for aggregators and, to Kuiper, “the most important online price comparison market in the UK,” brokers are still strong. “Panel providers account for around 35% of all aggregator sales,” he said.
“The imminent growth of price comparison sites in Australia need not necessarily mean massive loss of market share by the brokers,” according to Kuiper, although he acknowledges that, while some brokers have profited, others “have learned harsh lessons.” He sees the British experience as a lesson that should be studied by Australian brokers.
The gist of that lesson is simple: “One thing that brokers in all markets around the world agree on: sticking your head in the sand is not an option.”]]>
APRA proposes to apply the same product categories to reporting that it proposes for the industry in general, with life, income protection and TPD insurance reported separately. If an RSE provides a bundled product like combined life and TPD cover and does not impose a separate charge for each, that product can be reported as a bundled offering. APRA also makes provision for a transition period in which there may be a product that does not fit within the proposed three-part structure, in which case the RSE will report “other insurance” as a separate category.
According to APRA, the existing reporting regulations do not enable it to make a meaningful comparison of insurance costs with benefits, as insurers are not currently required to report rebates and premium expense separately. To remedy this deficiency, RSEs will be called on to report those items separately and to break down the numbers for each type of insurance they offer.
Claims experience will also be reported, and APRA proposes six categories of claim that it expects an RSE to monitor: reported but not admitted; admitted but unpaid; paid in whole or in part; denied; disputed; and deferred.
In addition to reporting on policies in place and details of cover, RSEs will have to report on premiums and include information about the source of premium payments.
RSEs will also be obliged to provide details about policyholders in several categories. They must report premiums for insureds at ages 30 and 50, considered representative ages, and furnish data on risks and occupations among all policyholders.
With the exception of certain very small superannuation funds, APRA envisions a regime in which RSEs provide unaudited quarterly reports and audited annual reports.
Industry participants who wish to comment on the proposals must submit materials to APRA no later than 16 November. The final reporting standards are expected to be published in the first half of 2013 and to go into effect on 1 July of that year.]]>
The company has enhanced its trauma definitions for melanoma and breast cancer, allowing benefit payment for decreased level of melanoma invasion and for breast cancer that involves surgery and specific post-surgical therapy.
Zurich has also improved ratings for occupations in mining and engineering and has added 34 new occupations to its ratings, a change that the company hopes will provide for more certainty for advisers and their clients and increased efficiency in the application process.
Income protection cover has also been revised. Zurich’s Premier Income Replacement product now includes a future insurability option for both new and existing policyholders at no additional cost. Agreed value and indemnity Income Replacement cover are now issued in a single policy, a move aimed at increasing convenience for customers and allowing for “access to large sum insured discounts.”
In addition to providing future insurability to its Premier Income Replacement customers at no extra cost, Zurich has also reduced the cost of that feature to its comprehensive customers by 80 percent. Inclusion of that option, which would have meant a 15 percent increase in base premium in the past, now carries a 3 percent additional charge. In its announcement, Zurich made special note of the fact that the reduction will be automatically applied to existing policyholders who are already paying the additional 15 percent.
Philip Kewin, GM Retail, Life and Investments, put the enhancements in the context of Zurich’s “ongoing response to evolving market drivers.”
According to Kewin, “Two of our headline improvements relate to structural changes we are seeing in the marketplace, in terms of the evolving profile of the workforce, and the significant advances being seen in medical technology.”
Kewin said that the enhancements were examples of the benefit of Zurich’s “Upgrade Guarantee,” a feature that keeps benefits current for existing policyholders, in the face of product innovation as a driver of replacement business.
He pointed out that customers who had taken out policies as long ago as 1998, when Zurich’s Wealth Protection range was introduced, are obtaining the same benefits now offered to new policyholders. As a result, advisers can assure clients their benefits have kept pace with current offerings.
“Our Guarantee of Upgrade therefore takes the pressure off advisers, giving them the confidence that their existing customers will be upgraded to the latest policy benefits automatically,” Kewin said.]]>
Risk managers agreed that the most important factor was value for money, but they placed greater value on underwriting and business development manager support than on product features.
Macquarie Life Head Justin Delaney saw the results as confirmation of advisers’ focus on product innovation as a key to differentiating among providers. He characterised it as a client-driven focus. “It is clear that advisers are seeking more innovative solutions from insurers and we believe this is being driven by end-client demand,” Delaney said.
Delaney noted that such distinctions are of special importance in the “relatively homogenous” life insurance market. “Product innovation is an area where insurers can help care out a unique position in the market, and, importantly, offer advisers and their clients insurance solutions which best meet their individual needs,” he added.
According to Delaney, Macquarie Sumo and Macquarie Life Active are products that the company delivered in recognition of the need for new features. “It is clear that there is real appetite for products that introduce new features and offer real benefits to clients.”
The survey, in which IRM Research polled 345 IFAs, also asked advisers to rate Macquarie’s own performance. In terms of overall satisfaction, Macquarie was rated 8.1 out of 10, a score that the company says represents a continuous improvement over the five years in which the survey has been conducted.
Macquarie’s product features and benefits also scored 8.1 out of 10, and the company received 8.7 out of 10 for its ability to offer innovative products. Telephone and email support also received high marks, scoring 8.4, as did the willingness of staff to go “out of their way to help,” which scored 8.5.
Time and efficiency were also high on advisers’ list of concerns. According to Macquarie, advisers place a high value on a company’s ability to generate and finalise policies quickly during the application process, and on the responsiveness and availability of underwriters. In the latter category, the company’s tele-underwriting service was highly rated, with a score of 8.4. Its rating for fairness in assessing claims was even higher, achieving a score of 8.7.]]>
Canstar considers product value in relation to the different needs of people in each of the life stages:
Despite their accomplishments as overall winners, Canstar’s ratings make it clear that other companies excel in some categories. In the category of packaged life, for example, AXA receives Canstar’s highest rating when a product offering a stepped premium is evaluated in terms of the needs of a young male working in retail or in light manual labour. If that same person were female, AIA resumes its placement at the top of the ratings.
With respect to the overall winners, Canstar points to consistency “in the value they offer consumers through a network of financial advisers,” noting that the achievement is of special note in light of intense industry competition and constantly improving products.]]>
At the same time, Crewe asserted that those same challenges “could also see Australia taking a lead position in the global life market.”
Crewe also maintained that the increasing similarity between group products and retail products had the potential to cause complications in the market. Where group insurance was once a simpler product offered at lower cost, it has now become more sophisticated, a phenomenon that Crewe attributed to member retention campaigns launched by funds and to “greater alignment” between funds and advice practices.
AIA’s Group Insurance Summit was the inaugural meeting of what AIA says will be an annual event.
One new product, AMP Group Insurance, reflects the continuing evolution of group offerings.
AMP says that the offering combines the best features of the existing stand-alone products from AMP and AXA, both of which have now been closed to new members.
AMP Group Insurance provides Death and Terminal Illness cover, available immediately regardless of cause, along with Salary Continuance and Total and Permanent Disability cover, generally from the first day of work, when an employee cannot attend work because of an illness unrelated to employment.
The new product offers relaxed underwriting standards and is available with a minimum plan size of 10. According to AMP, “A low minimum plan size means AMP Group Insurance can fulfil the needs of small groups of employees and cater to the unique requirements of a selected group of employees within a bigger business.”
When plans have 20 or more members, AMP has removed underwriting requirements when benefits increase more than 30% over a 12-month period. The company expects that provision to cover such changes as increases in salary and the movement of members to full-time employment from part-time work.]]>
The Cancer Council notes that stress, sickness and cost are barriers to obtaining services. Many patients fall behind on bills, accumulate debt and risk the loss of their homes. "A diagnosis of cancer can be extremely traumatic and most patients are primarily concerned with getting through treatment," according to Karen Conte, Cancer Council Victoria's Support Service Programs Director. Despite that understandable shift in patients’ priorities, financial issues must be addressed. “Bills do add up and quite often patients have to work through some really important financial issues to make sure they and their family are properly protected during these difficult times,” Conte said.
In response, the program has enlisted the aid of AMP financial planners and Hillross advisers who will donate time and expertise at no cost to patients and their families. According to AMP, volunteers will advise patients on early access to insurance and superannuation benefits, budgeting and cash flow, managing mortgage issues, gaining access to Centrelink benefits, and planning for the future.
Advisers see the program as an opportunity to strengthen community ties while putting their expertise to good use. Mark O’Leary, an AMP planner based in Melbourne, describes his participation in the program as a rewarding experience. “If I can relieve some of this stress by helping to organise the family finances, I feel like I've made a positive and practical contribution to an otherwise difficult period,” he said.
Howie McQuarrie, whose wife is in the midst of treatment, received assistance from O’Leary and described the services he received as invaluable. "Without our financial planner's care and advice, some of our biggest goals for our children would have been lost," he said. "We can't express our gratitude enough to those who so generously supported us through this incredibly difficult time."]]>
According to AIA, those results may mean that SMSFs are failing to take advantage of available tax benefits, since pre-tax dollars may be used to fund cover when life insurance is held within their funds.
For 66% of those surveyed, lack of knowledge of life insurance was the main barrier to increased adoption of insurance cover within super funds. In addition, 21% of respondents cited the presence of cover outside the SMSF, 12% cited lack of access to insurance and 7% named cost as barriers to funds’ inclusion of life insurance.
Damian Mu, AIA Australia General Manager of Life Insurance, sees the situation as an opportunity for advisers to better serve their clients. “Providing education around insurance within an SMSF is a real value-add for advisers and accountants,” he said.
Mu called particular attention to revisions of the Super Industry Supervision Act that make the consideration of insurance in a fund’s investment strategy a requirement for trustees, a development that, he said, “reinforces the importance of the issue.”
Mu compared the situation with the more familiar problems associated with underinsurance in Australia. “The growing SMSF market is another opportunity for the industry to reopen the conversation and provide trustees with education on life cover to reduce the gap,” he said.
Looking ahead, the survey found that insurance was likely to become a more important part of SMSFs, with 82% of respondents predicting a significant increase in the number of clients incorporating life insurance into their funds within the next six to 12 months.
Mu said that AIA Australia is working with advisers to remedy the situation. Its efforts include the introduction of the Self-Managed Superfund Master Insurance Plan in conjunction with AGI, a product that offers “online access to insurance at competitive wholesale rates,” and which can, according to AIA, save as much as 20% on standard insurance offerings.]]>
Fittingly, it was Callan Ward - the man who scored the Giants’ first ever AFL goal - who registered their first vote. He polled one vote in GWS’s loss to the Adelaide Crows in round four. Ward finished with finished with five votes, polling in three separate games.
Jonathan Giles, the Giants’ versatile ruckman, finished with the teams’ biggest vote haul, collecting seven votes.
Toby Greene, Will Hoskin-Elliott, Chad Cornes, Stephen Coniglio and Luke Power all received votes during the night.
Though no one looked like threatening for the top spot, this isn’t unexpected, given the team is still developing their game and maturing as a group. Encouragingly, the team polled thirteen of their twenty votes from round nineteen onwards, as more match experience resulted in better play.
The Giants will undoubtedly build on this Brownlow experience in 2013. But this showing, in their rookie year, shows promising signs for the future.]]>
Total new life insurance business increased 6.7%, to $111 million for the year. According to Snowball, Suncorp will continue to focus on sales through independent financial advisers (IFAs) and on direct sales, decreasing its emphasis on group sales, all as part of its intentional strategic shift.
Sales through IFAs brought in $62 million of new business for the year, an increase of 10.7%, while the direct sales channel accounted for $30 million of new business, a 30.4% increase. Group new sales fell 61.5%, to $5 million, a decline that the company attributed in its presentation of results to “a decision to pursue only business that delivers an acceptable rate of return.”
In New Zealand, new life business rose 17%, to $14 million.
In its results announcement, Suncorp said that it expects growth to continue in both Australia, where direct life products are sold under the Apia, AAMI, GIO and Suncorp brands, and New Zealand, where it is represented by AA Life. It has also changed the name of its Asteron brand to Asteron Life and has launched Asteron Life Complete (ALC) in a move “aimed at building and maintaining a competitive advantage in the IFA market.”
ALC, according to Suncorp, has developed an improved technology platform and enhanced product features. The company has partnered with Colonial First State’s FirstChoice, which Suncorp calls “Australia’s largest investment platform,” in a move designed to better support the practices of advisers engaged in insurance planning in superannuation.
In the midst of these positive developments, Suncorp notes that the economic environment has put pressure on claims and lapses. According to the company, “Close management attention to claims and customer retention initiatives has mitigated some of this impact.” In addition, weakness in the investment markets has caused funds under administration to fall to $7.1 billion, a drop of 7.6%, while new superannuation business has declined 12%.]]>
Beginning in July 2013, the new framework will replace existing default options for superannuation investments. Products will have a set of features in common so that the performance of different offerings can be compared more easily.
According to Shorten, the Government introduced two amendments to the legislation, a move made in response to the concerns of stakeholders.
First, the date on which employers must begin to make mandatory contributions has been deferred from 1 October 2013 to 1 January 2014. “This additional three months will facilitate a smoother transition to the new regime for both employers and superannuation funds,” Shorten said.
Second, funds offering a “life-cycle investment strategy” can ask permission to charge up to four different investment fees. The original bill allowed the imposition of only one such fee. According to Shorten’s announcement, “This change will avoid cross-subsidisation between members in different stages of the lifecycle strategy.”
Shorten indicated that the Government would move the remaining MySuper provisions forward as soon as possible, but did not provide a specific timetable.
In addition to the two Government amendments, Greens Deputy Leader Adam Bandt offered an amendment designed to prevent “flipping,” the practice of moving a worker’s money into another, more expensive fund after a worker has left the workplace. Previously, this could be done without the worker’s consent.
In making a case for the amendment, Bandt called attention to a study by the Industry Super Network that found that 12 out of 13 large retail funds had engaged in some form of flipping. According to Bandt, the practice resulted in an additional cost of $300 per member each year, an annual increase of 30% over fees that would otherwise have been charged.
"By 'flipping' funds between products without permission, fees could have increased by up to 73%, so we needed to protect workers from this sort of gouging," Bandt said.]]>
“We are concerned that the quality of the products and of the business being written may be poor in some cases,” Laughlin said, pointing to expensive products and high rates of policy discontinuance as problems. Those problems, according to Laughlin, raise issues of governance and reputational risk. He also noted “issues with market conduct,” without further specifying, and indicated that APRA had been discussing those issues with ASIC.
According to The Herald, ASIC Commissioner Peter Kell sees nothing inherently problematic about direct insurance sales. However, Kell is concerned about whether consumers are receiving accurate and complete information from insurance advertising, especially if the consumer is not receiving the independent counsel of a financial adviser.
Kell is concerned that the advertisers’ emphasis on price comes at the expense of providing consumers with an adequate explanation of policy features. “In insurance, there can be critical differences in the scope of cover or items excluded from a policy,” Kell said, and those differences may not be clear when advertising focuses on comparisons in price.
Price-based comparisons may not reflect the true value of a policy for a given consumer. “Just because an insurance product is cheaper doesn't mean it's the right product for you,” Kell added. ''As with all comparison advertising, ASIC would be concerned if the comparisons were being made between products that weren't similar.”
ASIC’s interest in direct sales may have been inspired by its recent study of funeral insurance. That study found that consumers were often inadequately informed about policy costs and benefits, especially given the public's confusion about distinctions between prepaid funerals, funeral insurance and funeral bonds, all of which have been marketed simply as “funeral plans.”
According to Kell, over the past two years ASIC has caused advertisers to withdraw or revise approximately 120 ads because they were unclear or inaccurate.]]>
Ashton cited “changing work patterns, family structures and business practices, as well as ever improving medical care” as the forces motivating AMP to make several specific enhancements to the FLP product line.
The company has made it easier to increase cover under FLP’s Guaranteed Future Insurability (GFI) provision, a feature that no longer requires insureds to provide evidence of their medical status. According to Ashton, “In a world where not every client will be getting married in the traditional sense, we’ve adjusted our GFI feature to allow de facto couples to increase their cover more easily.” Ashton sees the change as an enhancement that will be of particular value for people at times of key life events, like “having or adopting a child and becoming a carer for the first time.”
AMP has also adjusted the Income Protection and Temporary Salary Continuance features of GFI to accommodate a wider range of insureds. Previously, medical issues could make customers ineligible for those features, but perfect health is no longer a prerequisite.
In addition, AMP has expanded its trauma definitions under FLP, adding enhancements that cover hypertension, lung disease and Alzheimer’s disease, a move designed to offer insurance that better reflects modern medical practice.
Ashton singled out AMP’s enhancement of its melanoma definition so that earlier stages of the disease are covered. The change was made in light of the incidence of melanoma in Australia, which Ashton said was among the highest in the world.
In addition to those substantive changes, AMP has also simplified FLP’s financial and medical underwriting requirements. For most financial questionnaires, AMP will no longer require the signature of an accountant, and medical requirements will no longer include the need for examination by a medical specialist.
According to AMP, the changes will apply to new and existing insureds under three of the company's lines: Flexible Lifetime – Protection, Flexible Lifetime – Super, and Flexible Lifetime – Flexible Protection.
For more information about these products:
In Australia, where insurance operations are the province of CBA Wealth Management, net profits decreased 11% to $569 million, a drop attributed to weakness on the global investment front. Inforce premiums, however, grew 20% to $1.97 billion. At CommInsure, new sales of retail life products grew 21% to $216 million, and premiums for wholesale life products grew 41%, reaching $651 million.
At the same time, lapses and higher claims cut into profits in Australia, with lapses in retail life up 29%. CommInsure posted income of $691 million, an increase of 11%, accompanied by a 3% drop in after-tax profit, which fell to $246 million.
According to Craig Dunn, CEO of AMP, the company’s underlying business is strong, with after-tax profits for the six months ending 30 June increasing 21%, to $176 million, over the equivalent period in 2011.
Both individual and group life premiums grew, with individual premiums up 7% and group premiums up 6%. Lapse rates also rose, however, from 11.5% to 12.9%, an increase the company attributed to a difficult economic environment. AMP’s overall profit grew 11% to $383 million.
According to AMP, integrating its AXA acquisition should be completed six months ahead of schedule and is now expected to generate benefits to the company that are $10 million more than originally forecast. At the same time, the cost of implementing My Super and Future of Financial Advice regulations, originally estimated at $52 million, is now expected to rise as high as $75 million.
ANZ did not detail its results, but CEO Mike Smith indicated that the bank was performing well, pointing to a 10.3% increase in after-tax profit, to $4.4 billion on an unaudited basis, for the nine months ending 30 June. Smith noted that the bank has benefited from gains in market share and increased productivity in its Australian operations. The bank announced that its OnePath division saw a slight decrease in revenue, but it did not offer specifics.
At NAB Wealth, unaudited quarterly results also improved. For the second quarter of the year, inforce premiums increased over the first quarter, and net profit reached $1.2 billion, while cash earnings were unchanged at approximately $1.4 billion. The quarter saw little change in net claims.]]>
Authorities are still investigating the moments that lead to the event but have found no evidence so far to suggest foul play. The Las Vegas coroner’s office is yet to identify a formal cause of death even with CCTV footage available. There has also been speculation that McCarthy may have been attempting to climb one of the palm trees that line the south driveway of the hotel.
McCarthy spoke to his partner on the phone hours before the incident where he was said to have sounded confused, distressed and wanted to return home.
Lifebroker, the official Life Insurance partner of the AFL and co-major sponsor of the GWS Giants sends its condolences and sincere regards to the family and friends of McCarthy.]]>
In response to that change, IRESS has enhanced the social media capabilities of the latest iteration of its XPLAN system. Social media first appeared in XPLAN 2.1, which was released at the end of 2011, but a new version enhances the product by giving advisers a window into a client’s entire online social world.
Before the new version’s release, it was difficult to deal with the sheer volume of information flowing through social channels, according to IRESS Senior Business Development Executive Michael Kinens. IRESS says that the latest release “allows advisers to see a complete history of everything their clients have tweeted, posted or blogged via various social media networks from within the client record in XPLAN.”
Provided an adviser has already established an online social relationship with the client, XPLAN incorporates social information into a customisable “Client Dashboard” within the system. At the same time, advisers can access social media for their own purposes through the system. According to Kinens, “Rather than having to go to each individual site, they can post, tweet or blog directly from XPLAN.”
“That’s a great step forward in terms of efficiency,” he added.
Kinens points to the story of David Rae as an example of the potential power of social media for advisers. A tweet from one of Rae’s clients alerted Rae, a financial adviser in Canberra, to the fact that a client’s daughter had a serious disease. Rae followed a link to the client’s Tumblr account, where he learned more about the situation. As it happens, the client had updated his policy a year earlier to include child trauma cover, but he had been unaware of that cover until Rae made contact. Rae was able to begin the claims process immediately, something that might not have happened so quickly had it not been for social media.]]>
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Macquarie Associate Director Fiona Mackenzie emphasised the need for brokers to recognise referrals’ importance before they can capitalise on their opportunities. Once that recognition is in place, brokers can commit to a focus on the referral side of their operations.
“The next step is to assess your existing and potential referral partners to ensure they are the right fit for your business, Mackenzie said. “You need to ask yourself if you connect well on a personal level and whether your offering fits strategically with their business model and client base.”
Mackenzie noted that brokers need to demonstrate a wholehearted commitment to the process and be willing to invest the substantial time and energy it takes to create and nurture successful partnerships. Formal arrangements, including joint ventures with referral partners, can be especially valuable, since they generate average profits that can be more than twice as large as those available through informal arrangements.
In addition to referrals, the report highlighted the importance of the Internet as a source of new business. As an influence on financial decisions, online research is second only to advice from family and friends, according to Mackenzie, and online leads have increased by one-third this year for larger companies.
Mortgage brokers had several other concerns for the future. A soft property market, declines in investor confidence and questions over commission levels were mentioned as concerns by 68%, 51% and 35% of respondents respectively. On the other hand, fully 73% of the brokers surveyed were optimistic about future business, with 76% expecting to see revenue growth over the coming year and more than one-third expecting that growth to top 20%.]]>
After the initial rise, share price continued to increase, reaching 55 cents, with trading volume well above average volumes for the past year.
Investor sentiment may well reflect the attitude of ClearView and its largest shareholder, Guinness Peat Group (GPG) of New Zealand, which holds 47.8% of the outstanding shares. Neither company showed much enthusiasm for the bid. For its part, GPG told The Telegraph that it put a higher value on its holding. "In GPG's opinion, the price offered represents a substantial discount to the fair value of ClearView Wealth Ltd and is wholly inadequate," a company spokesperson said.
Ray Kellerman, ClearView Chairman, advised shareholders to take no action with respect to their shares, promising that the company would carefully assess the offer before providing further information.
Market analysts reportedly see the bid as representing a 14% discount to ClearView’s embedded value, a measure applied to life insurance companies that adds together adjusted net asset value and the present value of future profits. That measure is generally regarded as a conservative indication, since it ignores the potential value of policies that may be sold in the future. Similar recent deals, according to analysts, involve bids made at premiums of up to 140% of embedded value.
Since its beginning more than 20 years ago, ClearView has become a company with $3.1 billion under management and 60,000 insurance policies in force, operating through an extensive network of financial planners.
Crescent already controls 11.6% of ClearView’s shares, a number which includes the 4.3% held by Gary Weiss, formerly of ClearView, who has reportedly been tapped to lead the company should the bid succeed.
One analyst interviewed by The Telegraph, Stewart Oldfield, called the bid a response to a perceived lack of stability among ClearView shareholders. Oldfield also saw the move as a reaction to an Australian life insurance market that had become excessively consolidated. "We advise clients to view today's announcement as round one in a fight for a strategically significant life insurance capability in the Australian financial services market," he said.]]>
When the data is analysed using different variables, it becomes clear that there are a number of factors that influence actual salaries and that job titles alone are not dispositive.
For example, company size makes a big difference. For a broker working in a very small company, one with no more than nine employees, the median salary is $40,000. From there, salaries generally increase with the size of the company, although the progression is not consistent. Brokers at companies with from 50 to 1,999 employees report median salaries over $70,000 per year, but brokers at companies with 2,000 to 4,999 make only $52,694. At the top end of the range, however, the biggest companies pay the best. The median annual salary for brokers at companies with 20,000 to 49,999 employees is reported to be $101,184.
Geography is also an important influence on pay. Although PayScale does not break down its geographic data into specific job categories within the commercial insurance, it reports that, for all industry jobs, the median salary is $85,500 in Adelaide, but only $47,040 in Brisbane. Sydney, with a median salary of $70,110, is second to Adelaide in compensation, followed closely by Perth and Melbourne.
Unsurprisingly, earnings are also affected by experience. Those with one to four years of experience earn a median of $51,447. After 20 years, that number jumps to $77,419. Although each intervening level of experience brings with it a consistent increase in pay, PayScale reports that those with less than one year on the job make $60,000, more than the salary earned by people with one to four years in the business.
In addition, PayScale’s statistics show that a gender gap is very much in evidence in the industry. For men, salaries range from $67,565 to $115,951. For women, the salary range goes from $46,445 to $70,205, putting top female pay only slightly above the lower limit of male earnings.
PayScale collects its salary data from surveys taken by online visitors, and it should be noted that results for commercial insurance are derived from only 86 responses, a fact that may account for some potentially anomalous results.]]>
Speaking to those in their 20s, Justine Davis sees an excess of enthusiasm, combined with a lack of objectivity, as the cause of many failures. She acknowledges that it takes a certain unquestioning optimism to launch a new business or, for that matter, a new relationship, but wearing rose-coloured glasses should not blind young people to unpleasant realities. For business issues, Davies recommends turning to outside help. “You absolutely, definitely, without a shadow of doubt need independent legal and financial advice to do this properly as there is no generic correct way to set up a business,” she writes.
Bruce Bramall takes up the theme of optimism, this time directing his comments at Generation X. He agrees that those rose-coloured glasses are critical to generating the enthusiasm it takes to launch a new business or a new relationship, but he worries that members of this generation, particularly older members, pay insufficient attention to protecting what they have. “For those whose personal asset bases are substantial, protection becomes crucial,” according to Bramall. He recommends protecting assets through the use of a company or trust when a growing business is at issue. For relationships, he leans toward “binding financial agreements,” but acknowledges that these are not always easy to negotiate.
Bad planning and lack of protection are the bane of the baby boomers, according to Mark Bouris, and he emphasises the importance of insurance. Bouris recommends enlisting a financial planner to evaluate the adequacy of cover and an attorney to help with estate planning. “Life insurance, income protection, house and contents and TPD (total and permanent disability) are some of the most important insurances to look at if you're preparing for retirement,” Bouris writes.
To Kerrin Falconer, the retirement years are a minefield. He reminds readers that bad things can happen to retirees’ finances, especially when there is a new relationship in the picture. “Binding financial agreements or prenups may sound as if they are only for the young and silly, but they are also a good protection for the old and silly,” says Falconer. He recommends expert advice, review of existing documents like wills and powers of attorney, and separate bank accounts as ways to keep assets intact.]]>
According to Connective, regulatory compliance does not receive the attention it deserves. “Too often when our compliance team does a review on a broker’s files it is found that the compliance part of the process is an afterthought rather than part of the day to day procedures within the business,” according to an article posted on Connective’s website.
For mortgage brokers, there are two types of compliance duties. The Credit Guide, Credit Proposal Disclosure and quote are meant to inform consumers of the details of the proposed transaction. The Preliminary Assessment, however, is an analysis of the proposed transaction to determine if it will cause financial hardship for the consumer. Each of these steps must be taken at specific points in the loan application process.
Connective advises mortgage brokers to incorporate regulatory compliance into their regular business practices, rather than treating compliance as a separate duty to be dealt with after the fact. As a matter of best practices, it recommends that brokers automate the process to the extent possible.
At least one aspect of Connective’s assessment of the situation will be familiar to insurance brokers. Just as FOFA has been the subject of extensive deliberation and gradual implementation of some of its provisions, new mortgage regulations were subject to their own lengthy discussion periods. Mortgage brokers should not have been taken by surprise by an abundance of new regulations. “These processes should be second nature given that they have been discussed since July 2010, and implemented in their full capacity since October 2011,” according to Connective.]]>
NCI bases its index on “an aggregate of claims data, collection activity, underwriter credit limit decisions and overdue accounts.” The index, expressed on a scale of 4000 to 16000, now sits at 12464, its highest level since the third quarter of 2009, when it touched 14000. The index rose 3.5% from the first quarter to the second quarter of this year.
Kirk Cheesman, Managing Director of NCI says “NCI’s aim in producing the NCI Credit Index Score is to gauge not only the recent and current Credit Risks in Australia, but to assist companies in focusing on their credit risks in the near future and react accordingly.”
NCI announced that the quarter also saw an increase of 20% in the number of credit insurance claims, coupled with a 64% increase in those claims’ dollar value, saying that the failures of two large companies, Retravision Southern and Hastie Group, bore primary responsibility for the size of the increase in value.
Cheesman added “Credit Insurance as a credit risk mitigation tool is not widely known in Australia, hence the more focus on understanding the need to react to market conditions and to use mitigation tools such as credit insurance, is necessary in the current local and global environment”
Increased credit risk is also reflected in figures reported by the Australian Securities and Investments Commission (ASIC), which announced that total corporate collapses had jumped 13.1% for the year ending 30 April 2012. According to NCI, that increase is 8.3% above the number of collapses that occurred during the global financial crisis.
NCI supplements its calculations with anecdotal evidence of worsening conditions. A majority of credit managers reported that “days sales outstanding have increased with bad debts being incurred in the last quarter.” Those credit managers are pessimistic about the near future. “They believe difficulties in collecting payments from debtors will continue for, at least, the next three months.”
Some see trade credit insurance as a natural extension of an insurance broker’s existing offerings. When consulting with clients about their insurance needs, however, brokers often overlook credit insurance, while offering a full range of other products. Speaking to Insurance Business Online, Richard Wuff, General Manager of Trade Credit and Surety for QBE, said, “During that conversation it is a natural question to ask: ‘What about your trade receivables? Aren’t you worried about that?”
In a worsening credit environment, we may see businesses turn to sales as a source of capital, especially when existing assets are already heavily leveraged.]]>
In particular, Edmondson pointed to the fact that, under FOFA, ASIC can accept an adviser’s obligations under a professional code as an alternative to enforcing opt-in requirements imposed by FOFA.
Not all professional codes will necessarily qualify, and Edmondson expects the process of review and approval to take months to complete, given the care and rigour which ASIC intends to apply to the task.
In essence, a professional code must reach the same ends mandated by FOFA before it is approved, and ASIC will consider questions of compensation-related conflicts and the “best interest” test in analysing the adequacy of codes that come under review.
ASIC draws its power to review and approve codes from Section 1101A of the Corporations Act, and, according to Edmondson, the Act underscores the gravity with which codes are assessed.
Part of that assessment, she said, is a consideration of the enforcement and review mechanisms that are inherent in a given code. The burden of satisfying ASIC as to the adequacy of those mechanisms lies with the applicant. As part of the approval process, applicants must also show that a code was developed in consultation with consumers and other interested parties.
The key determinant of a professional code’s adequacy, however, is the extent to which it reaches the same end as the FOFA opt-in requirement. “We’re talking about engaged retail clients who receive value services for the ongoing fees that they pay,” Edmondson said.
ASIC does not expect to be in a position to begin accepting applications until early in 2013, according to Edmondson, given the work that remains to be done. It plans to begin consultation in October and hopes to have its final policies in place by the end of 2012, at which time review of proposed professional codes can commence.
While ASIC forges ahead with its FOFA work, the Federal Opposition has raised questions about two important members of the ASIC team, General Manager Nick Coates and Commissioner Peter Kell. Both men worked for the Australian Consumers Association, now renamed “Choice,” an organisation that was heavily involved in lobbying in advance of Parliament’s passage of FOFA legislation.]]>
Results were not consistent throughout the nation. Prices for both new houses and established houses rose in Sydney, Brisbane, Adelaide, Perth and Darwin, but fell in Melbourne, Hobart and Canberra. The Sydney market for new houses was strongest, with prices rising 1.1%. For established houses, Darwin, with a rise of 5.1%, was the strongest market by far. Its closest competitor, Sydney, saw an increase of 1.4%.
Prices for new houses fared worst in Hobart, where they dropped 1.7%. In Canberra, prices for established houses fell 1.3%, making it the weakest of the markets studied.
“The fundamentals of Australia’s housing market remain very strong - rents continue to grow at a rate well above headline inflation, rental vacancy rates are tight, and Australia’s unemployment rate remains the envy of the developed world,” Harvey said.
At the same time, the HIA report includes a reminder that prices “remain down 2.1% on prices of one year ago.” That reminder is more in keeping with the HIA’s report of 26 July, when it described “persistent and widespread home building weakness.”
The July report based its conclusion on the increase in the availability of skilled labour, a sign that residential construction activity was lagging. To reach that conclusion, the HIA surveys its members across 13 trades to determine their availability. According to those responses, trades for the June 2012 quarter were in a state of “moderate oversupply,” with a value of .20, while the HIA Trade Prices Index fell 0.7% for the quarter. On an annual basis, trade prices rose 0.1% from June 2011 to June 2012.
Harley Dale, HIA Chief Economist, noted that trade availability was at a high point. “A synchronised decline in new home building and renovations activity in 2012, which sees the former sector back in recession, is reflected in the highest availability of skilled labour reported since the HIA trades survey began in 2002,” he said.]]>
Looking ahead, Richardson expected strong growth to continue, although he tempered that optimism with a mention of two continuing concerns. First, conditions in China and Europe will have an effect, but the Australian economy will thrive so long as those conditions do not deteriorate beyond the level already predicted. Second, much of Australia’s growth has been the result of “a striking investment boom,” and that boom will not last forever.
“The peak of the project pipeline is already in sight, meaning the key prop to the faster part of Australia’s two speed economy is looking less certain the further out you look,” Richardson said.
Despite that, resource projects, along with strong consumer spending and a strong dollar, continue to bolster the economy.
Richardson noted that not all sectors were exhibiting the same strength, but that some were exceeding expectations.
The financial sector has been one of those outperformers, according to Richardson, and Deloitte includes general insurance among the bright spots in finance.
Rick Shaw, Deloitte Access Economics General Insurance Partner, told insuranceNEWS.com.au that, while issues of affordability remain troubling, growth in general insurance has continued. Looking ahead, the industry should remain aware of several potential obstacles to continued growth.
Among those obstacles are the risk of an economic slowdown and the impact of new regulations, especially those that impose new capital requirements on insurers. According to Shaw, increased capital requirements, especially the horizontal insurance obligation expected in 2014, may cut into insurer profits.
On the topic of affordability, Shaw noted that insurance became unaffordable for some when insurers improved their rating systems following recent natural disasters, an improvement that led to premium increases.
More generally, financial considerations have created affordability problems for many people. “The two-speed economy effect is being seen as rates of underinsurance and non-insurance increase at lower socio-economic levels,” Shaw said.]]>
Loan-to-value ratios reflected the first-time-buyer trend, increasing from 66.9% in June to 67.7% in July, consistent with the tendency of new buyers to borrow a greater proportion of property value. July also saw a corresponding increase in the proportion of introductory loans, which jumped from the previous month’s 2.9% to 5.4%.
AFG attributed the changes to a combination of market trends. ''Low interest rates, soft property prices and escalating rents create a powerful cocktail of incentives to get people into the property market,” according to General Manager of Sales and Operations Mark Hewitt.
The company also reported that variable rates continued to outnumber fixed rates by a wide margin, with fixed-rate loans accounting for only 16% of the market. In the refinance market, non-majors lenders increased their share from 22.9% in June to 26.7% in July.
AFG, which claims 20% of the brokerage market in mortgages, reports that its business grew some 30% in its last fiscal year and that it plans to build on that growth. Malcolm Watkins, AFG Executive Director, has announced that the company plans to list its shares on the market and that an IPO steering committee is already in place. “We will list in the first quarter of next year,” he said.
AFG has also announced that it is in the process of expanding its offerings beyond mortgage brokerage, moving into insurance and other financial services, and that it has enhanced the training of its 2500 brokers to prepare them for the company’s coming metamorphosis into a full-service financial entity.]]>
Speaking to insuranceNEWS.com.au, an unidentified spokesman for Munich Re Asia said, “With his extensive experience, Mr Francis will be instrumental to support the variety of research and development propositions we are planning to bring to the Australasian market.”
Francis will be joined in Munich Re’s Sydney office by William Monday, who will serve as Manager Underwriting and Claims. He was recruited from CommInsure, where he had worked as Chief Medical Officer since 2009. Prior to joining CommInsure, he worked in Africa, first for Southern Life and later for Hannover Life Re Africa.
According to the same spokesman, “Mr. Monday brings to our company a wealth of insurance medicine expertise along with a proven track record as CMO, within both insurance as well as reinsurance.” According to Monday’s LinkedIn profile, he will manage a team of underwriters and analysts in the company’s life operations, where he will be “working closely with the various R&D and actuarial divisions within the Life company.”
Munich Re was founded in 1880 and operated as a reinsurer through much of its history. Its international operations, which had begun at the turn of the 20th century, were terminated following World War II, but it was allowed to resume international operations in 1950. It had opened 65 offices outside Germany by 1989. Throughout its history, it increasingly supplemented its traditional reinsurance business with primary insurance.
Today, the company identifies itself as an integrated insurer, operating “in all lines of insurance,” according to a July press release. Its ERGO Insurance Group, the company’s primary insurance line, is offered in more than 30 countries and produced more than $23 billion in premium income in 2011. Across all lines of business, including reinsurance, 2011 premium income came to $58 billion, generating a 2011 profit to the company of almost $830 million.]]>
At the end of July, however, in a move that was apparently a surprise to anyone outside the upper ranks of Ten management, “The Circle” was cancelled. The cancellation was characterised as a cost-cutting measure, but those involved, including Stynes, were utterly unprepared.
The day before the cancellation was announced, according to Stynes, she was looking for income protection insurance. “The unfortunate thing is I didn’t end up buying the income protection insurance,” she said.
That scenario is all too common. Insurance industry experts have frequently expressed concern about insurance levels in Australia, seeing underinsurance as a chronic problem that is perennially in need of improvement. Income protection insurance is often among their top concerns.
The way in which “The Circle” ended is not unique to the media business or to the lives of celebrities. Many people are taken by surprise and fail to consider income protection insurance until it is too late. Whether or not people are functioning in the rarefied atmosphere of television stardom, incomes can be lost because of injury or illness, or because of redundancy, at any time, and many of us receive little notice when those things happen.
In the case of Stynes, there was little time to linger after the news was announced. The show was given one week in which to wrap things up, at the end of which the stars and the supporting cast would go their separate ways. That includes a reported 25 staff members who would join the ranks of the unemployed. We can hope that there were some among them with insurance brokers who had convinced them of the value of the right kind of coverage.]]>
Barron acknowledged that the London location does give brokers an advantage, one that stems simply from the proximity of insurers. He also raised the issue of cancellation insurance, one type of cover recommended by the Olympic Committee’s own broker, Marsh. The importance of that coverage was underscored by the natural disaster that preceded the 2011 Rugby World Cup, hosted by New Zealand. Approximately one year before World Cup play was scheduled to begin, an earthquake damaged the stadium in Christchurch that was slated to host seven games. Those games had to be relocated, but the tournament was able to proceed.
In addition to cancellation insurance, Marsh recommended a full menu of coverage for businesses that could be adversely affected by disruptions related to the Games. In addition to cancellation risk, Marsh advised that businesses insure against non-appearance, the unexpected cost of prizes, over-redemption of product promotions and the cost of performance-based sponsorship contracts. In all of its recommendations, it emphasized the importance of managing exposure by limiting the potential cost of known risks.
At Aon Risk Solutions, Director Lori Shaw saw reason to be optimistic about capacity. She did not think that bringing the Olympic Games to a large city like London brought exceptional risk on the basis of geography. It did, however, mean that the host city was a densely populated area that contains an inevitable abundance of insureds. That circumstance, regardless of location, tests the willingness of insurers to take on large shares of the risk.
According to Shaw, however, the situation has improved in recent years. Speaking to Insurance Business, Shaw said, “Capacity is always a problem close to the event. You pay a premium for it. That said, capacity is better now than it was post-9/11, especially on the issue of terrorism.”]]>
The second most popular response, offered by 32% of survey participants, was that consumers mistakenly believe that the services of a mortgage broker “come at a cost.”
The reality, according to Loan Market spokesman Paul Smith, is that mortgage brokers are able to find better deals for their customers because brokers can interact with several lenders in order to negotiate the best deal. That capability allows brokers to discover better options than consumers can find on their own.
Quoted in Loan Market’s press release, Smith likened the process to comparison shopping: “The best way to find out if you have a good deal is to go to the market and compare what is out there. It is no different to shopping for any other product. If you don’t shop around the chances of over-paying are very high.”
According to Smith, customers who only investigate their primary financial institutions are likely to miss out on more the advantageous deals that a broker, with several funding alternatives, can uncover.
In addition to the two most popular answers, 21% of the brokers surveyed reported that consumers’ biggest misconception was their belief that mortgage brokers “only offer home loans.”
Despite those misconceptions, Smith noted that borrowers are now relying on mortgage brokers to obtain almost half of all Australian mortgages. Lenders and banks have begun to recognise the importance of the broker network to the mortgage industry, Smith said, because of the sheer number of customers and because “there are no fixed costs associated with brokers, such as a branch facility.”
Loan Market describes itself as “Australia’s largest independently owned retail mortgage brokerage,” with annual loan settlements valued at over $7 billion and a network of more than 600 brokers in Australasia.]]>
Kilpin thanked the FSC for inviting industry comments on the paper, expressing the hope that it would allow for “a bigger picture debate.” At the same time, he said that the FSC’s focus on churning was misplaced. “Churning is rare and limited to a few isolated advisers,” Kilpin said, not a systemic problem.
He therefore recommended that attention be focused on the few advisers who churn and that, once the practice was more clearly defined and the extent of the problem measured, insurers should be involved in eliminating the problem. In part, he said, the application of the Best Interests Duty, incorporated into reforms included in the Future of Financial Advice (FOFA) legislation, would highlight the importance of identifying material benefit to the client when clients change policies.
The AFA’s response included several specific suggestions:
To address churning, FOFA would require commission refunds for policies terminated within two years of origination and limitations on commissions when clients change policies within five years. Kilpin hopes that the FSC paper will open the door to meaningful collaboration among industry participants, resulting in “better outcomes for consumers and a better deal for all stakeholders.”
He reaffirmed the conclusions of the AFA’s 2011 research report, “Risking Everything,” which underscored the importance of advisers in helping clients to make the best financial decisions. That role, according to Kilpin, is particularly important in today’s insurance environment, an environment characterised by chronic and widespread underinsurance. When consumers have the benefit of reliable advice, he said, “Their levels of cover are more realistic and they better understand the benefits of cover.”]]>
Plan for Life divides the market into three sectors: group risk, individual risk lump sum and individual risk income. Group risk demonstrated the strongest growth, rising 15.4%, with premium inflows of $3.6 billion. Individual risk lump sum rose 9.9%, with premium inflows amounting to $5.1 billion. Individual risk income grew 10.5%, with premium inflows of $1.9 billion. As a whole, total risk premium inflows totalled over $10.6 billion for the three sectors combined.
For the previous year, the period ending 31 March 2011, premium inflows increased 10.5% year over year.
Among the major companies, AIA Australia reported the strongest growth, with an annual increase of 33%. Comminsure was in second place, with growth of 20.8%, followed by BT/Westpac at 15.5% and TAL at 15.3%. Only one of the large companies saw its premium inflows decline. Suncorp’s inflows fell 9.2% after rising 7.4% in the previous year.
In terms of market share, the positions of the major companies were largely unchanged. With 15.7% of the market, AMP had the largest share, a position it had held the previous year, when its share was 16.1%. National Australia/MLC Group was in second place, with a share of 14%, followed by Comminsure, at 13.4%, and TAL, at 13.1%.
The greatest increase in overall sales, a remarkable 458.2%, was reported by MetLife Insurance, but Plan for Life notes that this exceptional growth was “off a very low base.” AIA showed the greatest growth among other companies, with overall sales rising 105.2%. Other strong performers in the category included AIA, with an increase of 105.2%, Comminsure, with an increase of 66.1%, Suncorp, with an increase of 33.7%, and BT/Westpac, with an increase of 24.4%.
Plan for Life also offers a report of annual results from 2003, although it does not separate those results by company prior to 2010. Taken as a whole, life insurance risk market inflows have more than doubled since 2003, growing from slightly less than $4 billion to a 2012 total that exceeds $10 billion.]]>
At the same time, according to the interview, Fabris sees potential drawbacks in certain situations. For one, he acknowledges that the practice of rebating up-front commission may mean that the client pays no premium when the policy is inaugurated. When next year’s premium is due, the unexpected news comes as an unpleasant surprise.
In the interview, Fabris also addressed the choice of compensation mode in different types of claims. Speaking of the fee-for-service model, he acknowledged that compensation in the form of a percentage makes sense when the claim is paid in a lump sum. When claims are paid in a series of smaller, ongoing payments, however, as is typical of income protection policies, he questioned the utility of the fee-for-service model. In that case, according to Fabris, those payments become an unnecessary burden for clients. With that in mind, Fabris argues that the commission approach works best for clients, who would prefer to avoid making “extra payments” to their advisers, and for advisers themselves, since the client relationship could be harmed when the adviser collects a fee during the claims process.
Commission rebates have additional pitfalls, according to Chris Wookey, Director of Taxation Consulting at GMK Partners, this time arising from their tax consequences. Wookey, in another interview with insuranceNEWS.com.au, said that a rebated up-front commission would not qualify as a deductible expense. Instead, it would constitute income taxable to the client.
Wookey did not think it likely that a rebate would adversely affect the client’s tax bracket. Instead, the problem arises when the additional income affects the client’s qualification for programs that are subject to strict income limitations. To the extent that the additional income is unexpected, Wookey worried that its disqualifying consequences would not be detected until it was too late.
Wookey also noted that the problem does not affect trail commission, since that rebate can qualify as a fee for continuing review of tax matters on the client’s behalf.]]>
After-tax profits for individual disability income amounted to $54 million, with $46 million drawn from ordinary business and the remainder from superannuation business. Total revenue came to $450 million, of which $38 million came from superannuation and $412 million from ordinary business.
Both previous quarters were marked by losses in individual disability insurance, although those losses became smaller as the year progressed. At the end of December 2011, the quarterly loss came to $29 million, a significant improvement over the quarter ending 30 September 2011. For that period, the loss amounted to $97 million.
Group disability income recorded a combined loss after tax of $6 million on revenues of $171 million. Ordinary business accounted for much of the result, showing a loss of $8 million on $56 million in revenues, while superannuation business showed an after-tax profit of $2 million on revenues of $115 million.
The APRA report highlights a number of statistics for the industry as a whole, beginning with a 4.1% decrease in net profits after tax for the year ending 31 March 2011, with profits dropping from $2.69 billion to $2.58 billion. For the quarter, net profits rose over the December 2011 quarter by 0.4%, increasing from $723 million to $726 million. Profits were lower in comparison to results for the equivalent quarter in 2011, however, when net profits after tax came to $771 million.
Although annual expenses for the industry dropped to $16.3 billion from $21.4 billion, weakened profitability may be largely explained by an even greater drop in revenue. For the year ending 31 March 2012, total revenue amounted to $19.84 billion, a decrease of $5.83 billion compared to the year ending 31 March 2011. However, quarterly revenues increased from their December 2011 level, growing to $13.98 billion from $8.06 billion, and revenues for the current quarter exceeded those of a year ago, when total industry revenue was reported at $8.95 billion.]]>
Pointing to increased sales in September and December 2011, Dexx&R puts annual sales of new disability insurance at $425 million, a 15.5% increase over the past year’s results. Three companies posted increases above the market average: OnePath increased sales 17.5% to $69 million; CommInsure sales rose 15.9% to $54 million; and TAL boosted its sales to $61 million, a noteworthy 59.6% increase. All three companies were counted among the five leading companies in the sector.
In-force policy premiums grew as well, posting a 9.8% increase and premium income of $1.85 billion, a rate of increase equal to the rate for the 12-month period ending 31 March 2011.
Individual lump sum risk, a category that includes term life, trauma and total permanent disability, also fared well. Sales rose to $1.15 billion, a 12.3% increase for the period. Among the leaders were AMP/AXA, with a 10.6% increase to $210 million, CommInsure, with a 9.5% increase to $183 million, OnePath, which increased sales 10.2% to $163 million and TAL, where sales grew 10.4% to $140 million.
Three companies, all among the top five, posted increases in in-force business that exceded the market average. CommInsure grew 9.9% to $698 million, OnePath grew 12.6% to $612 million and TAL grew 11.7% to $526 million.
New group risk sales were reported at $990 million, a remarkable 689.7% increase, but Dexx&R cautions that this exceptional result may be attributed to the fact that group policyholders, especially industry funds, make large premium payments that can lead to “significant fluctuations” in reported new premium income for the sector as a whole.
Results for in-force group risk, however, are less subject to those fluctuations and still showed strength. Business increased to $3.3 billion, a 14.4% increase, and three companies among the top five were able to post increases above the average. AIA Australia, the market leader, saw a 38.7% increase to $871 million. TAL reported a 17.8% increase to $697 million. CommInsure posted an increase of 49.2% to $492 million.]]>
The survey, which beyondblue called “the first of its kind” in the country, posed 28 questions to 495 respondents, collecting information about age, employment, location, type of mental illness and respondents’ experiences with life, disability, private health and travel insurance.
Of those respondents, 36% reported that they had been denied life insurance and 45% reported that they were unable to obtain income protection insurance.
Those respondents who had not been declined faced further hurdles, either in the form of increased premiums or in the form of policy exclusions. For life insurance, 25% of respondents received policies from which mental illness was excluded, while 24% were offered coverage at a higher cost. Only 20% were offered coverage at standard cost with no exclusions.
For income protection insurance, 34% of respondents received cover with exclusions and 16% were insured at a higher premium. Only 8% were able to obtain coverage without exclusions and without higher cost.
In assessing claims performance, the survey limited its data to responses from participants who had actually made claims for any reason, with 61% of respondents qualifying under that criterion. It then asked respondents if their claims were directly related or relevant to mental illness, receiving 90 positive responses to that question. Of those 90 respondents, 41% had no problems with claim acceptance, 13% had problems and 12% had their claims partly declined.
According to Kate Carnell, beyondblue Chief Executive, the organisation understands that insurers may have legitimate reasons for considering mental health in making coverage and claims decisions, but the industry needs to base decisions on reliable actuarial data, not on a blanket approach that fails to account for the realities of the situation or for individual circumstances. Chris Sealey, speaking on behalf of the Insurance Council of Australia, agreed that insurers need a more consistent means of assessment in order to reliably calculate underwriting risks.]]>
Among the highlights noted in the bulletin, net premium income rose from $38.4 billion to $43.4 billion, with investment-linked funds accounting for $27.8 billion and non-investment-linked funds for $17.4 billion.
Net policy payments, the combined total of "net policy expenses and net policy expenses recognised as a withdrawal," according to APRA, rose from $34.8 billion to $41.7 billion. Investment-linked funds accounted for $31.1 billion, while non-investment-linked funds were responsible for $12.5 billion of those payments.
On the revenue front, the total dropped from $22.5 billion to $16.8 billion. Of that total, $3.8 billion came from investment revenue, $10.4 billion from net policy revenue and $2.4 billion from management service fees. An additional $242 million was characterised as "other revenue."
Non-investment-linked funds accounted for the vast majority of revenue, generating $15.4 billion, while investment-linked funds generated slightly more than $1 billion.
Total expenses dropped from $18.4 billion to $13.2 billion. Expenses included $6.9 billion in operating expenses, $6.1 billion in net policy expenses and other expenses of $183 million.
Commissions, included among those operating costs, amounted to $3.06 billion on both new and maintenance business, an increase of 1.8%.
As a result, net after-tax profit grew from $2.6 billion to $2.8 billion. Again, non-investment-linked funds captured the bulk of that profit, earning $2.05 billion. Net profit after tax for investment-linked funds was reported at $570 million.
Total assets and total liabilities both decreased. Assets, 87.9% of which were held in investments, fell from $235.1 billion to $229.6 billion. Total liabilities fell from $217.3 billion to $210.9 billion. Of those liabilities, 93.6% were made up of gross policy liabilities.
In all sectors, the adequacy of capital comfortably exceeded regulatory requirements. Total statutory funds stood at $219.3 billion, 1.79 times the required solvency reserve coverage. Investment-linked and non-investment-linked funds reported reserve coverage of 2.36 and 1.73 times the requirement respectively.
The industry made strong showings in total capital adequacy and total management capital requirements, reporting coverage of 1.42 times and 1.97 times the levels set by the regulatory framework.]]>
According to the Brisbane Times, cover at age 50 can amount to $50,000, a sharp decrease from the range of cover for those 10 or 15 years younger, when cover of $150,000 to $250,000 is typically available as the super fund’s default. Funds often begin to reduce cover as members reach age 35 or 40, with levels derived from a formula that analyses the financial situations of average fund members.
In most cases, costs of default cover are paid indirectly by members, but members can choose to purchase additional insurance directly. However, members may not always be aware that default levels have dropped.
Industry funds and retail funds treat default cover differently. The Times noted that industry funds allocate life and disability cover in units, with each unit amounting to a specific level of cover. Acceptance is automatic and costs are lower than the costs of equivalent cover obtained outside the fund, since the fund is buying on a large scale. Retail funds sometimes use that same approach, but they can also provide cover that is specific to a member’s individual circumstances.
In both cases, members can purchase additional insurance that will assure sufficient cover, provided that they remain alert to changes in their default cover and provided they are prepared to pay for it themselves.
The financial needs of people over 40 have changed in recent years, but the default cover provided by super funds has not kept pace. As the Times notes, fund members with life cover of some $100,000 cannot expect that level to adequately provide for their families if the need should ever arise.]]>
FOS divides life insurance disputes into two categories, “income stream risk” and “non-income stream risk,” and, of 433 disputes in the former category, 78% related to income protection insurance.
Income protection insurance is designed to replace all or part of the insured’s income should injury or illness prevent the insured from working. Within that simple premise, however, coverage and policy terms can differ enormously.
One fundamental distinction relates to the way in which benefit amounts are calculated. In an indemnity policy, the benefit amount depends on the insured’s income prior to filing a claim, a formula that can be appropriate for employees with regular income that is easy to prove. The self-employed, whose incomes tend to be more variable and harder to document, may be better served by a policy written for an agreed value. There, the benefit amount is established when the policy is purchased.
Alison Maynard, Ombudsman - Investments, Life Insurance and Superannuation for FOS, reported in one interview that the insurer’s denial of an insured’s claim was behind more than half of all income protection disputes heard by FOS. She added that there are three grounds on which the decision to deny a claim most commonly rest: reliance on a medical condition that does not fall within policy terms; failure to adequately prove the insured’s level of income; and the insured’s failure to alert the insurer to a medical condition that existed when the policy was purchased.
Consumers shopping for income protection insurance should be aware of significant differences among policies. Those differences include the length of the benefit period, the level of benefits, the waiting period before benefits are paid and, perhaps most important, the definition of the type of impairment that results in payment under the policy.
While the premium for a policy purchased outside superannuation can be deducted, including the full payment for the year’s premiums when paid by 30 June, policies are generally cheaper when purchased within super.]]>
While acknowledging that the group risk market is enormously competitive, "polarised by high volumes and narrow margins," according to Executive General Manager Jordan Hawke, Asteron believes that its strategy meets the needs of a market that is worth $3.4 billion and is still growing strongly. Hawke pointed to Asteron as both a “one-stop shop” and a trusted adviser able to provide the quality of service that the market needs. He emphasised the company's ability to customise solutions to the specific demands of the organisations with which it engages.
Hawke said that the company has already gained “a number of sizable wins” that have helped Asteron gain traction in the market. He noted that the company has recently filled a number of senior positions with an eye toward implementing the "refreshed" group risk strategy.
Asteron currently focuses on the direct market and retail segments, along with the group segment, but it will turn its attention more fully to the superannuation and corporate markets, while continuing distribution through intermediaries. It will also participate in the platform-provider market, working with master fund operations in both superannuation and non-superannuation contexts.
Andrew Reddy, a Suncorp manager in charge of group risk business development, said that the new strategy was aimed at growth in a financially attractive market segment. "It was completed following a review of market needs, our capabilities, resources and competitor offerings," he said, calling the strategy an evolution for Asteron, not a complete change of direction.
Asteron is actively seeking to expand its network in order to implement its strategy. "Brokers, benefit consultants and tender specialists are also our key partners in the corporate segment," Reddy said. Hawke, because he foresees an increase in claims in "the current challenging economic climate," sees this circumstance as an opportunity for Asteron given its reputation among clients and advisers. “For the last three years we’ve been rated the number one life insurer for our claims reputation,” he said.]]>
Ebix expects the acquisition to immediately add to the company’s earnings per share and, with Fintechnix based in Sydney, to provide improved access to Australian markets.
According to Ebix Managing Director Leon d’Apice, the acquisition was a good fit for the company following its entry into the life insurance market in the United States. "It had complementary solutions to our general insurance business, but we also see good growth opportunities for the business both here and overseas – especially in Asia," he said.
Ebix preferred to grow by acquisition in order to take advantage of the existing Fintechnix presence, rather than by entering the market with a new business venture of its own. In evaluating the transaction, d’Apice said, "The main reason behind the Fintechnix purchase was a lateral growth strategy for the company."
Fintechnix staff will stay in place under the new ownership. Its Managing Director, John Groves, said, "We look to leverage each other’s abilities to take a market leadership role in the Australian insurance markets."
The Fintechnix acquisition is not the only transaction that Ebix is pursuing. On June 5, it announced that it had made arrangements to purchase an Indian software company, PlanetSoft Inc., in a deal valued at $40 million. This is another purchase aimed at lateral growth, with PlanetSoft currently providing technological services to the life insurance industry in India and the United States. Robin Raina, Chairman, President and CEO of Ebix, called the move “a very strategic acquisition,” noting that the company would be able to merge investment and insurance operations “in an end-to-end transaction enabling straight through processing.” According to Raina, this will be the first truly comprehensive processing platform in the industry.
In addition to its Australian and U.S. operations, Ebix has offices in Brazil, Canada, India, New Zealand and Singapore, through which it conducts more than $100 billion in premiums.]]>
Employers in financial services were less sanguine, with 43% planning increases between 3% and 6% and only 5% of employers expecting increases to exceed 6%. Some 10% of employers anticipate no increase at all, while 42% will raise pay less than 3%.
In 2011, 51% of employers increased employee pay between 3% and 6%, 5% above the number with comparable expectations for 2012. Only 9% offered no 2011 increase, and 30% reported that their increases fell between 3% and 6%.
Jane McNeill, Director of Hays Banking, noted that employers continued to rely on part-time and temporary staff and that competition among job seekers remained fierce, factors that tended to disguise an increase in hiring in financial services. Amid significant uncertainty in financial services generally, insurance has been strong. Describing that strength, Hays said, "Over the past 12 months we continued to witness extreme skills shortages across most technical insurance areas," adding that this was accompanied by increases in salary that were higher than those in other financial services sectors.
Underwriting has been a particular bright spot, both in general insurance and in life insurance, and demand has been strong at all levels. A similar situation is evident in workers’ compensation, "where we have seen salary increases across the board, from claims assistants through to senior managers and case managers," Hays said in a recent interview.
Hays also noted that insurance employers have been increasingly willing to offer technical training to candidates who lacked advanced technical skills but who otherwise fit well into the company.]]>
The report analysed results in three of those segments. Two of the segments demonstrated substantial growth: Funeral insurance premiums increased 15.4% and combined premiums for income protection, accident and term insurance grew 17.4%. Credit card insurance and loan insurance, products that the report combines into "credit related insurance," increased only 2.8%.
The report characterises growth of 2.8% as “subdued” in light of increases of 3.0% in credit card debt and 7.8% in mortgage and loan debt that occurred in 2011.
The most surprising development, according to Rice Warner Director and Head of Life Insurance Richard Weatherhead, was the growth in premiums for funeral insurance. According to Weatherhead, funeral insurance is a saturated segment of the market, but its strength "reflects new entrants to the market and the scale of the major incumbents."
Although the report is focused on direct sales, those not made through an intermediary of any kind, it compares results with the performance of products distributed through retail channels and superannuation funds. In this comparison, the direct life insurers’ share of the overall risk insurance market grew from 11.8% at the end of 2010 to 11.9% at the end of 2011.
According to Weatherhead, two factors contributed to this increase. "Term, income protection and accident insurance business has grown more rapidly than traditional adviser sold and superannuation fund risk insurance in 2011, reflecting not only the efforts of product marketers but also the increasing acceptance of direct distribution by consumers," he said.
While the number of products on the market increased 86% over the past four years, growing from 109 to 203, the Rice Warner report notes that 34 direct products closed in 2011, a year in which 73 new products were launched. “Many direct life insurance ventures have failed to deliver the anticipated business volumes and it is proving difficult to gain the scale necessary to ensure long term profitability,” the report concluded.
Rice Warner also called attention to the perennial problem of explaining to consumers that they might have inadequate insurance when they were satisfied with basic levels of cover provided through superannuation funds.]]>
The company hopes that the new site will help people to make the connection between the very personal value of the people, events and memories reflected in their photos and the importance of protecting those valuable assets. “The Time Capsule was developed so people got a visual on how precious their memories, family and life is - and to protect that,” Dorber said.
In what Lifewise calls “an industry first,” the company has plunged into social media, including the launch of "new and exciting social media platforms such as Twitter, Facebook, Pinterest, Flickr, Tumblr and a personalised blog to interact with the new Lifewise social media website.”
Lifewise was founded in 2009 by a group of Financial Services Council members in the life insurance and reinsurance sectors, and its mission was simple and straightforward: to raise Australian awareness of underinsurance and its potential consequences.
The need for the Lifewise initiative grew from underinsurance research that found that, despite the fact that so many working Australians have some coverage through superannuation, the country ranks low in comparison to other developed nations. In 2007, it ranked 16th in the world, according to Swiss RE, in terms of density and penetration of life insurance. As a result, according to Lifewise, 95% of Australians are underinsured.
The company points out that 83% of Australians report that they maintain insurance coverage for their cars, but only 31% maintain any coverage protecting their incomes, despite the severity of the consequences of losing one’s income. Loss of income is a risk that can cost millions over the course of a lifetime.
Awareness of risk is not always enough to make people take actions. Parents, for example, report that they are more sensitive to risks since having children, but 72% of parents told Lifewise that they had no life insurance cover other than the insurance provided by superannuation funds. Compounding the problem, the risks of underinsurance extend well beyond questions of personal exposure. According to Lifewise, underinsurance may cost the government some $1 billion over the next decade.]]>
The survey gives good reason for brokers to make those offers more often. Conversion rates were especially significant: 36% for home insurance, 29.7% for loan protection and 18.4% for life insurance. First time buyers were the group most apt to be interested in all three kinds of coverage, while almost 20% of other buyers were interested in purchasing loan protection.
According to MFAA CEO Phil Naylor, the results show that there is a wide range of customers who are interested in purchasing insurance. "The survey shows that mortgage brokers have a great opportunity to cross-sell insurance products, with both young and mature borrowers showing they are open to opportunities to protect themselves,” he said. Naylor noted that many MFAA members had already seized the cross-selling opportunity. “I encourage more companies to investigate this area of growth,” he said.
The CoreData survey also investigated respondents’ approach to real estate in superannuation funds. More than half of respondents with self-managed funds indicated that they had not yet invested in property, but 11.4% of them evinced an interest in making that kind of investment within the next year. That percentage is almost double the number that the survey found one year ago.
Renewed interest in property investment reflects an increase in buyers’ level of optimism. The survey found that 51.7% of home buyers think that this is a good time to purchase a home. This result was in marked contrast to the 38.8% who expressed that belief six months ago.
Despite continuing economic uncertainty, lower home prices and low interest rates have bolstered consumer sentiment. "The renewed focus on property investment shows that people now see the sector as a viable alternative to shares and managed funds, providing a stronger yield than was possible in recent years,” Naylor said.]]>
Current regulations provide an "accountants' exemption" that allows accountants without an Australian Financial Services Licence to provide limited financial advice as part of their roles as tax and business advisers. While accountants can advise on the establishment and closure of Self-Managed Superannuation Funds (SMSFs) under the exemption, they are not authorised to give strategic advice beyond those limitations.
According to the joint statement, accountants are not interested in selling specific products, a role they leave to the licenced financial planners, but they do want to provide comprehensive advice. "The value professional accountants add stems from the strategic approach they take to an individual’s overall financial interests," the statement said.
Instead of addressing this need, accountants expect that FOFA will provide them with a "conditional licence" that will limit their contributions in equally inappropriate ways, allowing only general advice on simple bank products, life insurance and superannuation. If this is indeed the thrust of the new regulations, accountants see those conditional powers as overly narrow.
The joint statement paints the government’s approach as a missed opportunity: "Despite the best of intentions, it appears the government is doggedly pursuing a policy that fails on delivering the right outcomes for consumer. The policy that is currently being proposed will not increase the availability of financial advice and it will not make financial advice more affordable for consumers."
Not everyone agrees with the accountants’ position. The Financial Planning Association, speaking through its Chief Executive, Mark Rantall, also framed the issue in terms of consumer needs. ''The starting point is to make sure consumers get the best advice that they can get,'' Rantall said, adding that accountants are free to obtain the appropriate licences in order to broaden the scope of their advice.
The accountants, in turn, see some of the requirements of the Financial Services License as unduly burdensome and impractical, especially for accountants who are sole practitioners or who are unwilling to work under the direction of someone who is licenced in the financial services field.]]>
Some interesting facts & figures included in the graphic include:
Australians still remain significantly underinsured since 2010 when we conducted similar research, so it seems the answer is still most likely "yes" - you do need insurance.]]>
AIA announced the change as a response to the results of a national survey of advisers, which revealed that advisers view the self-employed as an underserved market. According to Tim Tez, AIA Head of Product and Marketing, "A recent AIA Australia survey of advisers across the country showed that the self-employed are viewed as one of the biggest growth opportunities for advisers this year."
In AIA’s view, clients who work for themselves are at a disadvantage because they do not have employers contributing to superannuation. They can, however, benefit from the tax deduction available when they contribute to super, and AIA's revised offering allows that tax benefit to be part of an insurance plan that can finally be structured to include income protection.
In addition to enhancing its Income Protection cover, AIA revised a number of other offerings.
With cardiovascular disease representing the second leading source of claims under AIA’s crisis recovery offerings, the company improved the definition of heart attack in order to remove any question of payment under its policies, regardless of the severity of the event.
According to Tez, "The upgrade was in response to improvements in clinical practice employing earlier detection techniques."
AIA made a similar change to its definition of cancer, the most common basis for claims under crisis recovery, and introduced out-of hospital cardiac arrest, intensive care and terminal illness coverage as part of income protection. Income protection benefits under the company’s IP Plus Optional product will also extend to claims related to total disability that results from elective surgery, cosmetic surgery and transplant surgery in which the insured donates an organ to another person.
Damien Mu, AIA General Manager - Life Insurance, emphasised that the enhancements, which were effective 21 May 2012, were incorporated into existing cover with no premium increase. "AIA Australia regularly upgrades its product range to ensure the features and benefits offered to our customers and policyholders meet their changing needs,” Mu said.]]>
Second, Generation Y, made up of people now between ages 18 and 30, have higher rates of fatal accidents than any other age group. Asteron calls Generation Y "the accident-prone generation," noting that the statistics contradict the popular belief that older people are more likely die accidentally.
In its analysis, Asteron divided accidents into five types: road and traffic, accidental drowning, falls, poisoning or choking, and natural disasters.
Generation Y have especially high rates of road and transport fatalities, with those causes accounting for 41% of the age group’s accidental deaths, almost twice the rate for the next highest age group, Generation X. Generation X, composed of people between 32 and 44, have a 23% rate of fatal road and transport accidents, while poisoning and choking account for 41% of that generation’s accidental deaths.
Poisoning and choking also have the highest fatality rate among those between 45 and 64, the Baby Boomers, at 26 percent, followed closely by road and transport accidents at 20 percent.
Retirees, defined as those over 65, were most likely by far to suffer a fatal fall, with 84% of the age group’s accidental deaths attributed to falls. Retirees had very low rates of road and transport deaths and poisoning or choking deaths, at 16% and 9% respectively, but they had the highest rate of dying in a natural disaster at 55%. Asteron defined "natural disaster" to include "other external forces," which, in turn, included accidents in and around the home.
Between 2001 and 2010, 104,000 Australians died accidentally. Natural disasters accounted for 45,954 of those fatalities, road and transport accidents for 34,662, falls for 11,100, poisoning or choking for 7,526 and drowning for 4,822.
Asteron points out that only 4% of Australian families carry sufficient insurance to protect them against the consequences of an unexpected death, a problem that it blames on "Australians’ ‘she’ll be right’ attitude."
“Australians are on average twice as much in debt as they are protected for it with adequate levels of cover - and that’s not counting serious illness or long term disability from work,” according to Jordon Hawke, Asteron Life’s Executive General Manager. He emphasised that the study’s results contradicted popular assumptions. "Surprisingly, it’s not our senior citizens who are at most risk of accidental death, but young people under 30, who are more able-bodied, but have the highest rate of fatality across the top-five accident categories," he said.]]>
Much of the revenue drop appears to stem from performance during the third quarter of 2011, when total revenue amounted to an outflow of over $4.32 billion.
Total expenses also showed a significant drop on an annual basis, falling from $21.4 billion to $16.3 billion. Expenses were higher than those of the previous quarter by almost $5.5 billion and higher than those of the March 2011 quarter by a similar amount.
Annual net premiums were marginally lower than a year ago, falling from $43.1 billion to $42.4 billion. Quarterly net premiums declined from approximately $11 billion for the December 2011 and March 2011 quarters to $9.6 billion for the most recent quarter.
Annual net profits, reported on an after-tax basis, dropped 4.1%, falling from $2.69 billion to $2.58 billion. On a quarterly basis, profits rose to $726 million from $723 million for the last quarter of 2011, while falling from the net profit of $771 million reported for the March 2011 quarter.
In addition to reporting on life insurers’ financial performance, APRA publishes statistics on “financial position,” collecting data from insurers’ income statements for performance metrics and from their balance sheets when reporting on the industry’s financial position.
According to those balance sheets, total assets rose 3.9% from December 2011 levels, increasing from $230.2 billion to $239.1 billion. This also represents a 0.9% increase from assets of $237.1 billion in March 2011. Total liabilities showed similar changes, increasing 4.1% from December 2011 and 0.2% from March 2011 to $219.9 billion for the current quarter.
The industry managed an annualised return of 15.3% on net assets for the quarter, which translates into an annualised return of 14% for the year. For the previous year, return on net assets stood at 15.5%. Again, generally steady performance from quarter to quarter was affected by results for September 2011, when return on net assets amounted to only 9.4%.]]>
That ambiguity may be the result of FOFA’s concentration on investment products, a focus that leaves the status of some insurance products unclear. In one interview, Richard Batten, Partner at Minter Ellis, noted that the new regulatory scheme "is ambiguous when you are talking about a new client in an existing group life insurance scheme" and not an entirely new product.
"It wouldn’t be a new product; we are just talking about a new client joining the fund and being included in the existing group insurance policy," Batten added.
Other advisers have questioned whether a change of licensee or the sale of a practice would trigger the application of the new rules and thereby eliminate grandfathering of existing arrangements.
The Treasury describes grandfathering in general terms: "The ban on conflicted remuneration will not apply to payments made under arrangements entered into before the reforms commence. This means, for example, that commissions currently being paid by product manufacturers to financial advisers in relation to existing investments will not be banned and can continue to be paid after the reforms commence. This is what is meant when it is said that these payments have been 'grandfathered' under the legislation."
Under FOFA, group life commissions will be prohibited beginning 1 July 2013, and resolution of remaining ambiguities becomes more pressing as that date approaches. Adding to that sense of urgency, comments on the proposed regulations must be submitted by 5 June 2012.
A second set of draft regulations, covering training courses, was unveiled along with the grandfathering regulations. According to that second set, advisers' employers are required to bear the cost of accommodation, travel and entertainment for the event, and 75% of the time spent at an event must be focused on professional education and training.
Submission of comments on these training regulations is subject to the same 5 June deadline that applies to the grandfathering regulations.]]>
Hoyle began his career in marketing and advertising and had served in senior marketing and sales capacities at Barclays Bank, IMS Health Inc. and AXA Sun Life before moving to Chartis to lead its direct sales operation. TAL lauded Hoyle for his extensive exposure to worldwide markets, with the company making special note of his experience in Asia, the UK and the Middle East.
Hoyle's appointment comes at a time when life insurance sales models are changing, with direct and intermediary channels sometimes coming into conflict. The industry has come to accept the direct sales model as a necessary part of the landscape. In announcing the appointment, Jim Minto, TAL Managing Director, indicated that the company was aware that the industry was changing and that part of that change was the increased involvement of consumers and their increased insistence on value.
"We see this as an inevitable evolution of the life insurance market," he continued, "and we want to apply leading expertise from other countries and markets to help us deliver superior customer value in future and to win consumer support from those people who choose to transact directly."
On 8 May 2012, TAL announced the appointment of Kent Griffin as CFO. Also based in Sydney, Griffin came to TAL from Ernst & Young, where he served as a Partner and as Head of Actuarial and Financial Services Risk Management Advisory, working in the company's Melbourne office. His service at Ernst & Young followed a nine year stint at AXA, where he served most recently as Regional CFO for AXA Asia.
Griffin also holds the position of Convenor of the Risk Management Practice Committee at the Institute of Actuaries.
In announcing the appointment of Griffin, Minto said, "Kent brings with him a breadth of experience in leading finance functions and facilitating transformational change in life insurance companies." Minto expects TAL to benefit greatly from Griffin's experience in the industry, expecting him to "leverage this experience, along with his deep technical expertise, at TAL."]]>
In a step that several other companies have taken, ANZ has created a new SuperLink option that allows added flexibility in total permanent disability (TPD) cover. Ownership of a TPD policy can now be split between a superannuation policy and an ordinary policy outside superannuation, giving customers, in the company’s words, "the best of both worlds."
ANZ has also introduced Business TPD, an offering that allows up to $10 million cover for business owners. The change was made "because we recognise that business owners often need higher levels of TPD cover to protect their personal and business commitments," according to the company.
TPD cover is also the focus of two other broad changes.
First, the company has updated its definition of trauma in light of current techniques of diagnosis and treatment, a change which, according to ANZ, will provide for partial payment for some trauma events. It has also revisited and improved its existing trauma definitions.
Second, it has changed its Income Secure Cover to incorporate a third tier that provides for the assessment of a covered event, whether injury or illness, against the earning potential of the insured, and it has extended this new tier to both total disability and partial disability contexts.
Finally, in response to customer feedback that indicated a general antipathy to time-consuming processing of claims, ANZ has instituted a “tele-claims” process designed to streamline and personalise the claims experience.
According to Kerr, “These enhancements to OneCare demonstrate our ongoing commitment to providing the most comprehensive and flexible life insurance product in the market.” The feedback of customers was not the only influence on the company’s decision to modify its OneCare offerings. “These enhancements, which take effect on 26 May 2012, have been specifically designed in response to customer and adviser feedback,” Mr Kerr said.]]>
As the company explains, this will obviate the need for occupational assessment in some cases and will include "an objective measure for assessing impairment based on the ability to perform extended ADLs." If that objective measure reveals that the insured is able to perform no more than two of the six categories of extended ADLs, the insured will be entitled to benefits.
FutureWise policies will also incorporate a "Partial Impairment" option that will make partial benefit payments in the event that an insured cannot perform "a specified number of extended ADLs."
Similar changes have been made to Active. Category A Health Events will now include "occupational impairment" and claims that fall outside other policy health events will now fall within that revised formulation. "A definition of own occupation, any occupation or domestic duties will be applied to each eligible policy based on the applicant’s occupation and hours worked," according to the announcement.
Macquarie is also increasing Active’s maximum cover to $4 million and adding an extended care option. That option will pay an additional benefit "to help cover the expenses associated with long term care if a claimant suffers serious long term impairment," the company said.
According to Macquarie Life CEO Justin Delaney, Active has been well received since its 2010 introduction and FutureWise will benefit from incorporating features that were previously available only through Active. By offering both products, the company was able to identify features that were valued by advisers and that would be enhancements to its existing offerings. "Through these latest updates, we are pleased to be sharing the features that are in demand across both products to bring together the best of both worlds," Delaney said.
The study utilised case studies of individuals at different ages and with different needs to reach its conclusions. The case studies also considered different genders, despite the fact that gender is irrelevant to both prepaid and insurance pricing, in order to “reflect the different life expectancies of men and women,” according to the study.
The study compared only two options. It used the Guardian Plan as its prepaid example, assuming a funeral cost of $6,000 and inflation at four percent annually. Although an instalment plan is available, the study assumed that payment would be made in a lump sum. When considering insurance, the study used only one product, the InsuranceLine Funeral Plan offered by Tower Australia.
Perhaps Rice Warner chose that product because it made it easy to argue the best possible case for prepaid plans. While the study noted several advantages and disadvantages of the two options, it chiefly focused on cost, calculating the time it would take for the cumulative cost of insurance to overtake the amount that would be paid out under that particular policy.
For example, it considered the case of “Jill,” a 70-year-old woman who purchases a policy covering $6,000 of funeral costs. According to Rice Warner’s calculations, insurance would be a bargain for the first eight or nine years of the policy, but, after the ninth year, total cost would begin to surpass the plan’s benefit.
Even the InsuranceLine product has some advantages. Premiums are low for younger people, discounts are available for multiple policies and the policy can be a bargain in certain circumstances.
In fact, consumers have many options, and some companies offer policies with even more favourable terms, but the study does not consider policies other than InsuranceLine. Some products stop premium payments at a specified age. Others collect premiums only until the insured amount has been reached. Those features might have tipped the scales heavily in favour of insurance had they been considered.
In addition, the study ignores alternatives like funeral bonds, ordinary life insurance policies and designated savings accounts.]]>
John Hoyle was appointed CEO of TAL Direct in April 2012. Prior to joining TAL, Hoyle had been at Chartis Europe, where he had been CEO of Chartis Direct for more than five years. He had previously held senior marketing and sales positions at Barclays Bank, IMS Health and AXA Sun Life.
Speaking in terms of the importance of TAL Direct to the company’s vision, Minto said, "John's expertise in running direct insurance businesses and direct marketing functions will be of huge importance in helping shape TAL's direct insurance customer agenda over the coming years."
Minto also emphasised the importance of diverse expertise to the mission of TAL Direct. "We see this as an inevitable evolution of the life insurance market and we want to apply leading expertise from other countries and markets to help us deliver superior customer value in future and to win consumer support from those people who choose to transact directly," he said.
Kent Griffin came to TAL in May 2012 from Ernst & Young. He had been in Melbourne, serving as a Partner and Head of Actuarial and Financial Services Risk Management Advisory. Before coming to Ernst & Young, Griffin held several senior posts at AXA, including the position of Regional Chief Financial Officer for AXA Asia. Griffin also serves as Convenor of the Risk Management Practice Committee at the Institute of Actuaries.
According to TAL, Griffin brings considerable experience "in strategic finance, actuarial, risk, treasury, investor relations and regulatory and capital management in the life insurance, wealth management and banking sectors."
Speaking of Griffin's appointment, Minto said, "Kent brings with him a breadth of experience in leading finance functions and facilitating transformational change in life insurance companies."
Minto also emphasised Griffin's professional competence. "We are looking forward to seeing him leverage this experience, along with his deep technical expertise, at TAL," he said.]]>
Given those results, the Macquarie survey asked its 1000 participants about the adequacy of their life cover and whether it met the needs of policyholders. When the question was directed at people who held policies only through super, with no stand-alone coverage, 72% of respondents saw themselves as “very well” or “reasonably well” covered, and few of those offering that opinion felt that their super-only cover was insufficient for their needs.
When divided by gender, 42% of male respondents and half of female respondents indicated that coverage provided through superannuation was sufficient for their needs.
Macquarie CEO Justin Delaney questioned whether consumers really understood the level of cover provided by super and whether that insurance met policyholders’ real needs.
According to Delaney, there are obstacles to a thorough evaluation of life insurance for many people, including a reluctance to invest the money, time and effort that are necessary for a review of cover with financial advisers. The fact that the involvement of an adviser increases the proportion of people with stand-alone cover to 30% was seen by Delaney as "proof of the positive work the advice industry is doing to ensure its clients are adequately covered."
Cost is becoming an increasing influence on decisions, although survey respondents in the past have tended to emphasise other reasons for eschewing stand-alone insurance. Along with cost, respondents said that increased cover was simply not something they had considered. Of those with no life insurance, 62% were unsure about obtaining cover, unlikely to obtain it or simply unwilling to obtain it. In that same group, 45% thought life cover was less important than health insurance and only 17% acknowledged that life insurance was of any benefit. A quarter of survey respondents expressed the belief that life cover was irrelevant for those with substantial assets.]]>
The paper, "Living Until 120: The Implications For Absolutely Everything," tries to counter our natural tendency to discount the future by focusing on the plain fact that more and more people are living into what was once considered extreme old age. At the same time, Howes said, "Normal modelling techniques cannot handle things like major medical breakthroughs, such as curing cancer, being able to grow new body parts, or sudden changes such as wars or pandemics."
Howes and Rafe are concerned that insurance companies have paid insufficient attention to these possibilities and that what once seemed futuristic has become quite real. The authors quote one researcher, Harvard Business School’s Juan Enriquez, to the effect that the next century will see a doubling of the human lifespan.
In addition to sheer longevity, questions of definition need to be addressed, and the paper poses hypothetical questions that may give insurers pause. "If you live beyond 120 as a brain in a vat, fully conscious and able to communicate and participate in life online and in virtual reality, are you still eligible for lifetime annuity payments?"
One obvious approach, the possibility of offering products that are guaranteed for life, is not among the authors' recommendations. They point out that recent events have made people distrustful of financial institutions and that flexibility and access are more important grounds for consumer decisions about financial products.
Howes and Rafe do have some recommendations for the industry. They would like to see retirement age increased and possibly tied to life expectancy, a strategy instituted in the Netherlands, where it is scheduled to become effective in 2025. They recommend changes in the tax treatment of deferred annuities to make them competitive with more traditional products, they advise a shift in investment focus for super funds, from equities to income-generating vehicles, and they would institute a system under which voluntary pension deferral would an option for people reaching retirement age.
According to Howes, "Financial services businesses and trustees of super funds need to start thinking differently if they want to stay viable."]]>
New sales increased dramatically, reaching $75 million, a 47% increase over the previous sales total of $540 million. At the same time, lapses grew $3 million, from $31 million to $34 million.
In life insurance, GWP rose from $156 million to $170 million. Mortgage insurance GWP also increased, from $26 million to $32 million, a gain of 23%.
Loss rations were mixed. In life insurance, loss ratios held steady at 30%, while general insurance loss ratios fell from 118% to 99%. Meanwhile, mortgage insurance loss ratios more than doubled, rising to 30% from 12%.
Cash earnings for BT Financial Group were reported at $294 million, a 19 percent decrease from earnings for the comparable previous period.
BT Financial Group is a part of the Westpac Group and incorporates a number of brands within its structure, including St. George Financial Planning, Insurance and Private Clients as a result of a 2008 merger between Westpac and St. George. BT Financial Group derives its name from its history as part of Bankers Trust Australia, when it was known as BT Funds Management. According to the company, the 2008 merger made it one of Australia’s largest wealth management firms. Westpac, for its part, is the oldest bank in Australia, first chartered in 1817 as the Bank of New South Wales. It retained that name until 1982, when it acquired the Commercial Bank of Australia and the combined operation became Westpac. Since then, it has continued to expand its business, largely through acquisitions in the wealth management business, a strategy that was part of what the company calls "a strategic reshaping" that began with the sale of Australian Guarantee Corporation Limited to GE Australia.
Gail Kelly, Westpac's CEO, addressed the fall in cash earnings by explaining that the decrease stemmed from the "derisking" of the company’s lender’s mortgage insurance portfolio. Derisking has been a prominent part of financial discussions over the past several years, becoming a more common strategic consideration in light of increased market volatility over that same period of time.]]>
At the same time, the most common fear among respondents is “not having enough for a rainy day,” with more than a third of survey participants naming this as their top worry. In second place on the list of worries was the fear that there might not be enough to pay household bills, followed by the prospect of having inadequate money in retirement. Brisbane respondents supplied a different answer, putting retirement funding at the top of the list.
Macquarie noted that answers varied depending on the age and gender of the respondent. Women, for example, were more likely to save when they had funds available, while men were more likely to put spare cash into investments. When asked how they felt about life, baby boomers were the most positive. Younger respondents were less satisfied, with 37% of Generation X respondents indicating that they were under stress and 57% of Generation Y respondents seeking "a more fulfilling life."
Lembit elaborated on some of the geographic differences at a recent seminar hosted by Macquarie. Although respondents consistently reported that they had become more cautious, that caution manifested itself in different ways in different cities. In Sydney and Melbourne, people postponed travel, while Perth residents put off major life decisions and respondents in Adelaide had reconsidered what they valued in life.
Macquarie sees the survey results, with 80% of respondents indicating that they would be open to financial advice, as an opportunity for financial planners. Despite that openness, only 63% have actually sought advice in the past. Professional advice would be welcomed by 50% of the respondents when the subject of that advice was retirement planning, for example, but only 17% had actually sought that kind of advice.]]>
According to the survey, almost half of all consumers approach major life decisions with caution, but, despite this reality, a similar proportion wish to be perceived as making those same decisions confidently. When purchasing insurance, women describe themselves as less confident than men and tend to select lower amounts of coverage.
In general, however, consumer confidence is higher among those working with a financial planner, and some 80% of survey participants preferred to meet with their advisors in person. Telephone advice was preferred by only 14% of respondents.
Lembit also reported that the number of parents with standalone insurance or with no life cover fell from 2006 to 2012, a trend that he attributed to the increase in life cover through super. In the opinion of Justin Delaney, Macquarie’s Head of Insurance and Platforms, many consumers do not have a firm grasp of whether their needs were effectively met by super-based life insurance alone.
When asked about criteria they would use to evaluate insurance providers, respondents minimized the importance of cost, instead focussing on prompt and efficient processing of claims, the availability of products tailored to specific needs, levels of coverage and clarity of policy terms. According to the study, however, the reality is different, and cost was seen as the biggest barrier to purchasing life insurance. In addition, 45% of those without life cover see life insurance as secondary in importance to health insurance.
According to Lembit, this information provides valuable insight into consumer attitudes, and that insight can be translated into more effective ways for advisers to approach their clients. He emphasised the importance of "peace of mind," what Lembit called "the number one thing that life insurance gives you." If that fundamental benefit is stressed, it will resonate with consumers. "They're not seeing the benefits because they haven't made the link between the peace of mind, having the insurance and feeling good," he said. "You guys have the opportunity to sell peace of mind to the people."]]>
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At the same time, the association has established a presence on Twitter as another way to communicate with its members. Chief Marketing Officer Lindy Jones acknowledged that less than 10 percent of financial planners communicate through Twitter, but emphasised its value at a time when so much is changing for the financial and insurance industries, especially in light of pending Future of Financial Advice (FoFA) reforms. “FPA members who follow us on Twitter appreciated the minute-by-minute updates from January PJC inquiry and the February SEC hearings into FoFA.” Jones said that Twitter’s immediacy was uniquely valuable as a means to keep FPA members informed via “minute-by-minute updates.”
The FPA’s Twitter stream has attracted a robust following, according to the organization, especially as it has been in existence for less than two months, but the LinkedIn group, open only to FPA members, has been a better venue for communication among those members. This communication helps to guide the association’s response to legislative and regulatory developments.
According to Jones, “The subject matter, collegiate tone and calibre of insight distinguish this Forum from any other online media for financial planners." As a result, the association looks to LinkedIn for insight into members’ views when developing government policy submissions. “For instance, the Federal Budget submission in January prompted a debate in the Forum about the hot topic of tax deductibility of advice fees. The Forum's views were taken into account when we developed the Submission."
In light of its success in social media to date, the association has announced ambitious plans to develop further online activity. It expects to add member forums to its existing sites and, according to a recent announcement, plans to launch “a new online knowledge hub and practical toolkits in the next month to deliver further value to its members.”]]>
Of the five sectors analysed by Plan for Life, life insurance showed the most consistent and sustained growth, with premiums rising 12.3% in 2010 and another 10.4% in 2011, resulting in a total premium inflow for the year of $10.3 billion. Retirement Income and Individual Superannuation Investment followed declines in 2010 premiums with strong 2011 growth, increasing 27% to $7 billion and 18% to $10 billion respectively.
Two sectors showed results that countered the positive trend. Group Superannuation Investment fell more than 10%, declining to $10.7 billion, with only one company, Suncorp, showing an increase in Group Super inflows. In its commentary, Plan for Life notes that the Group Super category “includes a large amount of older (pre 1970) products.” Ordinary (Non Superannuation) Investment fell 3.7% to $540 million. Again, only one company bucked the trend of what Plan for Life called a "relatively genteel long term decline." In this sector, CommInsure uniquely experienced a 4% increase in inflows.
For the industry as a whole, new premium sales were up some 17%, with many companies showing strong individual results.
In terms of risk business, AMP Group showed a 9.2% increase in inflows and continues to lead in market share at 16.1%, a slight decline from its 16.3% market share in 2010. AIA Australia showed the largest inflow growth, at 33.5%, an increase sufficient to increase its market share to 10.8% from 8.9% in 2010. Other leaders in market share were MLC Group, CommInsure, TAL and OnePath Australia, with shares of 14.3%, 13.2%, 12.8% and 11.7% respectively.
In the industry as a whole, several companies demonstrated inflow growth in double digits. Challenger’s growth, at 85.8%, was the most dramatic among them, but AIA, at 31.2%, AMP, at 13.7% and CommInsure, at 12.9%, all showed significant growth in overall inflow rates.]]>
The strong March showing by finance and insurance extends a trend that began in December 2011. In March, that trend was especially evident in the growth in new orders and a solid increase in stocks, two areas in which the performance of the finance and insurance component of the index stood in direct contrast to the sluggish performance of other service industry sub-sectors.
Of the nine sectors tracked by the Australian PSI, the personal and recreational services sub-sector was the only one to join finance and insurance on the positive side of the ledger. There, however, marked growth in February was followed by a much smaller increase in March.
According to Ai Group, "Respondents continue to note that uncertainty, low levels of activity in parts of the manufacturing and construction sectors, and the high level of the currency" are responsible for the declines in seven of the nine sub-sectors involved.
The finance and insurance sub-sector was also distinguished by a solid increase in sales. This is in marked contrast to sharp sales declines in the retail trade sub-sector and in the PSI's worst performer, the accommodation, cafes and restaurants sub-sector.
Experts do not predict much improvement in the near term for sub-sectors that are performing poorly. According to John Peters, Commonwealth Bank Senior Economist, "The bad news is that this pattern of growth is likely to persist through 2012, and into 2013. The Australian dollar is unlikely to substantially depreciate due to the ongoing high terms of trade, and ongoing wide interest rate differentials with currencies of the advanced economies like the US, Japan, the UK and Euroland."
For those chiefly interested in finance and insurance, those negative sentiments may not be entirely applicable. Both Peters and Innes Wilcox, Australian Industry Group Chief Executive Designate, point to factors that may not weigh heavily on finance and insurance. "The high dollar is thwarting the prospects for trade-exposed service businesses and a lack of confidence among households is holding back the retail sector and service businesses with links to the manufacturing, residential and commercial construction sectors," Wilcox said in his analysis of the latest index trends.]]>
Brogden sees the measure as a consumer-friendly way to further professionalise the provision of financial advice in the industry and offers a degree of reassurance to practitioners. "These measures are not intended to limit or prohibit alternative payment structures that may exist for retail life insurance advice including fee-for-service models."
This follows on the heels of remarks made by Pauline Blight-Johnston, Managing Director of RGA Insurance Company of Australia, when she chaired a plenary session of the annual FSC Life Insurance Conference on 22 March, 2012. At that session, Blight-Johnson addressed the danger of churn in the context of advisers’ duty to act in their clients' best interests.
The FSC's churn policy, presently in draft form, would limit advisers to level commission for replacement policies written within five years and would require return of all commission for policies that lapse within one year. For policies that lapse within the second year, clawback would amount to half the total commission.
Many in the industry disputed the notion that churn is a problem. Greg Martin, Chief Actuary of ClearView Wealth, argued that churn is not a “big driver of lapse rates.” In his view, regulators need to see that churn is not a major problem within the sector, “even with average lapse rates at about 15 percent.”
Damien Mu, AIA Australia’s Chief Distribution Officer, offered a similar perspective. "Our experience is that a small group of advisers are churning, but we don’t think it is large problem," he said. Mu did, however, express the belief that self-regulation by the industry would be preferable to legislative intervention.
Similar concerns about the Best Interest Duty had been raised earlier, in the context of scalability and the reluctance of the Treasury to provide for tailored superannuation advice as part of the pending MySuper reforms.]]>
Addressing the conference on 22 March, 2012, Ian Laughlin, one of the three Members of APRA’s Executive Group, acknowledged that the industry has made significant progress over the past year, but emphasised the need for further strengthening in the group life sector.
According to Laughlin, APRA plans to devote increased attention to specific characteristics of the sector in the coming year. Some of that attention will be devoted to the quality of data maintained by insurers, since Laughlin characterised good data as an essential part of the solid foundation needed by insurers. "We are concerned poor data from the funds is being used for pricing in competitive insurance tenders."
As a result, APRA plans to visit insurers prior to releasing its standards for consultation in the context of superannuation. Those standards, known as SPS 250, "will have a specific requirement for trustees to maintain good quality data so that the incumbent insurer and the insurers involved in a tender have a robust foundation," Laughlin said.
The quality of data was not APRA’s only concern. Laughlin also addressed what he characterised as "a decline in the skill base to deal with claims." That decline has resulted in "some poor claims experiences," he said.
In addition, Laughlin criticised current group life offerings for their complexity, a sentiment mirrored in the Treasury's MySuper initiative, which emphasises the value of products that can be readily understood and easily compared. "If we could find a way to stop adding bells and whistles it would make a big difference," according to Laughlin, who sees the current scheme of product management as unhelpful to the consumer.
Laughlin was joined on the panel by Duncan West, MLC's Executive General Manager for insurance, who welcomed APRA's increased attention to the sector on the ground that it would make for a more sustainable and differentiated market, and by Scott Ferguson of Pricewaterhouse Coopers Australia, who addressed the possibility that claims management practices in the life insurance sector could learn valuable lessons from practices employed in other sectors of the industry.
The panel was chaired by Pauline Blight-Johnston, Managing Director of RGA Reinsurance Company of Australia. Her remarks focused on problems with churning as an industry practice that contravenes the duty of advisers to act in the best interests of their clients.]]>
Mercer, for example, argued for a tailored approach, asserting that tailored products were more likely to be optimal for diverse employee groups. The committee acknowledged this concern, stating that the alternative might produce "an 'average' strategy that is sub-optimal for all members."
The committee recognised the potential value of products that could be tailored to different needs, but it found that those benefits were outweighed by a number of other factors. In particular, the committee focused on the ability of members to evaluate different products on the same terms. The report states that "by having a common set of features, such as life insurance, it will make it easier for members and employers to compare products."
The committee sees this approach as an appropriate response to the policy concerns, including simplicity and ease of product comparison that underlie the MySuper legislation. "These features will encourage competition among MySuper product providers to lower fees."
In its own explanation of the reforms, the Treasury has emphasized that its goal is to introduce a product that will "improve the simplicity, transparency and comparability of default superannuation products."
As a result, the reforms focus on lowering costs, simplifying transactions and improving governance of trustees. In arguing for the ability to tailor products, industry groups have expressed concern that the committee's approach is inconsistent with legislation proposed as part of the Future of Financial Advice (FOFA) proposal, which requires advisers to act according to the best interests of members.
The committee did indicate that it was troubled that the proposed bill lacked details pertaining to insurance requirements, especially given that the legislation is supposed to go into effect in October 2013, but those misgivings were not enough to overrule the committee's support. In February, Mercer expressed concern that the timetable for reform is impractical and that it is likely to "create significant disruption for the industry."]]>
OnePath and AMP have both risen to the challenge, unveiling online features that can have real, practical appeal for many industry professionals and their clients.
OnePath has responded with OneView Life, an application that is an outgrowth of the company’s existing system for monitoring insurance applications in suspense. OneView Life expands that system to cover OnePath’s World of Protection and OneCare policies. An adviser can still track new business applications through the OnePath system, but the expanded functionality allows the adviser to submit documents required in the underwriting requirements and to communicate with underwriters and managers within the online application.
OneView Life also allows advisers to work with in-force policies online. Client and policy information are available and can be analysed within the application. Advisers can respond to client needs and produce Certificates of Insurance when required. Client management benefits from the ability to run a variety of reports, including policies due for renewal and policies that are overdue, cancelled or lapsed, and data can be exported as a spreadsheet or in PDF format. In addition, advisers can access details of cover type, client details, beneficiary details, payment details and commission information.
According to Gerard Kerr, the company’s Head of Retail Product, OnePath developed the application in response to “the growing adviser demand for fast and easy online technology solutions” that are destined to become “an even more important part of an adviser’s value proposition.”
AMP has designed a combination of tools that include online videos and calculators designed to engage customers and empower them to better manage their finances. AMP offers a broad range of educational materials that cover insurance and related subjects, including information about investments, economic factors and superannuation.
AMP helps clients to get a complete picture of their insurance needs by allowing them to include policies from other companies in online calculations, all with the intention of enabling customers to control their finances, evaluate their options and take action when appropriate.]]>
In its December report on the state of the market as of September 2011, DEXX&R reported that both new premiums and in-force premiums had grown significantly. New annual premiums amounted to $2.2 billion, an increase of 11.05%. In-force premiums grew at a slightly lower rate of 10.92% to an annual total of $9.6 billion.
Group Risk was the strongest segment of the market during the reporting period, with noteworthy increases in both new and in-force business. In-force premiums grew 13% to a total value of $3.21 billion, while new premiums amounted to $775 million, an increase of 15%.
DEXX&R calculated changes on a per-company basis for the top five insurers in each sector. While cautioning readers that “significant fluctuations can occur from quarter to quarter in reported group new premium” because of the timing of large payments by industry funds on the group level, the DEXX&R report noted an especially robust showing by MetLife in new premiums in the Group Risk category. MetLife’s new premiums rose 566%, resulting in a market share of 19.6%, putting MetLife in second place behind the 31.3% share attributed to AIA Australia. The remaining three companies in the top five all suffered decreases in new premiums and in market share.
With an increase of 40.8% and a 25.8% market share, AIA Australia demonstrated the greatest change in in-force Group Risk premiums among the top five companies. Tower, with an increase of 15.3%, was second in market share at 18.3%.
The combination of AMP and AXA have put the company in first place in both new and in-force premiums in individual lump sum business. In-force premiums rose 72.5% and new premiums rose 91.2%, giving AMP/AXA market shares of 19.4% and 18.6% in those areas respectively.
In terms of total risk business, including individual lump sum, disability and group risk, AMP/AXA was first in market share, capturing 16.5% and 14.3% of the in-force and new business markets respectively.
DEXX&R notes that 2011 marks the first year that new business in the individual lump sum segment of the market exceeded $1 billion.]]>
Total assets held by insurers increased to approximately $235 billion from the $234 billion in assets held at the end of the previous financial year. As of the most recent annual reporting period, 89.3% of those assets were held as investments, 7.5% were cash holdings and 3.2% were held in other forms.
Of those assets, $161.5 million were held by investment-linked insurance funds and $70 million were held by non-investment-linked funds.
Liabilities also increased during the period, from $217.2 million to $217.3 million, with 94.2% of those liabilities consisting of gross policy liabilities.
At the same time, net premiums decreased from $39,578 million to $38,422 million, with investment-linked and non-investment linked funds accounting for approximately $24,149 million and $15,433 million respectively.
Net policy payments also fell, from $37,465 million to $34,772 million, along with revenue, which dropped slightly from $23,467 million to $22,514 million.
Viewed on an industry-wide basis, expenses followed a similar pattern, falling from $19,199 million in 2010 to $18,353 million in 2011. Operating expenses and net policy expenses accounted for almost all of total expenses, amounting to $6,379 million and $5,761 million respectively.
The industry’s return on net assets was 15.1% when taken as a whole. The net return for investment-linked funds was 35.4%. For non-investment-linked funds, the return was 14.8%.
The industry as a whole showed a net profit after tax of $2,614 million, a slight decrease from the previous year’s profit of $2,746 million. Commissions, valued at the end of September 2011, totalled $2.9 billion, with new business accounting for $1.2 billion and the remainder coming from commissions on ongoing policies.
Australian life insurers were uniformly profitable during this period. AMP led the field with a profit of $593 million on $5,337 million total revenue. It was followed by Challenger, with a profit of $360 million on revenues of $927 million, and CommInsure, with a profit of $295 million on total revenues of $2,561 million.
The APRA report noted that domestic and international financial turmoil had adversely affected the Australian life insurance industry, but that improvement in equity markets had led to "a further strengthening in profitability and capital" that had allowed the industry "to stabilise around pre-crisis levels". Those improvements had, in turn, helped the industry to weather "renewed turbulence" that continued to affect the equity markets as the crisis abated.]]>
A: In this situation, it's best to make sure that you understand each of your options. Superannuation lump sum payouts are subject to all sorts of tricky taxation policies. Payouts can have a tax-free component as well as what is known as an “untaxed element.” This untaxed element tends to be greater the younger you are. At age 40, your beneficiaries will likely receive far less from your superannuation insurance lump sum payment than they would if you were over the age of 65. Luckily, HECS debt payments are owed only as long as you are alive. After your death, the remainder is generally forgiven.
As a result, the best way to ensure that your family receives the money they need is to increase your overall monthly income insurance protection policy. Having a larger monthly income payout policy will not compromise payments from the superannuation fund as long as the payments do not exceed 75 percent of your monthly salary. If you are currently making $70,000 a year, your average monthly salary is about $5,800 a month. By increasing your income protection plan to have monthly payouts of $4,000, you will be able to comfortably provide for your family in the event of your death without the additional complication of taxation.
What makes income protection plans particularly attractive is that their tax structure differs radically from superannuation fund insurance payouts. As long as the premiums for the income protection plan have been paid with money that has already been taxed, the benefits themselves are tax-free. By shifting your funds to a large death cover/income protection policy, your family will be provided for without any complications.]]>
Many fund members hesitate to hire financial experts to explain the benefits of their fund to them. However, as insurance brokers we can provide our current and future clients with an invaluable financial boost by clearly explaining the benefits of these funds. We should consider a straightforward strategy when explaining what our clients can expect to receive and how they should interact with their superannuation fund. The idea of “scaled” advice is particularly popular. According to a paper authored by the Australian Securities and Investments Commission, 80% of members appreciate scaled advice when making decisions concerning the future of their insurance policies.
Breaking down advice into a simple and straightforward format also has benefits for the membership rates of the funds themselves. Members don’t appreciate being kept in the dark or made to feel that they don’t have the necessary intellectual prowess to participate fully in the benefits of their fund. This leads to a lower participation rate as members seek out other funds or other financial experts who will allow them to better understand how to fulfil their various insurance needs.
Of course, some in our industry may have concerns about the impact of different regulatory requirements on the specific type of advice they can give to their clients. Unfortunately, while understanding the full list of rules can be complicated, clients are not particularly interested in being told that they can’t have their questions answered because of an arcane regulatory policy. Understandably, clients want answers to their questions. They feel that they are entitled to an explanation of the services offered by their insurance provider, even if that explanation is limited by the regulations of the industry.
Those of us who are able to provide simple yet sound advice without neglecting industry regulations will experience a considerable boost in our overall client roster. This strategy helps fund members and brokers alike.]]>
The timing couldn’t be more perfect with the Giants having 11 of the first 14 selections in tonight’s 2011 NAB AFL Draft, allowing them to pick from a pool of some of Australia’s best young talent.
The Giants will officially enter into the AFL competition as the 18th team in 2012 after much awaited anticipation. The footy team has already played in several tournaments including the TAC Cup, North East Australian Football League, Foxtel Cup, 2011 NAB Cup and the 2011 NAB Challenge.
Four time premiership coach, Kevin Sheedy, has signed a 3 year contract to coach the team and has some experienced campaigners on board to help him build an elite squad of young players.
We are proud of the new partnership and hope that it brings success to the club in the years to come.]]>
To many potential life insurance clients, there are two primary barriers to purchasing life insurance. One is the perceived cost and the second is their lack of available funds. Paul Turner, the Head of Client Management at Division Globals says that "comparing the cost of insurance with that of a cup of coffee a day" might help consumers make more informed purchasing decisions. This is especially true since many potential clients are willing to pay more than the current market price for some form of life insurance.
This attitude is prevalent in many other Asian countries including China, India and Taiwan. The perception gap is so widespread that many are calling for the insurance industry to make a concerted effort to educate the public in the greater Pan-Asian area. The total dollar amount of the "mortality gap" is estimated to be worth a total of $124 billion US in potential premiums.
What exactly is the mortality gap, and how is it calculated? According to the report, Swiss Re believes that the average family should have a policy that covers up to 10 times the amount of the current breadwinner’s annual salary. Using these figures the study surveyed the current income and savings levels of families in both the emerging and developed markets in Asia. Surprisingly, the gap was high in both markets due to higher income and the cost of living in the developed markets. In the emerging markets, the gap was fuelled by a large imbalance in the ratio of needed protection versus available savings. This gap is especially high in China and Vietnam, with India, Malaysia and Australia not far behind.
In the case of Australia, many consumers are becoming increasingly risk averse and wish to purchase a product that will protect them in the event of the loss of their household’s major provider. Over 56 percent of those Australians between the ages of 20 to 40 who participated in the survey plan to buy life insurance in the next year. In order to make the most of the public appetite for risk protection, insurance providers should first educate themselves on how their industry is perceived. These providers should then attempt to reach out to their market and help Australians realise the benefits of purchasing an affordable life insurance plan.
“The Protection Gap we have identified equates to a massive opportunity for the insurance industry now,” Turner continues. In developed markets this translates to an opportunity to sell life insurance products at a cost that is cheaper than what the consumer expects without reducing the total value of premiums that the insurance companies receive. Each geographic region surveyed in the report indicates that insurers have the chance to increase their total premium sales without having to resort to hard-sell tactics.]]>
We’ve created an info graphic to display highlights of the data collected in an easy to read format entitled “The Game of Life” – after all, as they say, a picture is worth a thousand words.]]>
Certain markets, such as the total and permanent disability or TPD insurance, had tremendous inflow gains. The TPD market posted a gain of 9.1%. Group life insurance also had a tremendous gain of 10.2%, for a total of $3.2 billion dollars. The largest single life insurance inflow figure belongs to AMP Group, with a total of nearly $13 billion. The company claims the largest market share in insurance with 34.3% of the market.
New sales are measured separately from inflow figures, but this market showed tremendous growth as well. OnePath reported a 30% annual growth rate, with AIA nipping closely at its heels with an impressive 27.5% growth. TAL didn’t do so badly either, managing a 23% growth rate in sales. MLC is the one major company that reported a loss in its new sales division, with a decline of 21.5% when compared to the previous year. The sector of new group life insurance sales also had some outstanding gains. Zurich had an incredible growth rate of 134.7%.
Retirement income has spiked in the last year from $5.4 billion to over $6.5 billion as of June 2011. This is a 19.3% annual growth rate, which has led to a substantial increase in inflows in the risk insurance market. As of June 2011, this market had experienced a 10% increase across the board.
Some companies fared better in certain categories than others. Challenger Financial Group posted a gain of 92.8% in individual superannuation investment inflows, while ClearView Life posted a decline of 34.1% in this same category. On the whole, both individual superannuation and group superannuation investment inflows were down from the previous year. It should be noted that group superannuation investment flows consist of products that are over 40 years old.
However, gains in other categories more than made up for the temporary decline.
When viewed as a whole, the Australian insurance market is experiencing healthy growth in a variety of different sectors. No one company is dominating the field. This healthy competition between major insurers will likely continue to drive growth and innovation for the next fiscal year.]]>
Lifebroker is excited to announce that we will be offering TAL’s rebranded suite of insurance products. TAL’s product line will not only help Australians feel a greater sense of security but also help them save money. From Total and Permanent Disability Insurance to Income Protection Standard Insurance to Trauma Insurance, these insurance services will be able to provide much needed peace of mind. As of June 2011, TAL was ranked as the 3rd largest life insurer in Australia. With a compound annual growth rate of 15 percent, the company is only poised to continue its phenomenal success.
The TAL Life Insurance products that Lifebroker offers include:
Lifebroker upholds the belief that life insurance doesn’t have to be complex to deliver value. All of the policies we carry are designed to meet the needs of our customers. Simplicity, efficiency, and clarity are the hallmarks underpinning our approach to insurance services. TAL is dedicated to delivering high quality service at a fast rate. TAL pays out claims as quickly as possible and works with each customer to guarantee satisfaction. Lifebroker understands that major events in life are stressful. We take the time to work with each of our customers in order to make sure their needs are fully met. More importantly, we only connect our customers with those companies that we feel can meet our high personal care standards.
Businesses have always appreciated Tower Life Insurance’s approach to handling risk management. TAL Life Insurance upholds this approach. All business customers can relax knowing that they are supported by a responsible approach to business governance. Finding group life insurance that protects valuable employees without hurting the bottom line is TAL’s specialty.
In addition to Lifebroker’s impressive array of insurance options, we are pleased to distribute TAL Life Insurance because of its underlying commitment to corporate responsibility. TAL believes that contributing to the surrounding community and environment is a vital part of good business practice. In addition to taking steps to minimise its impact on the environment, TAL encourages each of its employees to become actively involved in the community to foster a greater atmosphere of trust and responsibility.
Insurance isn’t just a series of dry facts and figures. It’s a way of intelligently dealing with the everyday realities of life. TAL Life Insurance helps businesses and families take the stress out of handling difficult situations. With its comprehensive array of insurance products, TAL customers can focus on enjoying their lives to the fullest. Lifebroker looks forward to a continued partnership with TAL Life Insurance.]]>
Managing Director of Virgin Money Australia Matt Baxby has said that:
“With the Virgin Brand and Tower’s unquestionable reputation and expertise in this area, I’m confident our new life insurance product will resonate with Australians and drive further growth in the market”
Specifically, Virgins policies will be targeted at those that don’t want to splash out too much on their policies but have enough that, if it is needed, their families will continue to survive.
Policies will begin at as little as $2.31 per week and any Australian aged between 18 and 65 will be eligible. Another bonus is their unique 5 year exclusion period. Any pre-existing condition that is declared will be included under the policy after a 5 year exclusion period, a rare benefit in life insurance.
The merge comes at a time where industry officials are working to address the current issue of under-insurance by urging Australians to take out cover to assist in the event of loss of income or life.]]>
This is an extremely worrying thought since the statistics for illness, injury and death speak for themselves.
Risk of illness: In 2004–05, an estimated 77 per cent of Australians had a long-term medical condition; that is, a disease or other health problem that had lasted, or was expected to last, 6 months or more. 
Risk of injury: Injury accounted for over 1 in 20 of all hospitalisations in Australia in the financial year 2005-06, with 400,000 admitted patient episodes that year. 
Risk of death: About 25 per cent of males and 15 per cent of females in 2005 were of persons aged less than 65. 
Australians are the first to admit they would struggle financially should their income stop due to a serious illness or injury. According to The Lifebroker Research Report 2010, nearly half of respondents said they and/or their family would ‘not cope well’ or ‘not at all’ financially, should they stop earning an income for more than three months due to injury, illness or death.
As we grow older, we come to realise these statistics aren’t made up. Our friends and family begin to fall victim to serious illness and injuries. Taking out Income Protection Insurance can help you and those dependant on you rest easy at night with the thought they will be protected, no matter what the future will bring us.
When you start to consider whether income protection is worth the money, you need to ask yourself how long could you survive without your income?
Rice Warner for IFSA, A Nation Exposed, August 2005
Australia’s Health 2008, Australian Institute of Health and Welfare Report, Chapter 2.3, Long-term conditions, www.aihw.gov.au
Australia's Health 2008, Australian Institute of Health and Welfare Report, Chapter 2, Mortality, www.aihw.gov.au
Reading these statistics can be frightening. It appears that we’ll either end up with a mental illness or cancer or heart disease. Maybe all three. Maybe we won’t end up with them, but asthma or diabetes instead.
Australians are often very optimistic in terms of serious illness and injury. We watch television ad’s of people falling sick or getting injured. A lot of us have the same mentality, “it won’t happen to me”.
It’s easy to become cynical when faced with such confronting facts. Instead of becoming cynical, it might be wise to take out protective cover in case you do fall seriously ill.
Trauma insurance, or critical illness insurance pays out a lump sum of money upon diagnosis of a serious illness. There are about 30 to 40 illnesses which are covered, depending on which insurance company you choose to go with.
Talk to a Lifebroker insurance consultant today about taking out trauma insurance to cover you in the even that you end up suffering from a critical illness.]]>
For all the frightening facts about cancer, we do live in a world full of modern technology. Hundreds of millions of dollars is spent each year on cancer research, trying to find a cure. We have effective treatment, which people years ago could only dream about.
We are fortunate enough in Australia to have access to a good public health system. While we can have treatment for cancer that is taken care of by our public health system, we need to look at the situation realistically. If 50% of Australians suffer from cancer, a large portion of those will either pass away from the disease or need to take time off from work to recover.
Taking out life insurance is taking a big step towards ensuring protection for your family, when you are no longer around. It’s not a nice thought to consider, but a necessary one. While we as Australians lean towards the attitude that it won’t happen to us, it may very well.
You can also consider trauma insurance, or critical illness insurance as it’s sometimes known. Taking out a trauma policy will ensure a lump sum payment if you are diagnosed with a critical illness such as cancer. And apparently a lot of us who do fall ill to cancer, will survive the illness.
For those who survive, there are costs involved. You may need to extend your house, to include room for someone to care for you. You may need money to cover you and your family, while you have taken time off work to recover. You may recover and want to go on the holiday you have always dreamed of to assist in recovery. You may have doctors bills. You might have to move house. Maybe you’ll need a car to get to the doctors regularly.
There are standard trauma insurance policies you can apply for. A trauma insurance policy will cover 30 – 40 illnesses, cancer included. You could also take out a critical illness policy, targeted specifically at cancer suffers. This is especially convenient for people who may have suffered a serious illness previously, such as a heart attack, who would not be eligible for a standard trauma insurance policy. They would however, be able to take out the trauma policy, created for those who wish to protect themselves against cancer.
There are numerous ways that insurance can cover cancer and help with treatment costs, loss of income and in the unfortunate case of passing away, the families left behind are also covered. Considering the statistics associated with cancer it is worth thinking about cancer insurance.
> Get a Trauma Insurance Quote]]>
Life insurance pays out a lump sum cover in the event of death or terminal illness, this is designed to pay out any debt an individual may have. This means their family is able to keep their home and not have to worry about expensive mortgage repayments on only one or even no income.
TPD and trauma insurance also provide a lump sum payout, however the benefits are paid out at a different time. Instead of in the event of death, payment is made in the event of sickness or injury.
TPD is designed to pay a lump sum in the event that someone is totally and permanently disabled, therefore never able to work again. Most people take a similar amount of TPD as they do life cover, as the expectation is they will never be able to earn an income again, therefore any debt can be paid out, so the only concern will be living expenses.
Trauma insurance also pays out a lump sum, this is paid when a person suffers a critical illness such as a heart attack, cancer, stroke, open heart surgery and even severe burns. There are a range of conditions covered, make sure to check the terms and conditions of the policy, as some policies cover more medical conditions than others.
Income Protection is one of the most valuable forms of debt protection of all. It pays out a monthly benefit, in the event that a person cannot work due to sickness or injury. Imagine that you had to stop working for 12 months because you’ve been diagnosed with diabetes. Once you’ve exhausted your sick leave and annual leave, would you then have enough savings to support yourself? Or would you have to sell the house and live off the proceeds? Maybe you can survive on a government benefit of $500 per fortnight?
What if you didn't need to exhaust any of those options because you have income protection?
One of the smartest choices a person can make is to take income protection. Instead of just providing a benefit for you minimum loan repayment like loan protection insurance, income protection covers 75% of your gross annual income. This means you can continue to live the lifestyle you are accustomed to, without having to make sacrifices (like giving up the family home).
It is worthwhile speaking to an experienced insurance consultant about debt protection to ensure that you and your family are covered.]]>
Over the last week we have updated the site to include information on how smoking, and diabetes influences life insurance. An article to get rid of misconceptions that blood tests are needed to take out life insurance, and information on suicide exlcusions and life insurance polices. We have also included an article about the risk of going direct to the insurer to get the best deal. We have also included an article about the risk of going direct to the insurer to get the best deal. For further information on each subject please have a look at:
Decisions will need to be made about what type of life insurance is required as well as how much it will cost.
Now, one of Australia’s leading insurance brokers, Lifebroker, has launched their new online comparison engine, iQuote, making the hassle of life insurance a thing of the past.
The application has been developed to provide clients with a quick and simple solution when applying for life insurance products. With the majority of Australian’s having grown accustomed to instantaneous results, Lifebroker have adapted to this need by providing approved cover within 24 hours.
The iQuote widget has been designed to integrate into any website, giving businesses from all around the country the ability to sell income protection, life and TPD insurance. Lifebroker is also offering iQuote as a point of sale tool, allowing businesses to sell to their clients on the spot. Those without websites wanting to sell life insurance products can do so with their own personalized iQuote page.
Managing Director of Lifebroker, Chris Eade, feels this new application will "close the gap for potential clients that believe life insurance consumes too much time and effort. This gives people instant responses and comprehensive cover in a much quicker time frame"
Information sessions are being held across the country for businesses to take the application to their sites and their clients, ensuring that even the most time poor clients will have the opportunity for a comprehensive policy.
Lifebroker is Australia's leading specialist online life insurance broker, helping you to find the best insurance coverage from Australia’s leading life insurance companies.
For more information on how you can start working with iQuote visit www.iquote.com.au or contact Lifebroker on 1300 20 40 50.]]>
The research report tells us Australians have an interesting view on personal risk protection. While they don’t consider personal risk insurance to be of major importance, they admit they would struggle financially if a death, injury or illness was to affect a major breadwinner in the family.
Australians consider it of high importance to insure assets like their home or their car, with 78% of people nominating it to be extremely or very important. When it comes to their own lives, only 46% of people consider it extremely or very important to protect themselves.
Interestingly however, nearly half of respondents said they and/or their family would ‘not cope well’ or ‘not at all’ financially, should they stop earning an income for more than three months due to injury, illness or death.
This tells us that people are prepared to protect their homes and their cars, but substantially less willing to protect their lives. Should this be the other way around?
To decide whether you need personal risk protection, you simply need to ask yourself how you and people dependant you would survive if you were to pass away or become seriously ill or injured.
Even if you have a small amount of insurance in place, is that enough for your family to be comfortable? It shouldn’t be a matter of simply surviving with you gone or out of work. Could they cover the mortgage, pay the bills and continue the lifestyle they are living?
Do you want to leave your dependants with at least the same level of lifestyle?
It is probably less expensive than you think.
When non-insured persons were asked to estimate the annual cost of a life insurance policy for a 40 year old non-smoker, 40% were unable to provide an estimate, while those who provided an estimate overstated the cost by between 49% and 65%.
Let’s have a look at the type of prices you would be paying for life insurance from some of the leading life insurance companies in Australia.
All rates are based on a non-smoker, with an administrative type occupation. All premiums quoted are on a monthly basis.
Diabetes is much more commonly diagnosed now than ever before. Life insurance companies acknowledge this and are continuously reviewing their guidelines to try and accommodate the increasing number of diabetics applying for insurance.
When you consider that our population is predicted to reach 30 million people, that statistic would mean 11% of the entire country could suffer from the disease.
All applications that are processed through Lifebroker are medically underwritten upfront. To simplify the insurance jargon, this basically means that when you apply for the insurance, you will be asked a series of medical questions, which will then be assessed by the underwriter. The underwriter’s job is to evaluate the risk of you potentially making a claim in the future. If you have a pre-existing illness, such as diabetes, then statistically speaking, the risk of you making a claim will be higher.
By underwriting up-front, the life insurance company will offer you fair and reasonable acceptance terms, which you are fully informed of and can choose to accept. This is favourable because you will know exactly what you are, or are not covered for at the outset. If a policy is underwritten at the time of claim, it is common that "hidden" exclusions could mean you have paid premiums for years only to find that you cannot claim at a time when you need it most.
In many cases, whether you have a medical condition or not, the life insurance companies require further information. For a diabetic this will generally include;
Basically, by obtaining this information the underwriter is trying to determine whether you have ‘good’ to ‘excellent’ control of diabetes.
In order to be able to cover you, the insurance company may place a revised terms onto your policy. This can include a loading onto the policy, an exclusion, a deferral or decline, however each insurance company has different underwriting guidelines. Due to the fact 1 in 4 Lifebroker clients are offered revised terms, we have a team dedicated to performing pre-assessments. This is an inquiry across all of the leading life insurance companies, on behalf of our clients, to see if another company is willing to offer better terms.
So yes, it is possible to find life insurance cover if you suffer from diabetes, Lifebroker is here to help.]]>
Things range from the important and obvious, like rent and mortgage repayments to the minor, like their morning coffee.
We’ve listed the top 30 things people spend their money on:
You know you could live without your morning coffee, but would you really want to if you didn’t have to?
We aren’t lucky enough to be able to predict the future, no matter how hard we may try. It’s essential to plan for the unexpected. We have statistics about things like cancer, death and road accidents thrown at us every day. As Australians we pride ourselves on our laid back attitude. We like to have the attitude “it won’t happen to me”.
As we grow older, we come to realise these statistics aren’t made up. Our friends and family start falling victim to serious illness and injuries. Taking out Income Protection Insurance can help you and those dependant on you rest easy at night with the thought they will be protected, no matter what the future will bring us.
When you start to consider whether Income Protection is worth the money, you really just need to ask yourself the question: could you live without all of even just a few of the things listed above?
A myth, according to dictionary.com is:
When it comes to insurance, there are countless stories continually circulating around. With the help of The Lifebroker Life Insurance Research Report February 2010, along with some of our senior staff and the assistance of insurer AIA’s Claims Manager, Howard Williams, we have complied the most common myths we are faced with in the personal risk industry.
Many Australians falsely believe they are protected financially from illness, injury and premature death, both by their superannuation and by federal government laws.
The Lifebroker Research Report provides some enlightening facts on the issue:
That is a huge amount of Australians who are relying on false information when it comes to life insurance and income protection. The reality is the Australian Government is under no obligation to provide life insurance or income protection benefits to families.
We often come across clients that are under the impression that a 2 year or 5 year benefit period means that their policy will expire 2 years or 5 years after first taking out the policy. They are not aware that you actually keep the policy until you are aged 65, sometimes even longer.
In the event of a claim, you would be paid the monthly benefit for your maximum benefit period. This may be 2 years or 5 years or to age 65, depending on which policy you choose.
You can claim as many times as you need to on the policy, you are not restricted in claiming only once for your benefit period.
One of the most common misconceptions in the insurance industry is that the insurance company will not pay out a claim you put forward or will look for ways to decline your claim.
The Lifebroker Research Report substantiates this idea, finding out that:
We asked AIA’s Howard Williams what he thought on the issue.
“At AIA, we try to find a way to pay claims as quickly and transparently as possible. Between September 2009 and September 2010 we declined less than 2% of all claims submitted”
In regards to the 2% of claims, which were denied, 80% of them were in regards to Trauma Insurance benefits that did not meet very specific definitions.
A common story our consultants hear is that when a couple is applying for insurance, only one of them needs to take insurance – usually the main income earner.
There are different types of couples who apply for insurance. Firstly there can be a couple who both work, but end up taking out life insurance only for one of them. When both partners are contributing to factors like a mortgage or rent payments, what happens if the person who passes away isn’t the insured person? People tend to have the mentality that the main income earner can survive without the insurance, but at what cost? Will they still be able to afford the mortgage and the general up keep of their lifestyle, should they be left without financial assistance?
Looking at a different scenario, young families apply for insurance. The father might be working but the mother is not. The father takes out a life insurance policy to cover him in the event of his death. But what happens if the mother is to pass away? Who will stay home and look after the children? If he is out of work, can he afford to live off savings for an extended period of time?
There are many different lifestyle situations, but when taking out insurance, you really need to consider all factors before deciding to only cover one life.
This is one of the easiest myths to crack open. If you put in an insurance application through a broker who maintains good relationships with insurers, you will nearly always be able to obtain some cover. In fact, 1 in 3 of Lifebroker’s clients are offered revised terms, so you can see being declined from one insurer or a being offered a loading or exclusion is quite common. Revised terms offered by an insurer are generally reviewable in the future and it’s very rare that we won’t be able to offer our clients some type of cover. We have a team dedicated to finding the most comprehensive cover on offer for each of our clients.
So don’t be disheartened if you are declined, as many insurers have different guidelines. Just because one company can’t offer something doesn’t mean the decision will be across the board.
According to AIA, “Certain rare conditions are uninsurable but insurers find unique and creative means to manage most risks. It also happens that should a person be uninsurable today, going forward their condition may improve and insurance terms may be obtained”.
We can hear the hesitation from people when they first enquire about life insurance. They aren’t sure if they will be able to afford it. In fact, a lot of people are adamant they won’t be able to.
The Lifebroker Research Report tells us that when non-insured persons were asked to estimate the annual cost of a life insurance policy for a 40 year old non-smoker, 40% were unable to provide an estimate, while those who provided an estimate overstated the cost by between 49% and 65%.
It is within a lot of people’s means, they just don’t know it yet.
The Lifebroker Research Report shows that 77% of respondents falsely believe everyone automatically has life insurance through their superannuation. Of that, 62% of those who have life insurance exclusively through superannuation said they accepted the default amount of life cover in their super. Default levels of life insurance through superannuation are often insufficient, with the default level around $20,000 for an average 40 year old. Would $20,000 be enough to cover your mortgage and continue your lifestyle?
48% of those who have income protection insurance exclusively through superannuation said they accepted the default amount of income protection insurance cover.
While some respondents hold life and income insurance within super, between half and two thirds of these people accepted the default level of insurance, which is typically very low.
A very common misconception with personal risk insurance is that everybody who applies for insurance must sit a medical exam. Blood tests and medical exams are sometimes a requirement of insurance applications, there is no denying that. However, each application is assessed on its individual merits and the underwriters will decide if a medical exam or blood test is needed based on the answers given in the application. It is clearly one of the more common myths with 78% of people believing a medical exam is a necessity in life insurance applications, according to the Lifebroker Research Report.
“Group cover is mostly based on formula driven benefits and does not take into account an individual’s needs and circumstances,” says AIA’s Howard Williams.
Australians have a chronic underinsurance problem, which means most of us don’t have enough cover to protect our families, if something unexpected happened. If you are in a position where you are fortunate enough to work for a company who cover their workers through group insurance, you are lucky but are you completely protected? Group Insurance will not take into consideration each individual employees situation. You may have group insurance for $200,000 life insurance, but if your mortgage amount is $500,000, you may not consider the group insurance to be an adequate level of cover.
Many employers also offer a variation of income protection insurance with limited benefit and waiting periods. What you need to consider is what happens if your disability lasts longer than the benefit period and also what happens when you leave that job. Will you be left exposed?
By protecting your family and assets through a specialist provider, you’ll find you have the cover that meets your needs, instead of just what your boss is willing to pay for.
Australians are significantly underinsured when it comes to life and income protection insurance. While people are happy to take out cover for their homes and their cars, when it comes to personal insurance, they fall well off the radar. 86% of people, according to The Lifebroker Research Report, have cover for their cars and 80% of people cover their homes, but only 25% of people have life insurance.
Nearly half of respondents said they and/or their family would ‘not cope well’ or ‘not at all’ financially, in the event of their premature death or if an illness or injury stopped them earning an income for more than three months.
Around one-third of respondents, increasing to 50% amongst those with dependant children, indicated they would not be financially secure or were unsure of their financial situation in the event of incapacity/death.
While Australians tell themselves life insurance is a luxury, not a necessity, they are also admitting they would struggle without it.
Part One of the article can be viewed here.]]>
The discount applies to a range of the new business options through AXA’s Elevate product suite. Products available for the discount include Life Insurance, Total & Permanent Disablement Insurance (TPD) and Trauma Insurance. While it does also incorporate stand alone TPD and Trauma Insurance, it does not include any Income Protection or Business Expense policies.
Any current AXA policy holders are also ineligible for the discount to be placed onto their policy, however if they take out any additional cover along side their existing policy, they too will be able to receive the discount.
The offer is open to all 2 million RACV members, as apart of their “Show Your Card & Save” program. With our state’s population sitting at just over 5 million, that means around half of Victoria is eligible for the discount. RACV employees and their partners are also able to take advantage of the discount.
The discount is set to last the life of the policy for any RACV customers who continue their membership.
> Get a RACV Life Insurance Quote]]>
Tradesmen know better than anyone; a serious illness or injury can have a major effect on not just their lifestyle, but also the lifestyle of their family.
According to the Australian Bureau of Statistics (ABS) it is more likely for a male than a female to experience an injury at work and this would be especially true for the male-dominated trade industry.
The ABS also states that in the year ending June 2006, 6.4% of Australians were injured at work. That is 690,000 people.
This is a huge number of people to potentially be out of work, depending on the severity of their accident. More specifically it is actually 86 per 1000 employed people in the construction industry to have suffered an injury, according to the ABS.
The Lifebroker Life Insurance Research Report 2010 also sheds some light on the issue. Nearly half of respondents said they and/or their family would ‘not cope well’ or ‘not at all’ financially, in the event of their premature death or if an illness or injury stopped them earning an income for more than three months.
If you are a self-employed tradesmen, you have the advantage of being your own boss and deciding which jobs you want to work on. In the event of a serious illness or injury and if there is no one working along side you, you have to consider how you would continue to maintain your lifestyle and run your business.
When it comes to protecting your family’s income, you can’t just rely on Worker’s Compensation. You need to ensure your income is protected, not just for the on site accidents which occur, but for the illnesses and injuries that can happen after hours.
Ensure you are adequately insured to protect your family, debts and be able to run your business if you fall sick or become injured.]]>
According to the Cancer Council website of Australia:
The ad campaigns, blaring on our TV’s remind us to “slip, slop, slap” with hats and sunscreen, but unfortunately they’re not rules we always follow. The facts show a high number of us will contract some form of skin cancer.
Lifebroker is here to make sure you are protected, should you contract skin cancer. Trauma Insurance can provide a lump sum payment upon diagnosis and Income Protection will ensure your wage is covered should you take time off for treatment.
Enjoy this summer, with peace of mind you are covered both physically, with a hat and sunscreen and financially, through Lifebroker.]]>
The Australian Institute of Health and Welfare offers statistics from 2006, when the last Australian census was conducted. Based on figures from the website, we can see that 286 people are diagnosed with cancer every day. Out of that:
The impact of cancer on a family can be huge. Looking at the figures above may be uncomfortable, but it proves a need for Australians to plan ahead, as the likelihood of contracting cancer appears to be quite high. Cancer takes a toll both mentally and physically and also financially. The support of family and friends will help with the recovery of cancer, but unfortunately won’t pay the medical bills.
Taking out trauma insurance will ensure you are paid out a lump sum of money in the event you contract cancer (or another medical trauma).
With hospital stays, doctors visits and the fact that one person is no longer working, it can impact quite dramatically on a family. Trauma insurance is designed to help pay off debts and helps the cost of rehabilitation. Planning ahead will help ensure you are covered financially.]]>
The Lifebroker life insurance report was conducted in 2010 and included interviews with 1,000 adult Australians.
Lifebroker said superannuation had clearly increased the uptake of life and income insurance products.
Forty nine per cent of Australians now have some form of life insurance including 24 per cent through superannuation, while 21 per cent have income insurance including nine per cent through superannuation.
But Lifebroker warned that the availability of personal insurance through superannuation had a hidden downside.
“The compulsory nature of superannuation has left many thinking they automatically have enough personal insurance.
Worryingly the survey found that 77 per cent falsely believed they automatically have life insurance through their superannuation.
A further 62 per cent who had life insurance through superannuation and 48 per cent who had income protection insurance through superannuation, accepted the default amount of cover offered.
Default levels of life and income protection insurance offered through superannuation are often insufficient with some superannuation life insurance policies providing default amounts as low as $7000. Many income protection policies provided through superannuation had limitations including on the period of cover.
Lifebroker stated superannuation has had a counteractive effect in many instances, causing people to accept lower levels of coverage and reducing the amounts they will receive in claims.
Lifebroker warned Australians not to be complacent about the risks of injuries, illnesses on their finances and to review their personal insurance as soon as possible.]]>
Cardiovascular disease, or heart disease as it’s more commonly known, is the disease relating to the heart or blood vessels. There are some alarming facts about the disease which are not commonly known.
One of the most frightening facts is that cardiovascular disease causes more death than cancer. It accounts for 39% of death among Australian women and it kills one Australian nearly every 10 minutes.
According to the National Heart Foundation, women are at only a slightly less risk than men at contracting a cardiovascular disease. However, traditionally women are much more underinsured than men; leaving them without cover should they contract heart disease.
The facts speak for themselves, with there being at least one type of threat for cardiovascular disease affecting a huge 90% of women each year. Women from as young as 35 are more commonly overweight or obese than in a normal weight range.
The risk of contracting a cardiovascular disease is too high to overlook. As a woman, you need to look at all of your options before it is too late. Making positive changes to your lifestyle, such as quitting smoking, reducing your alcohol consumption and keeping your body mass in a healthy weight range are options to consider.
Establish some personal insurance for yourself before it is too late. Ensure you are covered when it comes to taking out life insurance or trauma insurance is an essential part of taking proactive steps forward. Give yourself peace of mind and guarantee you and your family are covered should heart disease start to affect you.]]>
Findings from a survey of 1000 Australians conducted by lifebroker early in 2010 show that emotions play a greater role in the purchase of life insurance, than it does in the purchase of income insurance.
Mr Chris Eade, managing director of lifebroker, said the most common reason that research respondents provided for buying life insurance (which was cited by 32 per cent of all respondents who owned life insurance), was ‘to protect their children’.
This contrasted with the most common reason research respondents provided for buying income insurance (cited by 22 per cent of respondents who owned income insurance), which was ‘to protect my income and security’.
Mr Eade said that buyers of life insurance are motivated by an emotional fear of death and the impact this will have on their family, while buyers of income insurance are motivated by a practical concern for maintaining their lifestyle should they stop working because of an injury or illness.
Mr Eade also said the emotional aspect to the buying of life insurance manifest in other characteristics.
“People who buy life insurance are more likely to buy it directly from an insurer in response to online, phone or mail advertising.
“They are also less likely to compare life insurance quotes from other insurers and are less likely to review their level of cover annualy than people who buy income insurance.
Mr Eade said people who buy income insurance often tended to be self-employed workers who are looking for a practical solution to real day-to-day financial risk.
“Self-employed people are more acutely aware of the risks of not working, while employed people are more likely to have a false sense of security due to holiday and sick leave entitlements.
“As a consequence, people who buy income insurance tend to shop around more, and review their policies more often.
Mr Eade said buyers of life insurance have something to learn from the approach used by buyers of income insurance.
“People who only buy life insurance would do well to take more time in their decision-making process.
“Some life insurers also exploit the emotive factor and lure young parents with direct offers for insurance that are, on comparison, much more expensive.
“I recommend everyone who is buying life or income insurance shop around first, review the cost of their policy and the level of insurance annually, and read all their policy documents before signing up.]]>
A further 58 per cent or respondents incorrectly believed premiums for life insurance products were much higher than car and home insurance, contributing further to a lack of trust that consumers feel toward life insurance products and the institutions that sell these products.
Life insurance products include life, income protection, trauma and total and permanent disability insurances.
Lifebroker said the results provided another clear insight into the obstacles that stop consumers from taking out life insurance products to protect themselves and their families.
“The fact is life insurance companies are legally obliged to pay claims and as quickly as possible and most life insurance policies cover a wide range of common events that can occur to a person, including the most common injuries and medical conditions.”
“Life insurance companies pay millions of dollars in claims to thousands of Australians each year.”
“According to the Australian Prudential Regulation Authority, the Australian life insurance industry paid $3.9 billion in death and disability claims in the twelve months to March 2010 , while CommInsure – one of Australia’s thirteen big life insurers – paid $60.7 million in total claims in 2009.
“Many people would be in financial ruin if they didn’t have an insurance policy and insurers didn’t pay claims.”
Lifebroker said the research findings are a clear signal to the insurance industry that it must do more to build trust with consumers.”
“As an industry we need to raise awareness of the amount of money we pay out each year, our legal obligations to pay claims, as well as the rights of consumers. Consumers need a better understanding of the professionalism within the industry.”
“We also need to encourage consumers to contact insurance brokers or advisers before buying an insurance policy so they have an opportunity to discuss the policies on offer and understand what they are insured for and the obligations on the insurer to pay at claim time.”
“Consumers should always read an insurance policy before purchasing, including reading the ‘exclusions’ section so they understand what events they are not insured for.”
Lifebroker said other obstacles to buying life insurance include misconceptions surrounding the actual and perceived costs of life insurance, and a lack of understanding about how life insurance works.]]>
In stark contrast, of those who were significantly concerned about the risk of a premature death from an accident or illness, only 43 per cent had taken out life insurance cover.
According to the lifebroker survey, the percentage of respondents who had relevant insurance corresponding to a significant concern about the risk of an event were:
|Risk||% with relevant insurance|
|Having a medical condition that stops me working for more than three months (income protection insurance)||22%|
|Premature death from an accident or illness (life insurance)||43%|
|Getting sick and needing excessive hospital treatment (private health insurance)||53%|
|Home damaged or burnt (home insurance)||65%|
|Crashing my car (car insurance)||81%|
|Car stolen (car insurance)||91%|
Lifebroker said the results were a clear indication that there are obstacles in the way of consumers buying life insurance that don’t exist for home or income protection insurance.
“Obstacles to buying life insurance include a lack of trust in life insurers, misconceptions surrounding the actual and perceived costs of life insurance, and a lack of understanding about how life insurance works.”
“Many Australians are also denying the potential impact an unexpected event could have on their quality of life, with a majority of Australians mistakenly believing they could maintain a high standard of living for up to six months if the main income earner died or was unable to work.”
“Another obstacle to buying life and income insurance is the invisibility of the risks they cover. While cars and homes are material objects with a visible presence that every day remind us of the risks of fire, theft and storm damage, our health and wellbeing is less tangible and can be easily overlooked.”
People need to think of their health and wellbeing as an asset equal to or more important than their cars and homes, and insure it accordingly”.]]>
Lifebroker said the rankings indicated Australians are focused on short-term financial strategies that in the longer-term won’t necessarily provide the best financial outcomes.
“Avoiding debt, paying off debt as quickly as possible, and protecting physical assets like cars and homes are all important short-term financial strategies; however, they should be accompanied by other longer-term strategies such as building wealth through investing and protecting savings and investments by having life insurance and income protection insurance.”
“Without investments in property or shares or a business, most Australians won’t save enough for retirement or enough to realise many of their financial goals."
Not having personal financial protection like income insurance or life insurance puts an entire financial plan at risk, and the risks are much higher than many people realise:
Australians need to understand that sound financial plans rest on three fundamental principles – long-term savings, investing, and protecting savings and investments into the future using financial protection.]]>
Examples of naivety identified by the research included:
The research showed men and women vastly overestimated the cost of life insurance by 49 per cent and 65 per cent respectively, even though premiums for life insurance can be lower than car, home and health insurance. Thirty six per cent directly cited the perceived cost as the major factor in their not having it.
The research revealed a lack of awareness has blinded many people to the financial risks of injury, illness and premature death. Australians stated they were similarly worried by the financial costs of a home burglary or crashing their car, as they were with the financial costs to their family of their premature death or having a medical condition that stopped them working for more than three months.
The Lifebroker life insurance report 2010 confirmed findings of previous underinsurance reports that show Australians are dangerously underinsured when it comes to life and income insurance, in contrast to rates of car, home and health insurance.
“If you look at Australians’ attitudes to insurance in general you see they are quite prepared to buy insurance when they realise a risk exists that is worth protecting,” said Mr Eade.
“When asked only 8 per cent of Australians strongly agreed with the proposition that they were knowingly prepared to take the risk of not having insurance.”
Mr Eade said the research shows the insurance industry has an obligation to raise awareness of the risks of underinsurance, the products available to protect people, the affordability of life and income protection insurance, and that insurers do pay claims when misfortune strikes.
“As a result of these findings lifebroker is developing a new educational tool that will allow us to increase awareness and understanding of insurance and help reduce a problem that is causing so many people additional grief when accidents occur.”
The Lifebroker Life Insurance Report 2010 was an online survey of 1000 Australians conducted by Sweeney Research and covered all Australian states and territories.]]>
You take care of your loved ones because they, more than likely, cared for you when you were young. While you are “Doing the right thing” you may not have paused and thought about who would care for them if you weren’t around.
When it comes to thinking about the way a dependant would survive without your help, the answer can be a hard one to fathom. Would they become dependent on another younger relative or is this impractical? Are they likely to require care workers at home, or would they be moved to a residential care home without your help? More importantly, how would their costs be covered?
With someone relying on you in this way you owe it to yourself, and them, to insure yourself against your untimely death.
Taking some time out to arrange life insurance is one way of making sure they are cared for even after your death.
This will give you the peace of mind if the worst should happen.]]>
While it is natural to think our children need most help when they are young it is often when they are about to leave the nest that they need most help. For example a helping hand from parents may often be needed to get their first foot on the ladder when they set up home or maybe even marry.
Whether it is an unexpected bill or something larger, most parents will usually gladly hand over the cash to support their children. Yet when you stop and think it is surprising just how much financial help is needed. The answer is often a lot! With this in mind, if a tragic accident occurred have you considered how your family would be taken care of?
Having proper cover in the form of Total Permanent Disability (TPD) insurance is one way to protect both yourself and your family against financial catastrophe.
Remember, becoming permanently disabled often turns a former breadwinner from someone who provides for the entire family into someone who needs their support. While your family may be happy to help with many aspects of the change you may wish to avoid the financial burdens, especially if they are less financially stable themselves.
We all know that having life insurance is absolutely crucial and most of us have made appropriate arrangements, but what happens if you do not die? Are you covered in the case of total permanent disability? Making sure you are covered in the case of total permanent disability is one way to protect your family against the financial burdens in the event of an accident or your health failing.]]>
Of course you work hard for the money you earn, and because of this you often will be too busy to even consider worst-case scenarios regarding your job and family. Yet in the cut-throat world of business it may be worth thinking about these potential problems. What would your safety-net look like if your company scheme is withdrawn, cancelled or lost via leaving your job?
A company life insurance policy only works for you as long as you work for that company. As an employee you are entitled to these perks, and your family can take some solace in the fact they won’t be financially at risk should you pass away.
Yet if your job comes to an end, especially before retirement age, you could find yourself suddenly adrift without any life insurance. The safety-net you have relied on is suddenly whipped away from beneath you. Having a back up private policy, outside of that which your employer provides, is one way of the best ways making sure you have something to fall back on if you are made redundant too.
In this situation you may begin to wonder what your family would do if you passed away. The extra protection from money worries a life insurance policy can bring is always going to be welcome in times of hardship.
A second policy need not be expensive; instead it can simply be baseline cover to make sure you family is taken care of in the immediate time after your passing. Making sure you don’t leave your family’s future in the hands of your employer is one step to guarantee peace of mind if you’re ever down on your luck.]]>
“Three rules of thumb can help people when they are buying life, income, trauma, or total and permanent disablement insurance.
“Firstly, be wary of insurance that doesn’t require you to provide a detailed medical history.
“For most people, the less the insurance company knows about you the higher your premium will be. This is because the insurer finds it difficult to assess your level of risk and protects itself by charging high premiums. By providing a complete medical history, like you would when you visit your doctor, you are more likely to be offered a lower premium.
“Secondly, if you have a pre-existing medical condition like diabetes, depression or obesity, be open about your condition and shop around. Some insurance companies are more accommodating of some pre-existing conditions and provide lower premiums.
“Thirdly, compare products from all the major insurance providers. Many of them significantly reduce premiums to actively target people of a particular age and sex.
“The lack of knowledge stems in part from people’s reluctance to think about their own mortality. While people are prepared to contemplate an accident to their car, they are less prepared to contemplate an accident or illness to themselves and hence give personal insurance much less consideration.
“Many people only decide to purchase personal insurance after someone they know experiences a medical trauma or passes away unexpectedly, or after receiving financial advice, taking out a mortgage or starting a family.
“The lack of knowledge also stems from the fact that personal insurance is more complex than other types of insurance.
“Personal insurance doesn’t have to be expensive. Life insurance totalling $500,000 can cost as little as $1 a day each for a 40 year old couple.
“When customers use our website to obtain comparisons of personal insurance products, they are often surprised by how affordable it is and how much the premiums vary across different insurance companies,” Lifebroker said.]]>
Lifebroker based the figures on an audit of over 7,000 financial accounts, representing Australians across occupations, states and territories.
Self-employed occupations more likely to buy personal insurance include IT contractors, builders, plumbers and electricians, and self-employed professionals including doctors, barristers and lawyers.
According to Lifebroker, self-employment contributes to better financial literacy.
“Self-employment makes people mindful of their financial situation and in the case of personal insurance, makes them face the potential risks to their finances like injury and illness.
“In contrast, when it comes to buying personal insurance employees often have a false sense of security, usually linked to their perceived working entitlements.
“Many employees believe their employer will help out if they become injured or ill and are unable to work. Sadly this usually isn’t the case.
“Employees’ sick leave and annual leave pay contribute to a sense they can and should continue to be paid if they are forced to stop working.
“On the other hand, self-employed people are acutely aware that if they don’t work, they don’t get paid.
“Self-employed people, particularly tradespeople, are also more likely to pass financial advice on to their colleagues.
“Tradies regularly tell us they were advised to buy a financial product by fellow tradesperson, often the person to whom they were apprenticed," Lifebroker said.
The top five reasons people buy personal insurance include:
“A simple review could save hundreds of dollars a year without compromising the level of cover.
There are three ways people can reduce the premiums they pay for life, income, trauma, or total and permanent disablement insurance. Firstly, make sure you provide a detailed medical history when you purchase your personal insurance.
“A complete medical history makes it easier for the insurer to assess your level of risk, which for most people is low. Short application forms, while convenient, make it more difficult for the insurer to assess your risk. This means the insurer is more likely to protect itself by charging a higher premium.
“Secondly, if you have a pre-existing medical condition like diabetes, depression or obesity, shop around for the best rates.
“Some insurance companies are more accommodating of some pre-existing conditions.
“For example, some insurers may provide standard rates for those with a high Body Mass Index, whereas others may charge 2 to 3 times standard rates.
“Thirdly, shop around the major insurance providers based on your current sex and age.
“Many insurers significantly reduce premiums to actively target people of a particular sex and age.
“For example, Income Protection premiums for a 40 year old male can vary by as much as $600 a year across the 13 largest insurance companies.”]]>
2. Understand the standard policy features.
3. Don’t get ripped off. A 35 year-old non-smoking tradesman earning $70,000 a year might expect to pay around $85 per month for income insurance with a 30-day waiting period and a 5-year benefit period.
4. Income insurance premiums are entirely tax deductible, which can save you up to 40% of the total premium each year. If you buy a policy, save your receipts and don’t forget to include in your tax return.
5. Be careful of over-the-counter insurance policies. These are usually offered by banks or credit card companies and often by mail. They have short application forms only requiring you to tick a box and sign. These policies are on average 45% more expensive.
6. Does the policy have extra bells and whistles thrown in which increase the premium? These may be nice to have, but are not essential.
7. Make sure you describe any pre-existing medical conditions you may have such as diabetes or depression, and ask the broker if your condition will affect your premium or your payment at claim time. Some insurers may offer better rates for some conditions.
8. If you use an insurance broker, make sure they compare policies across at least 10 companies. Some brokers are linked to an insurance company and may favour one product over others. A broad comparison should be provided. Also, you shouldn’t have to pay the broker anything. Like mortgage brokers, insurance brokers earn fees directly from the insurer.
9. If you already have income insurance but you’re thinking twice about the policy get a free comparison from a reputable broker like lifebroker.com.au. Penalties do not apply for switching policies.
Saving money on eating out and entertainment are also among the experts' recommendations. Some of the simplest recommendations are finding competitive sources for expenses you already have, like a new telephone service provider, or a resource for insurance that can reduce your costs.
Many insurance providers give low quotes online or by phone without taking medical information into account, and when customers receive their full invoice for purchase, it can be double or triple the monthly payment originally mentioned. Lifebroker avoids this situation and allows consumers to make a determination on insurance which fits into their comprehensive spending plan.
Click to read the full Herald Sun article below:
Direct insurance providers, who offer basic life insurance policies that don't require their clients to go through an underwriting process, have shared in this growth. But, according to Lifebroker online insurance brokerage employee Chris Eades, simpler does not necessarily mean cheaper.
Underwritten life insurance policies evaluate their customers based on risk. The lower the risk a potential customer presents to the provider, the lower their premiums will be. Direct insurance providers, meanwhile, often skip the questionnaires and medical evaluations involved in underwriting. Instead, they charge a higher flat rate for all of their customers.
In addition to being comparatively cheaper, underwritten life insurance products usually come with fewer limits on policy amounts and the assistance of a financial adviser. So, though direct life insurance does have a place for certain markets and those looking to supplement existing coverage, it is not necessarily the best fiscal option for everyone.
Click to read the full Sydney Morning Herald article below:
Sales pitches promise that, by eliminating intermediaries, health exams and their associated costs, the insurers with whom you deal directly assure you the lowest possible price for cover.
Not so, claims Lifebroker, whose report on the premium charged for policies purchased directly from the insurer is cited in an article for "Choice" in which the consumer advocate summarizes the pitfalls of buying life insurance online. Such transactions may be quick and easy, but they are no panacea.
Lifebroker's report reveals an astonishing variance in premium charged for identical product purchased direct from various insurers: the highest price was over twice that of the lowest.
"Choice" suggests that consumers may be able to obtain life cover through their super fund at lower cost than via purchase online. "Choice" further emphasizes that, no matter how you purchase life cover, but especially if you are attracted to the lowest premium, the sum insured should be adequate and the policy's exclusions acceptable.
Click to read the full Choice Magazine article below:
While little, per se, is wrong with ostensibly low-cost covers, consumers should be aware that they lack numerous important benefits or simply represent a face amount too low for a given situation.
Life cover is not a "one size fits all" product. Shoppers should assess their particular needs and investigate products tailored to their unique situation, whether that means, for example, higher levels of cover or a policy that pays out for disability or trauma.
Chris Eade of Lifebroker points out that $1-a-day and other seemingly cheap life covers might not be true bargains. Eade notes that the price for such covers relies upon bulk underwriting, rather specific risks. Therefore, the cover's price factors in the cost to insure high-risk individuals who take advantage of offers requiring only superficial health examination, if any. Lifebroker contends that low-cost covers based on group underwriting inflate the premium paid by individuals who might be rated favorably were the underwriting more intensive.
Click to read the full Financial Review article below:
Tip 1: If you have credit card debt consider rolling it into your home loan. Since credit card interest rates are usually double those of mortgages, you can save substantially.
Tip 2: Keep contributing to your super even in down times. Though the value is down, your money will buy you more shares which will be better for you in the long run. Focus on obtaining more shares than on the share value.
Tip 3: Check your insurance policies. Make sure that you do have coverage and that you are getting competitive rates. Getting insurance while you still qualify is also important to avoid high premiums. Lifebroker managing director Chris Eade says that there is no coverage for redundancy and if there were, the premiums would be high.
Tip 4: Consider a fixed rate mortgage. While this will lock you into a rate for the duration of your loan it will ensure that it doesn't go up higher. If you do get a lower rate, keep paying your old payment to pay off your loan faster.
Tip 5: Use tax rebates or savings to pay off debt. If your tax rates have change or you are getting money back, be sure to use it to get out of debt or build up an emergency fund.
Click to read the full Money Magazine article below:
Consumers are also looking for lower premiums and there can be large differences in premiums between the top insurance companies, so consumers have the chance to save money. As an example, a man in his forties can expect to see a $600 dollar disparity in his income protection premiums while shopping amongst the largest insurance companies.
There's also the fact that consumers aren't committing to purchase nearly as quickly as they once did. Eade's advice for debt or mortgage-laden consumers, or those with families, is to be aware that the risks of buying insurance will remain constant, despite the current economy.
Click to read the full Investor Daily article below: