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It's always the adviser's fault - not

Thursday, August 21st 2014, 9:17AM 2 Comments

by Russell Hutchinson

Underinsurance? Whose fault it that? Is it overpriced, overcomplicated products? A really long application form? A poor claims-paying reputation? A feature of a market where a quarter of all product is sold by counter staff doing little or no needs analysis? A lack of investment in correcting the PR image around those issues? No, none of the above: let’s blame the financial adviser!

Total and Permanent Disablement? What’s wrong with that product? What a beautiful name it has, snappy, positive, memorable great branding! Why isn’t more of that being sold? Come on, it’s got a dismemberment benefits! Surely you cannot wait to go and talk to clients about those. You don’t need good claims statistics – just get out and sell. Not enough sales? Let’s blame the financial adviser!

Misinsurance - Clients don’t understand what they’ve got? What do you mean you’re having trouble with our 44 page policy document? Or try the 159 page document. Try flicking between the schedule, the base wording, the benefit wording, the definitions section, and the claims procedures to see if you will get paid out.

It’s plain English! There’s no problem with our policies. Client confused?  Let’s blame the financial adviser!

High lapse rate? Premiums go up 14% a year, what do you mean there’s a problem with that? Doesn’t everyone’s income go up 14% a year. That can’t be the problem – it must be churn!  Let’s blame the financial adviser!

Advisers: I am sure you have many faults, but are you wholly responsible for all these problems?

Some advisers don’t investigate products, options, and facilities very well. Some advisers take advantage of remuneration terms to get paid better moving clients coverage. You may not have quite the detailed advice process that you would like.

It would be good to have a better process for creating comprehensive risk reports quickly. It would be good to have extensive, simple, and flexible needs analysis tools. Nicer still to have powerful and wide-reaching marketing systems.

You do have a part to play in many of the issues that the industry needs to address. You are part of the value chain from big reinsurance corporates down to a single claimant. However, the tendency some people have, some journalists, for blaming the adviser is probably overdone.

You aren’t the source of all the problems in the industry, we all have a part to play in solving these problems.

« So little TPD, for tiny sumsPerceptions about the price of life insurance »

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Comments from our readers

On 22 August 2014 at 8:41 am Mark Ogden said:
I am sure we have all had it at times a client will ask us to go through their policy document to highlight what they have. I challenge any CEO of an insurance company to go through their own policy document crossing out any points not relevant to their a bog std life benefit with no options. I think they'll have a team for that(or they will get one).

I don't care how much you beat your chest saying it's in plain English, if it's not relevant to what I bought, it's gobbledygook.

On 22 August 2014 at 10:16 am Andy said:
How are we supposed to keep up with continually changing policy terms, conditions, wordings and exclusions? Then a new company comes in with better wordings but less financial certainty. How important is claims history compared to policy wording?

The reality is we can't. We can never guarantee the perfect policy for a client, we can only let them decide on what THEY want to compromise on. Even then they could get caught. A company may offer the best policy, but then it will be beaten the following month by a new-comer.

Just the same as buying a car - sacrifice comfort for economy; Speed for gadgets...

EXCEPT - you cannot sue your car dealer for selling a car without airbags, or because Holden came out with a better feature than Ford (again).

Answer - give your clients the policy wordings of every type of cover for every company and let them make the choice. THEN they will appreciate your recommendation, and even pay you to make a decision for them.

Under-insurance is a perception.

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