Risk market to mimic platform industry
TRENDS in the risk market will mirror recent developments in platforms through the introduction of a wider range of simpler products over coming years to push down premiums.
This is the future of risk according to AXA head of financial protection solutions Derek Hogg, who was speaking at this year’s Association of Financial Advisers (AFA) conference.
“The slowing growth of risk insurance and the high level of under insurance in Australia suggests a mismatch between the product and service needs of consumers and advisers and what is currently being offered by major companies,” Hogg told delegates.
Hogg says life insurers need to pay increased attention to segmentation of the risk market to cater for people with different lifestyles and different incomes.
“Presently we want to sell a Rolls Royce to everyone. But what our industry needs to recognise is that not everyone can afford a Rolls Royce. We need to offer them the $15,990 Hyundai option as well,” he later told Money Management.
“Even the most rudimentary form of segmentation into categories such as ‘accumulators’, ‘pre-retirees’ and ‘retirees’ confirms how client needs differ over time. Yet our product development, marketing and servicing has been slow to respond to this.”
Hogg said AXA will introduce a range of new products to the risk market in mid-2005.
He also called for industry and government to do more to raise public awareness of the importance of risk insurance.
“A lot of people won’t put their money into risk insurance because, unlike a house or even a car or a plasma screen, they can’t touch it. We need to convince the population that income-earning ability is a tangible asset too.”
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