The Australian insurance industry must focus on product manufacture and marketing as too many people are both uninsured and under-insured, according to AXA’s financial protection general manager Tassin Barnard.
Barnard in her address to the AFA national conference today argues that improving the manufacture and marketing of risk products must become a priority alongside improving customer and community understanding of the need for risk insurance products.
She says too many companies are facing a situation where their outflows are exceeding their inflows. “One response is to address the outflows through cost reduction and efficiency improvements. Another is to ramp up inflows through aggressive pricing and pursuit of market share,” she says.
“However, the more productive and beneficial approach is to address all four business levers simultaneously — that is, focus on product design, market positioning, risk selection and claims management,” Barnard says.
Yet she adds that such an approach requires “a fundamental shift from a business model that is product-centric to one that customer-centric” and that by customers she means advisers and end consumers.
Barnard says that too many Australians are both uninsured and under-insured, and is confirmed by research house Dexx&r which suggests that the average Australian has current life insurance cover equivalent to just 26 per cent of that required.
She says the same data suggests that the level of under-insurance in Australia is 74 per cent, equivalent to $401,000.
Barnard says this data clearly identifies opportunities for the insurance industry given the current level of insurance for many Australians is manifestly inadequate and the cost of raising the adequacy of cover is not substantial.
“I believe there is scope for our industry in general, as well as individual companies and advisers to work in concert to revive risk insurance,” she says, adding that “at an industry level, issues such as under-insurance need to be brought to the attention of the general community, government, media and others with an interest.”
“Significant progress has been made in raising community awareness about the adequacy of personal superannuation savings. The role of risk insurance in providing financial independence needs to be similarly promoted,” Barnard says.
