From the FPA: Risky business for advisers

With an estimated 70 per cent of Australians under-insured, there’s a huge untapped market for risk insurance. But the industry may need to broaden its approach to convince Australians that risk insurance should be the foundation of their financial wellbeing.

It needs to better articulate the needs, features and benefits of risk to the community — and that may mean introducing a broader range of products, as well as simplifying the application and underwriting process.

Risk is no longer the stand-alone business it used to be. Giving best advice requires an holistic approach to clients’ needs and that in turn means addressing issues of risk, either directly or via an alliance with a specialist risk writer.

Over the past three years a number of advisers have diversified their practice income and now offer risk insurance alongside super, investment and mortgages.

What then is the best practice model: generalist or specialist?

How many ‘carriers’ should be used, and how should they be positioned with clients?

To what extent should risk software drive advisers’ recommendations?

Should clients be charged on the basis of fee for service or commission?

Where can advisers add most value to the consumer?

These and many other often asked questions will be addressed at the FPA Annual Convention & Expo in December, which for the first time this year includes an additional stream of eight sessions focused on risk insurance.

The sessions are geared both to the interests of financial planners who are experienced risk writers and those now considering adding risk to their range of services. They also have relevance for managers of insurance businesses and service providers to the industry.

The risk insurance sessions will include:

n A presentation by Dr Michael Holt demonstrating the impact insurance can have on peoples’ lives. A severe car accident left Dr Holt with extensive injuries. His message will reinforce the importance of risk cover for clients.

n Lisa Gray of Wealth Protection MLC Life will look at the future of the industry and at product and distribution issues in her keynote address, ‘What’s Happening to the Life Insurance Industry: A CEO’s Perspective’.

n A ‘bullring’ discussion facilitated by Graham Peatey, managing director of the Encore Group, centering on building a successful risk practice within a financial planning practice. Using a case study, the panel will consider what’s worked and what hasn’t in risk insurance, the drivers for change, how practices accommodate change, and clients’ reactions.

n An examination of risk management for small business in two advanced strategy sessions.

In one session, Andrew Lowe of ING Australia will focus on the technical aspects of business succession, taking a look at strategies for selling business insurance and the buy/sell agreements that govern them.

The second session, run by Matt Richie and Jon Defries, strategic advice consultants with MLC, will address ‘tips and traps’ of life cover within superannuation.

n Zurich Australia’s Chris Kirby will show financial planners who are new to writing risk or those considering moving into risk the ground rules for getting started. This session will look at the skills needed, how to write risk-only statements of advice and the essentials of underwriting.

Richard Klipin, the head of boutique distribution at ING Australia, is a member of the program committee for the FPA Annual Convention & Expo 2004.

FPA Annual Convention & Expo 2004, December 1-3, Sydney Convention and Exhibition Centre, Darling Harbour. For more information, log onto www.fpa.asn.au.