Reshaping the Conversation
The life insurance sector has less than six months to prepare for the commencement of the Life Insurance Framework (LIF) regime and questions are still being asked about the end benefits for consumers.
Anyone who has been keeping an eye on the proceedings will know that LIF was designed as a response to some advisers taking advantage of the commission system and abusing it for their own financial gain while ignoring the best interests of clients.
The belief that something is wrong with the insurance sector has been bolstered by media coverage of problems with definitions and claims, and the determination of a Parliamentary Joint Committee to dig deeper into the workings of all forms of life insurance available in Australia.
For advisers, this view of the sector makes for uneasy reading and runs counter to the valuable and professional services they provide and the positive experiences their clients receive, and which regular readers of Riskinfo often relate to us through their online comments and face to face discussions.
consumers…naturally expect that an adviser will be professional, educated and acting in their best interest
It also reveals that there is a disconnect between how the public sees life insurance – as a sector and a product – and how those who on the front line, advisers, and life insurers as well, view the same things.
Sadly, this disconnect is not new and is manifested in the unchanging levels of non-insurance or under-insurance in Australia, usually driven by apathy, but in recent times boosted by a creeping distrust of financial services and advice, including life insurance. It is interesting to note the conversations that have been taking place around life insurance as this latter sentiment has grown.
The internal conversation in the world of advice and insurance has been around adapting and coping with the LIF changes and also getting ready for the changes in professional and education standards. These are good and useful conversations to have but consumers are not interested in them and naturally expect that an adviser will be professional, educated and acting in their best interest.
Meanwhile, the external conversation – those held over BBQs and sidelines at the footy – are around scandals, failures and why LIF may not be a bad thing for consumers after all, and ongoing industry posturing and resistance can reinforce that view.
And yet, neither discussion cuts to the heart of the problem and that is too many people have no idea about life insurance, have little or no cover and are open to insurable risks while a well-resourced, well-educated and client orientated service industry is in easy reach.
Starting this conversation around getting more people covered by life insurance presents an opportunity to reset the discussion and to lift the reputation of advisers and insurers, to create a social good and to provide peace of mind, and in some instances financial benefit, to more people.
Perhaps then it is time to stop seeing the solution as ‘If we build it, they will come’ and move towards ‘Let me tell you why insurance is good news for you’.
Many advisers will claim that this is what they have been doing for years so why make a big deal out of it now. They may also add that the media won’t cover the good news stories anyway. Perhaps then it is time to stop seeing the solution as ‘If we build it, they will come’ and move towards ‘Let me tell you why insurance is good news for you’.
The shift in this direction, where life insurance is presented as protector and preserver, has already started with some life insurers promoting the benefits of good health and wellness, or presenting themselves as guarantors of lifestyle, often without mentioning product at all.
And it is clear that life insurance works for those who have it. The Risk Store reported recently that a record $9 billion was paid in claims in Australia in 2016 benefitting thousands of individuals and families across the country.
The recipients of those funds understand the ‘good news’ of life insurance, the task that lies ahead is reshaping the external conversation so many more people understand it as well.
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