Consumers bypass advisers for risk insurance
Consumers are gaining confidence with regards to buying risk insurance direct rather than through an adviser, according to Rice Warner's latest direct insurance report.
The direct insurance market grew from 11.9 per cent to 12 per cent in the 12 months to December 2012. However term, income protection and accident insurance business had grown faster than adviser-sold and super risk insurance, which reflected increasing consumer confidence in bypassing advisers when purchasing this insurance, the report said.
Although direct insurance sales increased 10.6 per cent and in-force premiums by 13 per cent, the three market segments experienced significantly different results.
Credit-related insurance experienced a 9.5 per cent increase in in-force premiums, funeral insurance 14.1 per cent, and term, income protection and accident insurance, 15.1 per cent.
"The growth of the funeral insurance segment continues to surprise on the up side and reflects distribution initiatives in new customer segments by some insurers," Richard Weatherhead, principal and head of Life Insurance of Rice Warner said.
"Term, income protection and accident insurance business has grown more rapidly than traditional adviser-sold and superannuation fund risk insurance in 2012, reflecting increasing consumer confidence in buying risk insurance direct, rather than with advice."
Success was also patchy across businesses, with many direct life insurance ventures shutting up shop due to less-than-expected business volumes. Although the market did experience higher lapse rates, Rice Warner said this was more likely to affect the adviser market.
Rice Warner said its research showed direct life insurance products could compete with adviser-sold products. It warned, however, that there was a vast spread in prices across the direct insurance market.
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