About Good Returns  |  Advertise  |  Contact Us  |  Terms & Conditions  |  RSS Feeds Other Sites:   tmmonline.nz  |   landlords.co.nz
Last Article Uploaded: Wednesday, October 23rd, 11:06AM
Latest Headlines

The cost of convenience

The trend towards selling non-underwritten cover is growing.

Monday, September 5th 2016, 11:03AM

by Russell Hutchinson

Advisers are going to find a lot more of these clients in the next few years. What’s going on, and why?
It will not surprise you to know that direct insurance has a low conversion rate. Without the assistance of an adviser many clients do not carry on with their applications for insurance under their own steam. A big reason for that is underwriting questions. The more personal, complicated, and pointed, the more likely a client is to drop out.
But, remove the underwriting and hey presto! More people are covered, and in a world where not enough have cover that is a good thing.

But that comes at a cost.

Two costs in fact. The premium will be higher and the policy will usually have some quite tough restrictions – pre-existing conditions, sports / hobbies, and some occupations.
Take price. There is a conventional wisdom that ‘going direct’ and ‘cutting out the middle man’ means lower cost. This can be true for some specific offers, but typically isn’t true overall, and when you bring in differences in policy features the value demonstrated is, frankly, a matter of choice. But if non-underwritten products come to dominate then costs will routinely be higher. One example we just did shows that a popular non-underwritten cover is 40% to 60% more expensive than the underwritten equivalent. That’s a big difference, but it doesn’t end there.

Whether you are covered or not isn’t that simple. One insurer offers a great brochure to explain how pre-existing conditions exclusions, occupational exclusions, and hazardous pursuits exclusions all work. It’s eight pages.

Having said that, I am actually glad these products are available. Clients taking them out to save an hour filling in an application form, or the embarrassment of confessing to a stranger a medical condition, are making a trade-off – an expensive trade-off – but nevertheless one that they have chosen. You may even suggest these products in rare circumstances. A person with pre-existing conditions and an urgent need for cover could buy this in the interim. But there is another reason you might like the fact that this cover is becoming so popular: when you come across someone who is now ready to invest a little time, it is so easy to offer something better.


Tags: Insurance Advisers Russell Hutchinson

« Will insurance become redundant as things get safer?Are things you never use worth buying? »

Special Offers

Comments from our readers

No comments yet

Sign In to add your comment



Printable version  


Email to a friend
Insurance Briefs

AIA adds mental health support
AIA is boosting Vitality members’ donations to the Mental Health Foundation.

Major milestone for Cigna
Cigna, which acquired OnePath Life last year, is on the verge of reaching "a huge milestone".

Fidelity Life gets tick
Fidelity Life has been awarded the Accessibility Tick.

Asteron and Fidelity go head to head for award

News Bites
Latest Comments
  • Passive managers reject criticism
    “Are Kiwi Wealth really this misinformed? Plus their active share is appalling. MSFT AMZN and AAPL as largest holdings, that's...”
    2 hours ago by CJ2
  • Retirement Commissioner: Consider KiwiSpend
    “murray, ks can be a very useful tool if structured correctly. there's more than one way to use it....”
    3 hours ago by w k
  • Retirement Commissioner: Consider KiwiSpend
    “KiwiSpend is an idea for a solution to a potential challenge -what happens when you might live longer than average and have...”
    4 hours ago by Michael Chamberlain
  • Passive managers reject criticism
    “This is where fact meets fiction. I have read and agree with the KiwiWealth report on active vs passive. It has been produced...”
    5 hours ago by Pragmatic
  • Retirement Commissioner: Consider KiwiSpend
    “PS reflecting an earlier story I read somewhere, isn't the Government extremely clever allowing the situation to occur where...”
    21 hours ago by Murray Weatherston
Subscribe Now

Mortgage Rates Newsletter

Daily Weekly

Previous News
Most Commented On
About Us  |  Advertise  |  Contact Us  |  Terms & Conditions  |  Privacy Policy  |  RSS Feeds  |  Letters  |  Archive  |  Toolbox
Site by Web Developer and eyelovedesign.com