What are the long-term impacts of COVID-19 on life insurance?

What are the long-term impacts of COVID-19 on life insurance?

When we have so much to deal with in the ‘now’, like regulatory change (and uncertainty), technological transformation, and supporting client needs today, it’s easy to lose sight of what’s on the horizon. But what makes us good at our jobs (Adviser and Underwriter alike) is the ability to see the writing on the wall and ensure we take steps now to plan for what’s to come. Here are some key areas to watch that are likely to have broad impacts for Advisers, insurers, and clients.

 

More Australians may become critically ill over the next two years.

Data from the Medicare Benefits Schedule (MBS), analysed by the Heart Foundation, reveals a 10% drop in GP visits for the management of chronic disease in March 2020, equating to 96,000 fewer visits compared to the same time last year*. In fact, across the board fewer of us have been visiting the doctor to get check-ups – between 30% to 50% , with a 40% drop in pathology^.

What does this mean? Well we know the rates at which Australian’s develop chronic diseases, we’re just seeing the delay of those being discovered and treated. From a client point of view, not discovering these things sooner may make them harder to treat, and from an industry point of view, the increase in severity means bigger payments and potential cases for increasing the cost of premiums.

 

Mental health impacts are still largely unknown.

We do not yet know the impacts that long term isolation or living through a pandemic will have on people, but we do know enough about psychology and claims data to know that we are likely to see an increase in mental health issues. Acknowledging this very issue, the Federal Government pumped an additional $500 million into suicide prevention and mental health support as part of their COVID-19 response.

That said, it’s not only mental health issues and resulting claims caused directly by the pandemic, but as we have seen, people’s ability to access social support (emotional and practical) through extended family and other social interactions has been significantly affected by restrictions on movement and travel. This means for people who were already managing mental health concerns, their access to support has been limited. What we may see is not only relapse but mental health conditions on top of other long-term illness or injury.

 

Increased cost of Income Insurance.

While not a direct result of COVID-19 and more to do with the unsustainability of the products, the increased cost of II or IP (income protection) is likely going to compound the two other issues. Not the least of which because so many insurers cross-subsidise their products. Integrity, of course, does not.

 

So what does this mean for Advisers and clients?

It probably wouldn’t surprise anyone if prices for new protection policies started to rise, which means getting cover in place now may not be the worst idea. Whether we see price increases – and how big these may be – will largely depend on market forces, but either way, insurers are expecting a significant rise in claims – which often leads to higher prices.

Advisers have another important role to play here too and that is keeping their clients covered, even as financial pressure continues for many clients. Integrity, like many insurers, has options like premium waivers for financial hardship and ‘premium breaks’. These should always be the first resort before cancelling and removing cover altogether.

*http://www.mbsonline.gov.au/internet/mbsonline/publishing.nsf/Content/downloads

^https://www.dailytelegraph.com.au/coronavirus/the-illnesses-being-missed-thanks-to-covid19-and-skipping-doctor-visits/news-story/1226638711cf48ae8dd0d39bdb088e86

 

This information has been prepared without considering your personal objectives, financial situation or needs. Before acting on it, please consider its appropriateness to your circumstances.

Scott Hodgson

Scott Hodgson

Chief Underwriter

Key considerations for life insurance. How to get the best deal and avoid the pitfalls.

Key considerations for life insurance. How to get the best deal and avoid the pitfalls.

We spend a lot of time creating information for customers on how best to approach the purchase of Life Insurance. We understand it can be a complicated purchase so, here is a handy guide on key considerations for first time buyers.

Believing life insurance is too expensive.  

One of the most common objections we hear from those who do not have life insurance is around the cost. Many people believe that it is out of reach for most Australians. The truth is, according to Canstar, consumers overestimate the cost of life insurance by almost double*.

Life insurance isn’t, generally, any more expensive than health insurance or car insurance. The big difference is that we are talking about your life and the livelihood of those who depend on you. Based on that, it is worth looking into (at the very least).

Buying too little coverage.

The more life insurance coverage you buy, the more you will pay. That does not mean you should skimp on coverage, though, just to save money. The last major study of this by Rice Warner in 2015 estimated that Australians are underinsured by $471 billion for basic life cover and $3,435 billion for income protection. That is a staggering amount, and the industry continues to grapple with how to address this.

Relying too much on employer-provided coverage.

If you have a group life insurance policy through work, don’t assume that the coverage you have is adequate. Generally, these types of policies are based on broad assumptions rather than individually costed needs. Plus, group life insurance policies typically aren’t portable. That means that you can’t keep your coverage if you leave your job. With the large number of layoffs related to the coronavirus pandemic, people with life insurance policies through work have lost their coverage, that’s why it’s important to either have your own policy or have additional coverage which tops up the gap.

Keeping Information from the insurance company.

When you apply for life insurance, you’ll be asked a variety of questions about your health, your family’s medical history, your occupation and even your hobbies. This is part of the process called underwriting that insurers use to decide whether to give you coverage and what rate to charge you. It’s important to answer all of the questions honestly. Insurers may verify the information you provide by asking for your permission to get your medical records from your doctor and your prescription drug history, and using other third party sources and possibly requiring you to take a medical exam. An insurer might deny you coverage if it discovers you’ve withheld information on an application. If you do successfully hide something (which can be hard to do), the insurer might not pay a claim if your death is related to the information you didn’t disclose.

Not understanding what you’re buying.

Understanding the types of life insurance is not a simple task. For starters ‘life insurance’ isn’t just cover if you die. It can also cover things like permanent disability, trauma or accidents, or your income if you’re unable to work. There are many types of life insurance and the only way to really know what you’re covered for is to read the documentation or speak to your Financial Adviser.

Not understanding the products also robs you of one of the enduring benefits of life insurance (outside making a claim) which is comfort. If you never have to make a claim you have the comfort of knowing in a near-miss how you or your dependents would be taken care of. COVID-19 has shown many people what it feels like to be unprepared and that feeling can be awful. Life Insurance can give you peace of mind in uncertainty.

Believing you can’t be covered if you have ever been sick (or will have to pay a lot). 

Whether you have pre-existing conditions or have had an illness or injury in the past, does not automatically disqualify you from Life Insurance, nor does it mean you will have an exclusion. Take Mental Illness as an example, if you have had minimal time off for a mental health situation, and it was a while ago, but have since returned to work, we would generally consider that part of ‘life’ and standard rates would likely apply.

Putting Off the Purchase of Life Insurance.

One of the biggest mistakes when it comes to buying life insurance is waiting to buy a policy. Budgets and time can easily push off a life insurance purchase. And don’t wait with the hope that you’ll improve your health, such as losing weight, because every year you get older, and waiting increases the chance that you could develop other health issues.

The younger you are when you buy life insurance, the more affordable it will be. That’s because your age as well as your health affect the rate you pay.

 

As the saying goes, life insurance is like a parachute, if you don’t have it the first time you need it, you don’t get a second chance.

 

 

Please note. This information has been prepared without considering your personal objectives, financial situation or needs. Before acting on it, please consider its appropriateness to your circumstances.

*Canstar.com.au/life-insurance/can-you-afford-life-insurance-or-overestimating.

 

Scott Hodgson

Scott Hodgson

Chief Underwriter

Introducing ‘Application Concierge’. A new service to support smooth on-boarding.

Introducing ‘Application Concierge’. A new service to support smooth on-boarding.

One of the most challenging aspects of getting clients on risk is the application process. It’s often made challenging by some of the hoops insurers will make you jump through, or by a lack of engagement from the client, or just because it’s a complicated case. We wanted to find a way to make this process as easy as possible for both Adviser and client alike.

 

How did we approach the challenge?

Like most things at Integrity, we started with asking the Advisers we work with, how they wanted us to solve the problem. A number of key aspects emerged in this work.

  1. Speed – get it done, and get it done as quickly as possible. It’s hard to keep clients engaged in the process so the quicker the better. It’s also ‘2020’ and this stuff shouldn’t take weeks.
  2. Communication – keep me informed and always in the loop. The client is putting their trust in the Adviser and the way to maintain that trust is to ensure the Adviser is always informed and up to date. Communication should be proactive, Advisers shouldn’t have to chase it up.

Our solution? Application Concierge.

Over the last couple of months we have been ramping up support staff numbers and improving processes to be able to deliver, what we believe, is an application process that delivers on what Advisers have told us they want and what clients expect to get.

Our new Application Concierge process is speeding things up! 93% of new applications received are decisioned within 24 hours with more than 15% completed instantly! 83% underwriting decisioning within 2 days from receipt of further evidence (61% within 24 hours). As at Sept 2020.

Application Concierge is enabling better communication. With increased numbers in our application support team they’re on stand-by should any application require manual input or there is any need to proactively reach out to Advisers, plus every application has a dedicated underwriter to ensure consistency and one port of call.

 

How can I get it?

It’s now in place for all new applications. So whether you’re signing up someone new, or moving a client to Integrity – you’ll have the comfort of knowing we’ve got your back. 

Bridget Ramunno

Bridget Ramunno

General Manager, Operations.

Engaging first-time buyers in life insurance. How to make a great ‘first impression’.

Engaging first-time buyers in life insurance. How to make a great ‘first impression’.

As the saying goes ‘Life Insurance is sold, not bought’. And it can be hard work, not only to get the client educated enough appreciate the need for it, but then to keep them engaged throughout what can be a lengthy application process. So how do we overcome this? We might just have the answer… As the saying goes ‘Life Insurance is sold, not bought’. And it can be hard work, not only to get the client educated enough appreciate the need for it, but then to keep them engaged throughout what can be a lengthy application process. So how do we overcome this? We might just have the answer.

Natalie Sargeant, Head of Customer Experience, talks about some of the ways consumer behaviour is (finally) driving change in the Life Insurance industry. 

Why did it take so long for the notion of ‘customer centricity’ to reach the Life Insurance industry? 

Natalie: Life insurance is an old industry. It’s not for lack of people being customer centric and understanding customer needs, it’s more often an inability to be able to execute the desired change because of legacy systems that hold the industry back. Being able to understand the needs of customers when they have suffered an injury, illness, or death in the family, is really the starting point for designing a life insurance product and all of the processes around the claims experience. That is really what we are selling to the customer.Additionally, if we’re selling insurance products via an Adviser, we also have to intimately understand their client advice process and how the processes we design supports them. In other words, we are designing both an experience we will deliver, and an experience an Adviser will deliver. 

The whole industry is set up to compare ‘product specifics’ and not necessarily the ‘experience’ that comes with those products. How do we get more Advisers to see how the experience is the product? 

Natalie: Comparing products and pricing is a very important part of the process that Advisers go through in developing a recommendation for their clients. Risk researcher tools provide a good starting point for Advisers, but there is often more to it. In particular, what happens at claims time isn’t easily factored into the consideration process, because it’s not easily comparable until an Adviser has been through it with an insurer. An example of this would be, a client experiences illness or injury and are receiving an Income Insurance benefit. 

At a critical time in their recovery, how many hoops does the insurer make them jump through? With the number of requirements they need to provide, or forms they need to complete?

2. Can the Insurer pay them on the same day their wage would normally go in, or do they have to adjust all their automatic payments?

3. If there is an issue, is it escalated to an overseas call centre?

4. Do the staff make decisions based on sets of rules, or are they empowered to make values-based decisions?

All of this – distinguishes one product from another. You are not just buying what’s in the PDS. The experience and the process the insurer puts around the products is just as important as what’s in the box.    

Can you talk about some of the features we have built that help Advisers make a great first impression during application and quote  that match with modern consumer expectations around experience? 

Natalie: We’ve been very clear about who we are designing our product and experience for during quote and application. As Advisers are recommending our products to their clients, we need to fit in seamlessly with their advice process.

In our quoting tool, Advisers are able to easily compare stepped versus level premiums over the life of the policy as well as side by side comparisons for year 1 premiums. Our shopping cart in the quote tool provides complete transparency on the breakdown of the covers, optional extras, and if they do a pre-assessment, any loadings and exclusions are added straight into the basket . We have seen both these features used by Advisers in the presence of their customers to help create trust and help explain away some of the complexity. 

If Advisers need to do a pre-assessment they are able to use our digital tool, which has the outcomes built straight into the quote , or they can be in touch directly with our underwriters, who have very quick turnaround times. All of the documents Advisers need for compliance are available in the activity log.  Applying for cover  is a flexible digital form that can be completed in any order, which allows Adviser’s the ability to adapt this to the way they like to work in both preparing advice and meeting with their client. This really allows them to focus on the relationship and not painful paperwork. 

Integrity Life

Integrity Life

From the newsroom

Our underwriters have got you covered.

Our underwriters have got you covered.

One of the benefits of being a relatively small organisation is that we don’t need to apply sets of arbitrary rules to govern our approach to underwriting. Instead, we align to a set of values that are about finding simple solutions to complex cases, getting the most number of people insured as possible, and in so doing  achieve the right outcome for the client but also for our pool of people already insured with us.

This is actually the cornerstone of risk transfer – people pay us a premium to pool their risk with lots of others, and we manage that premium pool for the benefit of those whom life delivers an illness, injury or even death.

To carry out this work properly one must ‘act with integrity’, a concept so important to us – it’s how we named our company. We are guardians of the risk pool, and our policyholders depend on us to only allow properly selected risks (new policyholders) into that pool.

We sat down with our Chief Underwriter, Scott Hodgson to learn more about how the team operate and our broad, balanced approach to underwriting.

First question Scott, why no rule book?

Scott: Arbitrary rules (or rules of thumb) are great as a starting point, for simple standard cases, or as a tool to govern a large underwriting team, but if the whole company is set up to operate like that, when you get something that does not fit into the mould it often means an inconsistent outcome, and advisers want certainty – good underwriters try their utmost to deliver this. Our philosophy is about giving Advisers the support they need to be efficient in their business and to facilitate the advice they provide by writing appropriate policies to cover client’s risks.

What is your view on cases that might be ‘too complex’ for other insurers, but you are open to consider? We know this is a bit of a specialty for the team we have assembled at Integrity who are all very senior with a lot of years and experience behind them.

Scott: Sometimes ‘complexity’ is relative to the companies’ risk tolerance and expense margins. Complex = time and therefore cost. What we’re seeing through the current pandemic, is that many underwriters are refusing risks over a certain tolerance and applying rules to selected industries based on anecdotal evidence. It makes for efficient operations, but I am not sure it always results in the best outcomes for clients or Advisers… or even for the life company.

We find medical risk is often about asking the ‘next’ question to get the best information – as the more detail on medical history we get the better. Our underwriting decision making on medical risks is aided by good data from our reinsurer (often international, but some Australian experience is being included where it is statistically viable).

For financial risks it’s important to have an understanding of how business (especially small to medium enterprise) works, and what challenges they face. Even though all our senior underwriters have many years of experience in insurance, we have all worked in industries other than life insurance – some of us in small businesses as well as academia and even global companies. We understand life insurance as a financial tool – it allows businesspeople to take on risks sensibly. It’s the glue of commerce.

Scott Hodgson

Scott Hodgson

Chief Underwriter