Advisers told to go on the attack
Life insurance industry players are split on how agents should respond to the potential threat to their businesses from new entrants such as the Warehouse.
Thursday, September 13th 2001, 11:03AM
The Warehouse recently unveiled plans to sell life insurance products at kiosks in its 75 stores, seven days a week.
"We are now offering New Zealanders easy access to cost-effective products," acting general manager Bruce Gordon says.
Also on offer is travel insurance, accidental death insurance and two MasterCards.
The discount retailer joins a growing list of alternative outlets for life insurance, which is now also offered by banks, credit card companies, the Automobile Association, the Public Trust, and accountants. ASB even sells life insurance from kiosks in shopping malls.
AXA says agents should go on the attack to protect their client base from the new rivals.
However, Sovereign downplays the threat, saying there will always be a place for traditional life agents.
Paul Watkins, a marketing consultant working with AXA, says since the start of the year he’s personally received four offers for life and disability insurance from organisations he’s a customer of.
These new outlets are chipping away at the client-base of agents, Watkins says.
"The best defense is to attack," he says. Advisers should boost their own contact with clients by sending out more newsletters.
"It is inexpensive, easy to do and the best part is that you, as the adviser, (is) don’t have to get involved. Your personal assistant can arrange the whole thing."
However, Sovereign risk products manager Michael Hewes says the slow response to Internet sites selling insurance shows people preferred to buy life and disability cover through an agent.
"People want to sit down with someone and have a full needs assessment, so there is always demand for good advisers. They will win out over any other channel like The Warehouse."
Investment Savings and Insurance Association chief executive Vance Arkinstall believes agents can co-exist with budget outlets such as The Warehouse.
"They won’t make a lot of difference to advisers. There are always people who will choose the low-cost means of accessing a product. But there are also people who will go to an adviser and be prepared to pay the price for the advice."
The growth of low cost outlets is unlikely to put downward pressure on agents’ commissions, he says.
"Those who seek advice are prepared to pay the premium," he says.
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