Australia: Customer perspective vital to restoring trust in life insurers
Source: Asia Insurance Review | Oct 2018
Customer-centric product terms and conditions will be necessary to overcome the trust and social licence issues that have put the life insurance industry in the spotlight recently, according to KPMG in its Life Insurance Insights Report 2018.
The challenge will be implementing these changes while defining a sustainable, profitable product, said the report.
Changes to the industry can be expected out of the recommendations to be made by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, that in September looked at the insurance sector. The commission, which is scheduled to present its report to the government next February, has heard about aggressive and even callous selling practices, flaws in product design and issues with claims handling.
The changes will be in addition to the disruption already seen in the life insurance sector that includes consolidation; government mandated reform (the proposed budget changes to default insurance in superannuation); innovation (InsurTech, blockchain); and the life and superannuation code of practice.
The profitability of certain products, such as total and permanent disablement, trauma and disability income, continue to be an issue. Claims management initiatives alone are unlikely to be sufficient to restore these products to stable, long-term profitability. A fundamental rethink of the key product design features is needed.
With ownership of life insurance operations moving away from the banks, distribution models will also be transformed. In order to continue to be relevant, insurers will need to embed the customer perspective in all areas of their business, says the report. A