Efforts by clients and advisers to activate agreed-value policies before the 1 April deadline were substantially derailed by the impact of COVID-19 and resultant job losses, according to Centrepoint Alliance national insurance manager, David Spiteri.
In an assessment of the life/risk market in the wake of the coronavirus, Spiteri said it had led many Australians to reassess their life insurance cover and was likely to lead to significant shifts in life insurance product design.
“It’s no surprise that with the outbreak of the coronavirus pandemic, people are looking into their insurance policies to determine what they are covered for and what they need to consider for the future,” he said.
“Advisers are reporting a spike in insurance-related enquiries. On the one side are clients who have lost their jobs as a result of the pandemic, many of whom are looking to cancel their health insurance or life insurance policies. On the other are those who are double checking their life insurance policies to ensure that they are adequately covered for the coronavirus pandemic.”
Spiteri said that prior to the outbreak, life insurers were seeing a surge in new business, in particular in applications for Agreed Value income protection.
“As insurers will no longer require life insurance companies to offer Agreed Value policies from 1 April 2020, many were seeing an uplift in applications prior to this deadline. However, what hasn’t been reported is the amount of these applications in underwriting not going ahead due to applicants losing their job and not having an income to protect,” he said.
Spiteri suggested that notwithstanding job losses and hardship, there was no better time than now to touch base with clients, given that there is a reasonable chance that their financial circumstances may have changed.
“It is a time to give clients reassurance on the benefits of having their cover in place and what they are covered for,” he said. “Given the current circumstances, there is likely to be some clients who are now unemployed and having financial difficulties. Where advisers can help is by exploring the policies that are in place and detailing the options that may provide clients with some premium relief.”