Risk specialists future is positive: Zurich

Risk advisers are unable to grow their businesses but the future for risk specialists is “quite positive” as generalist advisers are seeking out specialists for support and the need for insurance is emphatic, according to Zurich.

Speaking on a panel at the Association of Financial Advisers (AFA) Evolve conference, Zurich life and investments chief executive, Justin Delaney, said balancing the inforce management of existing customers had been an increased burden on advisers, particularly with price increases.

“A lot of the advisers we talked to, particularly who are specialising in risk are dealing with much more inforce management types of issues and customer issues meaning they aren't actually growing their businesses, which clearly is not a good place to be,” he said.

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Delaney said he hoped over time the management and affordability issues would dissipate.

“The opportunity for generalists and specialists, particularly as demand we know is strong the customer need is emphatic, is that we know customers need what we provide,” Delaney said.

“I think the increasing specialisation, typically for a number of groups is certainly two new types of partnerships. The ability to scale and investing in new technology and new processes and consolidate books as well. The future for specialist risk advisers should be quite positive given that we are seeing some generalists look to seek specialists out for support.

Delaney noted there were new advice models emerging that were focused on digital engagement that helped empower clients and customers, and develop a kind of relationship that was quite different to now.

“Overall, both generalists and specialists are really important to our industry, particularly if we're looking to close that advice gap and ultimately provide advice and life insurance to all customers,” he said.

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I am fully FASEA qualified and have no plans to retire. However I've reached the conclusion that it's not worth offering insurance advice to new clients anymore, because of...

- regulatory overhead
- premiums
- competition from insurers' direct channels
- clawback periods

- product quality
- insurer service & support standards
- consumer confidence in the insurance industry
- commission rates

If there was only two or three of these challenges to overcome, then I'd be doing so. But when virtually every metric in the insurance advice business is going in the wrong direction, it's time to give up.

Insurers, parliament, regulators, "consumer" associations, and the media are all intent on transforming the personal insurance industry from one dominated by high quality products sold via advisers, to one dominated by poor quality products sold via direct marketing and super funds. There are too many powerful forces aligned against professional insurance advice.

Yes, its a shame. I have been continuing to offer it just because I have wanted to be able to afford this to clients... I just cant anymore.

There is so much liability in doing so, underwriting getting tighter, its a loss making exercise and product quality is getting watered down. A genuine shame.

Absolutely agree. Too much risk, too hard, too many loadings etc, etc,etc. I have written my last insurance. Refer to finder.com

It's always the execs from insurance companies telling us there's a bright future with new business models coming in. Until commission rates go back to at least 80%, clawbacks return to 12 months or less, and the compliance burden is reduced by at least half for insurance advice, there's no future. I still write insurance but I only actively follow up business clients who have the capacity to pay premiums in excess of $7k-$8k. It's not the way it should be but that's the situation the Government has created.

My business partners run a general insurance brokerage. They make a killing. No SOA's, do a needs analysis if you feel like it, spend a few hours testing the market then send out the invoice. They deal with premiums and levels of cover that make what we do look immaterial, yet we have all this compliance while they have essentially none. The brokers in the business would be working 25-30 hour weeks and taking home $300k plus on average, one makes $1m p.a.

Life insurance should shift back to that sort of model. SoA's should be the size of our current RoA's and for small changes to cover levels a simple file note should suffice. Then small value clients could potentially be serviced. Never going to happen though unfortunately.

The comments from insurer CEO's are getting more laughable by the day

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