Making life insurance sustainable
Geoff Summerhayes argues that there exist parallels between the public’s acceptance of sustainable energy and the push for a sustainable life insurance industry, with the recent debate around churning highlighting the need for shifts in behaviour.
What can we learn from how sustainable energy has evolved over the last decade, and how can we apply the insights to help the life insurance industry create a future that requires thinking differently?
Reading about the price of carbon recently, it made me think that the life insurance industry could learn a few things from the issue of sustainable energy.
Regardless of the price of carbon, Australians and our global counterparts have changed the way we think about energy. Despite the price of carbon going up or down, the path has been paved for changed behaviour and expectations.
Sustainable energy is part of our everyday lives. We have learnt to recycle our bottles and papers, insulate our homes or conserve and save our water.
The price of carbon put a commercial reality on the cost of sustainable energy, but those changes in behaviour have occurred because – despite whatever the price of carbon – changes were essential.
Despite the unsuccessful attempt of the replacement framework for a sustainable life insurance industry, the future will deliver a sustainable model, regardless of the legislation, because we have articulated our aspirations.
Just like sustainable energy, the discussion about the need for a sustainable life insurance industry has brought the issue into the light and started a movement that is rapidly gaining momentum.
The upside of the recent debate on churning is that the discussion has become more open. It has raised the issue of what changes are needed to ensure a future where customers, advisers and manufacturers all benefit from doing business together.
I see four key areas of focus that require shifts in behaviour of the industry as a whole:
- Customer centricity (customers need to be at the forefront, this hasn’t always been the case);
- Simplicity (we must reduce the complexity of life insurance);
- Technology (embracing automation and the digital world will reduce costs); and
- Remuneration and reward structure (a sustainable model that works for everyone).
If we accept the premise that the future simply won’t replicate the past, we must make changes to ensure we rise to the challenges of a new world, otherwise we sell ourselves short by not doing the best we can.
The behavioural shifts around customers, simplicity, technology and reward are easy to articulate but require significantly more skill to effectively execute.
Applying the same rationale of sustainable energy to a sustainable life insurance industry gives us insight into the various shifts required in collective behaviour - but also individually.
It isn’t a case of legislating one change to ensure sustainable energy, but rather a number of continual changes in parallel that have gathered momentum over time, and the long-term commitment to be energy efficient.
The most important point is that we, as consumers, accept the challenge to change the way we view the environment.
Just as we expect the packaging of our goods to be recyclable and our washing machines water efficient, so too must we change the way we make, price, distribute and communicate life insurance so that our customers buy it, value it and keep it for the long-term.
Like those who pioneered sustainable energy, I hope and want to pursue a better future for the life insurance industry. It has a significant role to play in the financial security of Australians. Put simply, it is a valuable asset and its future is worth getting right.
Geoff Summerhayes is the chief executive of Suncorp Life.
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