Despite the slightest of upticks in new business for the June 2023 quarter, following a sanguine 3 years in new business retail sales, it wasn’t enough to save Integrity Life. The retail life industry is currently surviving on a small cohort of advisers to bring in new business.
With 15,634 advisers in Australia at the end of June, in the last 6 months only 40% wrote a life insurance policy, what was once a standard part of an adviser’s armoury when onboarding a client or reviewing as a staple of their annual meeting. As advisers have shifted to servicing more retirees and “riskies” have fled in droves, underinsurance is worse than ever. As Deloitte highlighted in their recent Mind the Gap report, “we have estimated that Australian families could have claimed $25b more last year if not for underinsurance.”
Chart 1 – 6,373 advisers wrote a policy from Jan to June 2023
Source: Adviser Ratings
Note: Each adviser cohort represents 25% of polices written for the last 6 months.
Those 127 advisers, who write 25% of Australia’s retail life policies are earning on average $200k - $250k in upfront commissions every year, a significant drop from the earning potential prior to LIF.
Which begs the question, if the top line is immovable, will broader technology solutions, the QAR or adviser recruitment help bridge the gap. Deloitte posits that the “the Australian life insurance industry could grow by up to $40b in annual premium (i.e. to more than three times its current size of c $18b) by addressing the under-served segments of the market, such as the middle-income segment.”
To achieve this, all stakeholders need to come together to find a viable solution. Technology and customer centricity will play a role, but government incentives such as rebates or tax deductibility on death insurance should also be on the table. And will super funds and group life play a larger role? The recognition of the issue is even more apparent following the demise of Integrity Life. The insurers are awake to the issue, and have thrown their support behind CALI, the Council of Australian Life Insurers, to help enliven the sector and provide a united voice for stakeholders and to Government.
On top of this, two solutions being introduced to the market, are attempting to solve the issue from within the heart of the adviser community.
LifeBid, founded by risk adviser Brett Wright, is partnering with industry to build an end-to-end life insurance advice platform that is aiming to cut time and costs to serve by up to 90% for advisers. In fact, LifeBid recently announcing an equity crowdfunding raise to make it possible for the advice community, licensees and the wider sector to be owners, beneficiaries and the drivers of innovation in the life insurance advice space with LifeBid.
Meanwhile from a content perspective, RiskHub, founded by industry veteran Marc Fabris, is creating a central platform that offers resources, education, and tools for advisers to excel in risk insurance advice. The goal is to simplify the delivery of advice, for both risk professionals and holistic advisers, and provide streamlined access to valuable insurer and service provider information, ultimately saving time for advisers and helping them focus on delivering exceptional advice.
And with the new brigade of advisers coming through, ably exposed to the industry through firms like Striver and through its partnerships with insurers, just perhaps we may have the beginnings of a comeback of sorts – the Knights of the NRL or the Blues / GWS of the AFL - searching for a sports analogy with finals upon us…
I’ll leave the parting words to Deloitte – “Each individual insurer should seize the opportunity to grow the market and in doing so to outgrow their competitors as befits the competitive marketplace.”
Article by:
Comments10
"Well ! what do you say that has not been said before Someone in their admirable yet mislead thoughts decided that there was a conflict of interest if you received an invitation to an overseas event ( conference) because you put a majority of your business with a particular company Well all you genius’s guess what ! You were wrong I was one of those people who enjoyed those conferences worked closely with other advisers and learnt so much No one that I ever met said they were there purely because they put all their business with one company They did it because they knew they were respected by the company and where listened to when issues came up like claims etc Chemists and doctors still get their trips ( chemist by selling you the “ in house “ brand Doctors via referrals but no one questions that! This mental stigma that advisers were the biggest issue in the so called failure of the industry could be no further from the truth. We loved our business and more so our roll to help our clients! We ( collectively) never had anything other than the clients best interest in mind If not why have we lasted so long ? Me 43 years some others longer or well over 20 years So what is causing this “great divide” Greed by the insurance companies and current premium gouging is the current issue and a major problem yes the income protection area lost 3.5 billion in the lead up to 2020 but why do they have to get it back all in one go ? Sorry everyone! End of rant ! Just so disappointed in the multitude of stupid reasons we hear from them People want cover they know the importance but simply cannot afford premiums that take good off the table Cost cost and more cost and I doubt it will stop Look after those that can afford it and let the rest work it out themselves What a shame ! Let’s see how this new eara unfolds shall we ??? Regards "
Frank 21:55 on 13 Sep 23
"It's a very sad reality, the whole industry is holding on by a thread. And the fact is so many excellent advisers have left the industry due to stress or education requirements. So much for Australia having one of the best advice markets in the world. GONE! Great work...... "
Christopher 17:20 on 13 Sep 23
""The completion of some new business with insurers can drag longer than 6 months. I measure and compare it to managing a building site. The building site would be simpler and gratifying. At the end of the day we may receive a modest commission or a loss and if the client cancels the policy we deal with a clawback. Incentive is low and more clients become underinsured". "
Brad 16:47 on 13 Sep 23
"Reap what you sow, insurers. No one forced you to eye-gouge us. "
Michelle 15:04 on 13 Sep 23
"Things need to change, claims are increasing, higher lapse rates, not much business coming in for the insurers, and how good was LIF?... what a disaster, and all created by government and industry. Now the smaller life insurers are slowly dying, while you have the likes of TAL, Zurich, and AIA with large backing, the smaller players are falling away, and there could be more to come. Unfortunately, new risk platforms and better resources will not change anything until broader changes come into place, like lifting comms and reducing red tape, I mean commissions were seen as bad, and without advisers writing risk, what did they think was going to happen, throw in more compliance, claw backs with little return... the writing was on the wall. "
Tim 15:01 on 13 Sep 23
"Self inflicted own goal by the life insurance companies and the government. All predictable, same thing happened in the UK when they cut upfront commissions and then were forced to reverse the decision. At the end of the day its our clients who suffer as a consequence of LIF. Not only that but all our life companies are now foreign owned and competition has been reduced. Thanks for protecting the consumers job well done!!!"
Murray 14:57 on 13 Sep 23
"It would be interesting to break down that 493 into deciles and see how it plays out for $ and # of policies. Very interesting data!"
Rebecca Pritchard 14:48 on 13 Sep 23
"Earned about $30 an hour before costs on my last 3 new policies in the last 2 months. Can't support a business on that. Raise commissions, if it isn't to late."
Michael 14:42 on 13 Sep 23
"At the current cost level per advisor, no one will enter this profession "
Gihan 14:28 on 13 Sep 23
"The insurance companies make it near impossible to make risk a profitable market. Terrible systems, terrible service to advisers, unacceptable turn-around times on even the most basic admin requests and that's before we touch on the price gouging issue!"
Matth Robertson 14:25 on 13 Sep 23