New trends in life insurance products will make distribution a key growth area for life companies in the Australian retail market over the next few years, according to a Rice Warner survey.
The survey, which compared 109 direct life products in the UK and other global markets, found the trends are leading many life companies to conduct a ‘re-examination’ of their product and distribution strategy in the retail market.
A key finding was that price competition in the sector, due to an ever-increasing product and feature range, has intensified to the extent that margins are being “squeezed significantly”.
It also found Financial Services Reform advice requirements have made it more expensive for planners to write business and that ultimately this cost must be passed on to insurers and customers.
At the same time, technology has opened up new possibilities in the area of customer data mining and it is rapidly becoming feasible to identify potential life product customers based on demographic profiling.
The surveyed products included term insurance (with full, limited or no underwriting), funeral insurance, mortgage insurance, accident insurance, income protection and trauma insurance.