Increases in group insurance premiums presents advisers with the opportunity to promote the benefits of retail cover to clients, says IOOF.
Speaking to Risk Adviser, senior technical services manager of IOOF Martin Breckon said the pricing and blanket-cover nature of group insurance is providing advisers with the ability “to be proactive” in bringing clients out of group insurance policies and into retail cover.
“There have been increases in group insurance premiums from anywhere between 30 and 200 per cent over the past few years and that has its own root causes,” Mr Breckon said.
“Group life insurance used to be cheaper than retail. [However], group life insurance has now become more expensive and the gap has changed so that retail [is] cheaper, if not the same.
“We have been saying to [advisers], 'Visit your client base, see if there is an advantage, exercise your best interest duties for the client and have a look at [whether retail insurance is cheaper for them]',” he said.
Retail offers can also be individually tailored to a client, which presents another advantage over group insurance cover, Mr Breckon added.
Mr Breckon explained the reason behind insurance premiums increases is that insurers are faced with more complicated claims experiences.
“We all sort of know where that stems from – increased member awareness of benefits, lawyer-promoted activity and greater lawyer involvement in the claims process, and just the universality of super,” Mr Breckon said.
“So you are getting situations where not only do they have an increased awareness and benefit, [insurers] are also getting late notification of claims due to that legal activity [which means] their experience and cost is blown out.
“[Insurers] have then had to make compensatory gestures like reviewing their pricing and benefit definitions,” he said.