Risk Company of the Year 2009

Gold: Zurich Life

Silver: ING Life

Bronze: Asteron Life

Since the start of the global financial crisis, the risk insurance market has grown strongly as the downturn spurs clients and advisers to focus on the need for insurance.

According to Tower Australia, market figures showed the insurance industry expanded by 14 per cent in 2008, while it had gained more than $7 billion in annual premiums by May this year. Projections for future growth are even more optimistic, with the market expected to triple in size by 2017.

The underinsurance gap has also played its part, with life insurance companies devoting considerable resources to raising awareness among consumers about the issue.

The growing insurance market has led to a renewed focus on better adviser communication, greater flexibility, and more affordability as life insurance companies work to improve their product offerings.

The Money Management/ Dexx&r Adviser Choice Risk Awards commends the high achievers of the risk insurance space for 2009.

Risk Company of the Year: Zurich Life

Zurich has been named the 2009 Risk Company of the Year, an achievement the head of Zurich Life, Colin Morgan, has attributed to a revamp of the group’s life insurance products earlier this year.

“The angle was really better affordability and flexibility in the product solutions we had, with a theme of making it easier to offer protection in the marketplace,” Morgan said. The company also changed some of its products during the revamp, including term and TPD products.

It was Zurich’s second improvement package to its life insurance policies in 12 months, having introduced a number of changes to its trauma and income protection definitions in November 2008, as well as reducing the number of medical checks that form part of the insurance application process. That improvement package was itself the second revamp of its insurance products in 2008.

Morgan said the revamp resulted from the fast growing life insurance market during the downturn, as well as the ongoing underinsurance issue, and a need to make products more competitive.

“We knew that we would be very competitive, certainly on price, to make it more affordable, and given that there is a demand for people protecting themselves and they don’t have enough insurance, we just felt that the timing for doing all those things was right,” he added.

Morgan also pointed to the strength of the Zurich brand throughout the financial crisis as one of the reasons for its performance and growth through the past 12 months, pointing to its place in the global top five financial services companies.

“A year ago, we were in the top 20 [of financial services companies]... we’re seen as a very strong dependable company, and that’s something incredibly important when you take out long-term insurance, because the consumer needs to know that you’re going to be around,” he said.

Because Zurich was not aligned with a bank and did not own a distribution channel, it prospered on the quality of its products and services, which meant its products had to be more innovative and flexible, Morgan added.

Silver: ING Life

Keeping a broader focus on its overall offering for the market and financial planners was the secret behind the success of 2008 winner ING, which was awarded second place in the Risk Company of the Year category.

ING has focused on improving different aspects of its overall adviser offering throughout 2008 and 2009, including establishing advisory boards in every state to improve communication with advisers, according to head of marketing, retail products and reinsurance, Gerard Kerr.

“It’s a better way of engaging with advisers in each state because we realise different states have different particular hot issues, rather than taking one perspective on it,” he said.

Those advisory boards allowed the group to hear the problems advisers were grappling with in each insurance product. Some of the issues were quite low on the tactical level, including a particular definition or benefit feature that advisers felt ING was lacking in its products, Kerr said.

ING also released a “reasonably comprehensive” set of changes to its products around May this year, including a series of upgrades to its OneCare insurance product and electronic application platform, OneCare Express. It also announced a three-month premium waiver for life insurance policyholders who had been made redundant.

Kerr said ING was focused on making it easier for advisers to work through its insurance process, including simplifying the underwriting process and upgrading its electronic applications.

Towards this goal, the group upgraded its products earlier in the year — for example, reducing the total number of conditions in its trauma products, he said.

Bronze: Asteron Life

Asteron Life’s efforts to reposition itself in the life risk insurance space over the past 12 months has secured it third place in the Risk Company of the Year category this year.

Executive manager of life risk product David Wright said the repositioning occurred after discussions with more than 400 advisers revealed there was an opportunity for a life risk specialist to establish itself in the marketplace.

“It involved a whole new alignment, with our underwriters and our sales team, even our claims team, on working with particular advisers and financial services licensees to really understand their business needs more and, in turn, help them understand who in our team is assisting them with their business,” he said.

Asteron changed its brand name to Asteron Life to reflect the repositioning of its business. The company now only offers life risk insurance, having left the investment space.

The risk company also focused on increasing its flexibility and accessibility for adviser and product value, including making qualified offers for professionals that guarantee future earnings, Wright said.

Methodology

The Money Management/Dexx&r Adviser Choice Risk Awards, now in its seventh year, are based on an assessment of each product’s benefits, features, definitions and premium rates.

A panel of experienced risk insurance advisers who have built practices specialising in the provision of life risk insurance advice was contacted to provide feedback on the relative importance of the features included in term, trauma, total and permanent disability, disability income, and business overheads insurance products.

The scores for each feature were then weighted (determined by the average of the weightings nominated by the advisers) and combined with scores from the previous year. These scores were added up to give a total weighted score for each feature.

Definitions were also scored, with advisers ranking the importance of each definition style. For example, to provide a ranking of “one duty”, 10 hours or 80 per cent loss of income definitions of total disability were used. The responses were then converted to weightings that are applied to the score for each key definition.

Premiums were calculated for a wide range of sums insured for all lump sum risk products and monthly benefits for disability income and business expenses insurance.

Separate premium calculations were conducted for males and females, smokers and non-smokers, for a range of ages from 21 to 60 at five-yearly intervals. The relative cost for each product was weighted by age, gender and smoker/non-smoker status.

The advisers were asked to provide their assessment of the relative importance of cost to them when evaluating products in each category.

The total weighted score for features, definitions and price per product was then calculated out of a maximum of 100. The weightings applied for features, definitions and price in each product category were determined by averaging the adviser responses.

The leading risk company was determined by calculating the total score of the highest scoring products across each category for every company.

All product information is based on data collected by Dexx&r and published in the Dexx&r online and print versions of Term Life Analysis and Disability Analysis. Premium calculations are based on those generated by the Dexx&r Risk Developer Software.

Details of the features, definitions and price comparison criteria and standardised scores are published in Dexx&r’s Risk Rating Report.

— Mark Kachor