Australia: Study shows limitations of life insurance aggregators
Source: Asia Insurance Review | Jul 2017
Most life insurance product comparison websites (PCWs) receive a similar commission level to qualified financial advisers, according to a study by financial services consulting firm Rice Warner.
In its “Life Insurance Aggregator Review 2017” report, Rice Warner said: “Consequently, we would expect them to offer a level of services which closely matches those provided by a financial adviser. The research however indicates that this is unlikely to be the case.”
Although several PCWs compare product features, the focus for product differentiation is predominantly price. The inadequate link between price and product features is likely to result in consumers overlooking what is being offered for the price they pay. Without comparing the product features, consumers may rely on product names and prices to differentiate products.
Another consideration is that consumers tend to need most assistance at the claim stage. However, no information is given by PCWs on how consumers will be helped if they need to lodge claims. This is a clear disadvantage compared with using a financial adviser who is expected to help their clients through the full cycle of the life insurance policy.
A further limitation of PCWs is that they do not allow comparisons with all types of insurance products. Most PCWs exclude direct insurance policies which have different features such as the ability to obtain cover with reduced underwriting requirements. Another type of cover not considered by PCWs is insurance offered by superannuation funds even though most Australian employees are provided with automatic death and total & permanent disablement insurance cover through this channel. Individuals are generally given the option of changing the level of cover to suit their personal needs. A