The business practices of Australia's life insurers need to be updated to meet the rapid changes of the industry and needs of consumers, argues a financial services and insurance consultant.
In a presentation to the 2015 Actuaries Summit in Melbourne, Zoeller Consulting principal Kent Hopper described Australia’s life insurers as “obsolete”.
Speaking to Risk Adviser, Mr Hopper said he described the insurers this way because of the slow and “inadequate” response they have made to a number of challenges within the industry.
“We have big challenges coming down the line – obesity, the impact of changing technology, [and] data-rich competitors [which] we haven't even contemplated,” Mr Hopper said.
Mr Hopper also added the way life insurers currently do business is “opposite” to what consumers want and need.
“We are so slow still, we are not agile, it takes days even weeks to get a policy on the books for example,” Mr Hopper said. “That is just not where consumer sentiment is or how they engage with the world and future customers [especially] the millennials and even Gen X.”
“We do need to upgrade our business models, find new ways to connect with the consumers in a way that is going to respond to that sentiment or expectation to date,” he said.
“To make that transition will require internal disruption [and] challenging and dislodging the way we currently think and do things,” he said.
Mr Hopper also explained “outrageous advice scandals” have also had a huge effect on the industry, most notably damaging the level of trust consumers have with advisers and companies.
“Not all of it has been in the insurance space… but mud sticks and wherever there have been these issues in other parts of financial services I think we are all getting painted by the same brush,” Mr Hopper said.
“This is something that I think we all need to work on and try and regain that trust.”