Pinnacle finds the going tough
Cut-price life insurer Pinnacle Life is starting to look towards advisers and brokers in its quest to capture market share.
Wednesday, March 3rd 1999, 12:00AM
Cut-price life insurer Pinnacle Life is starting to look towards advisers and brokers in its quest to capture market share.The company, which was established last year, promises to replace existing term life policies issued by other insurers, and charge 20 per cent lower premiums.
It aims to capture up to 15 per cent of the $270 million-a-year term life market in its first five years.
Pinnacle founder and chief executive Noel Vaughan says the first six months have been harder than expected as people take a long time to make the switch.
While the level of enquiries has been good, "people take an extraordinary length of time to make decisions," he says.
Pinnacle's main promotional ventures are expensive television advertising and telephone servicing.
The company is feeling the pinch financially and has been unable to do the level of advertising it would like.
Vaughan says he has approached a number of other insurers for capital to fund further advertising, however the efforts have been unsuccessful. While one company seriously entertained the proposal, others weren't interested.
Vaughan says he has insufficient money to undertake the level of advertising he would like. "We don't have the firepower."
As an alternative Pinnacle has signed agency agreements with five advisers, and is looking increase that number.
There is no extra financial gain for advisers who sign up with Pinnacle as it pays renewal commissions which are broadly similar to those paid by other life offices.
Vaughan says the gain for advisers is with the clients, who paying 20 per cent lower premiums, feel they are getting a better deal.
Pinnacle's reinsurer is Hanover Re.
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