It’s not every day you get the chance to rethink an entire suite of Life Insurance products from the ground up. When Will Rogers (our Head of Retail Products) got the chance, he jumped at it. The guiding principles were to create a ‘best-of-breed’ product but with some tweaks that elevate cover with integrity beyond just ‘cutting a cheque’ at claims time.

We sat down with Will to chat about how our Retail products support people financially, physically and mentally – when they need help most.

Thanks for your time Will, first we would like to know a bit about where you focused on improving the customer experience through product design?

My main driver was striving for simplification. For a long time, life insurance products have been extremely complex and hard to understand and in doing this we have created distrust in how we operate and what you may or may not be covered for. Simplification means an easier job for Advisers in explaining products and more comfort for clients in knowing what they’ve got and how they’re protected. Simplification doesn’t mean we took everything out, but we did rationalise everything in our policies to ensure they stood up to clients’ need’s, but we also just made our products easier to digest and used more accessible language throughout our documentation.

Another key focus for us was  our benefits and not overloading products with too many options and features (and thus complexity). The great thing about creating modern products was access to data and the wealth of experience of our team which allowed us to stick with benefits we know provide value to clients and avoid features that might sound great but never get claimed.

One of the most thoughtful features (we’re proud of) is the Terminal Illness Care Benefit, can you talk a bit about that and how it works?

The Terminal Illness Care benefit sits within our market-leading Care Support Package. Our Care Support Package contains a bundle of ancillary benefits which are traditionally found within core life insurance covers. Part of our initial simplification was to pull these ancillary benefits out of the core covers and bring prominence to them for customers.

We also saw the need to build a new type of ancillary benefit, which caters for those customers who are terminally ill and want to die with dignity at home. That’s where our Terminal Illness care benefit comes in. It allows the customer, who’s in their last 30 days, to obtain a benefit where they can choose how to spend it. They may put the benefit to accommodation, medical or other expenses that they are likely to incur during this time.

When designing this feature, we didn’t just pull from our underwriting and industry experience, this was one where personal experience of many of the people who work here was able to inform our approach.

What are some other examples of product features and how they work in real-life?

We know that sometimes when you’re recovering or getting back on your feet, there may be times that there’s a relapse of the condition that you initially suffered. Within our Income Insurance cover, we have an inbuilt feature which restarts an Income Insurance claim if there’s a relapse of the same condition up to 12 months after we stop paying a claim.

When people suffer a critical illness, such as a heart attack or are diagnosed with cancer, unfortunately there’s a strong likelihood that there’ll be a re-occurrence or relapse of the same or a related condition. To ensure our customers are protected when this occurs, we offer the ‘Critical Illness Relapse option’, which is a costed option within our Critical Illness cover. If someone’s cancer spreads to another organ or they suffer another heart attack or even need bypass surgery, the Critical Illness Relapse option will support them at this time.

In everything we do, we start with the principle we were founded on, how can we be there for people when they need it most. 

I spend a lot of my time speaking to Advisers and Brokers across the industry, as it’s my firm belief that we get the best results when we operate in partnership to find solutions to industry wide problems.

APRA has made a number of moves, particularly as it relates to Individual Disability Income Insurance, to ensure the industry thinks in terms of sustainability but it’s a move that many Advisers feel is long-overdue. Not just for their clients, but also for them.

I recently asked some Advisers their views on sustainable pricing to get to the heart of why this is the case. 

“As an adviser, pre and post Royal Commission, it has been my duty to ensure that my client’s financial position is stable, as predictable as possible and protected.” 
Amie Baker, Rekab Advice

One of the financial advice industry’s clear and present dangers stings advisers and their clients alike: upfront, unsustainable pricing discounts used by insurance companies to hook clients, but then spike.

When once attractive, discounted premiums jump, and it’s clear many clients hold the Adviser directly responsible. “Clients have premium fatigue” Jeremy Boller from Certe Wealth Protection says. “Conversations with clients around price increases on both stepped and level premiums has increased dramatically, especially on the disability income front”.

Limited options for advisers facing unhappy clients  

Advisers are often caught between a rock and a hard place once discounts vanish.

“In many cases, I review clients’ insurance policies and the biggest complaint is the premium increases.” Says Amie Baker from Rekab Advice.

“And within the first few years of a policy we are challenged, as we cannot be seen to churn, even though clients are often requesting cheaper options”.

Holding the bag after big first year discounts disappear also wastes an adviser’s time. Jeremy says he completely understands clients want affordable premiums, but “the current marketplace offering ridiculous first year discounts…leads to advisers spending far too much time at renewal attempting to ensure clients maintain their cover.”

Age wearies both clients and their advisers

And while honeymoon discounts are hardly a new concept, older clients often encounter a particularly nasty sting in the tail. Huge but temporary first year discounts encourage clients to switch providers every few years, but those clients can end up paying more over the life of a policy as they age and are re-costed for coverage when they health deteriorates over time.

Health problems that arise after a policy is issued may even make it harder for older clients to find a new policy with the same pricing and benefits.

“There is a lot of time and research that advisers undertake that goes into making a recommendation of the most suitable insurance policy and protection strategy” says Paul Davies from Jarickson Insurance Brokers.

“It is not merely selling an insurance product.”

Insurance companies now must help advisers deliver what clients need

“We work for the client, not the insurer, but we still bear the frustration of our clients when insurers increase rates dramatically” says Paul.

“So our poor reputation is a result of insurance company behaviour.”

The industry now needs to change, and to find ways to sell life-insurance by demonstrating the value, not offering heavy unsustainable discounts. 

“An insurer who is not the cheapest, but focuses on a price point that will not vary so dramatically will, in fact get the bulk of business going forward,” says Paul.

“We are looking for stability in an increasingly unstable industry.”

Amie Baker agrees. “Knowing up front when recommending a policy that shows long term competitive rates helps a business like mine,” she says. “It meets my objectives in delivering a sustainably priced premium to my clients.”

Regulation is also driving the long-term pricing that Paul Davies says the general public and advisers alike deserve – and must grapple. APRA has already sounded the death knell for cross-subsidisation and the disentangling of subsidies from income protection and other life insurance products.

We embrace these changes. Our name reflects the foundation ethos of giving fastidious attention to serving the industry’s most experienced and ethical advisers and their clients. 

“It’s a long road,” says Paul. “So the product manufacturers need to start now”. 

Sometimes we forget how much our industry trades in trust.

According to the ‘World Values Survey’, Australians are the most trusting people in the world when it comes to each other. We are more likely than any other country surveyed to say that ‘most people can be trusted’ but when it comes to financial services and those of us in it, trust is at an all time low. And it’s declining.

So, what do we do about it?

There is certainly a role for regulators to help shape the landscape whether through looking at the sustainability of products or increasing professional development requirements for Advisers, but this is a major transformation that requires effort at all levels. We’ve looked at some of the most trusted companies in the world and what got them there, for some potential clues into our own way forward.

In human relationships, trust is comprised of a number of factors like open communication and transparency, authenticity and accessibility – and we expect the same things from the companies we work with. These ideas work to create trust whether you’re talking about a brand, a company, or an individual.

Listen, learn, and act.

Nike is one of the worlds most trusted brands, which could be seen as a bit surprising for a company that’s had its fair share of controversies…and that may be a big part if it’s success. When in 2019 they released a shoe featuring the original American flag featuring the 13 colonies, they faced significant consumer backlash. The brand could have continued with the well-selling shoe but based on consumer feedback pulled-it from sale and promptly apologised. In doing so they demonstrated that they not only listen to customer feedback, they act on it. It’s a fact that unites many of the most trusted brands – they listen, learn and act on customer feedback in an open and public way.

What do you stand for?

According to AdAge, 53% of consumers expect brands to get involved in at least one social issue that is not directly related to their business. Consumers want to know that you (and your company) care about more than just making money. It demonstrates ethics and values and existing for more than just the bottom line. They want to know you care so that your motivations and decisions can be trusted. In doing so, you’re more likely to generate positive conversations around your company. Virgin is one of the most trusted (and profitable) businesses of our time.  Richard Branson often talks about the importance of purpose to his success.

“Never has there been a more exciting time for all of us to explore this next great frontier where the boundaries between work and higher purpose are merging into one, where doing good really is good for business”.

Your call is important to us.

We have all experienced being on-hold to a company and hearing them repeat how important our call is. But you can’t help thinking that if the call was truly important to them, they would have more people answering phones. Shortening the distance between companies and customers is the last major factor we will explore which can help create trust.

Accessible companies are ones where you can speak to decision makers, when you can tell they’re not avoiding you, where no one hides behind a desk, and where you can ask the questions you want – not just hear what they want to tell you.

Starbucks is another of the world’s most trusted brands and they have achieved this in-part through their accessibility on social media. In 2018 they had more than 23,600 conversations initiated on their Facebook wall and they replied to more than 95% of them. Their CEO and most executives are on social media and all engage and reply to customers’ questions – big and small. In doing this they demonstrate that serving customers is the most important activity anyone at their organisation can do. It’s proof that customer service is in their DNA and critical to their business.

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We have a way to go in restoring trust, but the good new is, there is a way forward. By looking at the leading brands, the ones who inspire trust, we can take advantage of their experience and apply it to our own organisations…and ourselves.

References.

https://www.businessinsider.com.au/33-of-aussies-lost-trust-in-the-banks-in-2018-says-accenture-which-is-way-below-global-standards-2019-5

https://www2.deloitte.com/au/en/pages/financial-services/articles/restoring-trust-financial-services-digital-era.html

https://home.kpmg/au/en/home/insights/2019/02/financial-services-royal-commission-regaining-trust.html

For all our Advisers, we wanted to give a quick rundown on what you need to know about upcoming changes to our Income Insurance and other retail products. 

We’re making some changes – for the better!

From 1 April 2020, we’ll be aligning our Retail Income Insurance offering with APRA’s sustainability measures. As we’re removing Agreed Value, we’re also taking the opportunity to make some other improvements. As you probably know, we’re always striving to make things better.

• We’ll be adding a 1 year waiting period for Income Insurance, so you have more flexibility in designing cover for your customer.
• We’re increasing the maximum sum insured for TPD to $5 million.
• We’re adding new functionality so your customers can pay their premium monthly or annually across all ownership types (coming soon!).

We will not be increasing our pricing on Income Insurance or other cover types with these changes. The benefit of all our products being sustainably priced, is that we’re able to maintain our current premium rates across all cover types.

To lock in an Agreed Value application, you have until 11.59pm on March 31, 2020 to submit applications. You will then have until June 30, 2020 to finalise.

We’re not done yet.

Our product design team have already started creating a brand-new Income Insurance offering that we’re pretty thrilled to bring to market soon. We’ll be sure to keep you posted as more details are confirmed.

The icing on the cake.

To help Advisers during the transition period, we’ve extended our 8% Lifetime Discount on our retail lump sum cover until the end of March 2020.

Don’t forget we also offer discounts for healthy living with our Life+ discount, and when you bundle three or more covers, we waive the premium on the Care Support Package. You’re welcome!

As always, if you have any questions, please reach out to your BDM or contact me directly.