Clients lose in risk research ‘point scoring’

Executives from two of the insurance industry’s leading companies have criticised the risk research process, admitting it is often more about ‘point scoring’ than actually increasing consumer benefits.

However, new research released by research house CoreData suggests planners are more concerned about the service levels being delivered by risk

insurers — something that saw Zurich emerge ahead of heavyweights such as

CommInsure and Aviva at the top of the CoreData analysis.

Asteron executive manager Jordan Hawke said the “normal product cycle that goes on every six months” within the risk industry, which sees life companies reviewing their product offerings and ‘tweaking’ definitions to satisfy research ratings, is unsustainable.

“There’s a lot of [asking] how do we move our rating from 94 to 95 with a research house rather than thinking about the bigger picture of how to develop and deliver consumer driven product solutions rather than research house driven solutions,” Hawke said.

CommInsure chief executive Simon Swanson also admitted there is “a tension between [product] simplicity and points from a risk research house”.

Swanson said while he can empathise with the calls for simpler products from some dealer group heads (Count’s Marianne Perkovic for example), he said this is counterbalanced by the need for advisers to provide evidence of the strength of the products they recommend.

“So companies are pressured through risk research houses to provide products that are consistently scoring [a certain number of] points on the risk research house engine,” Swanson said.

Swanson admitted that in one extreme example of this, “we made one of our products slightly less beneficial, in my view, just so we got more points from a risk research house”.

“I wouldn’t actually call that a smart idea, but that’s the way it works.”

Hawke said while he’s “not averse to research”, it can’t be “at the cost of providing a consumer solution”.

“Yes, research is important because it does drive you to make sure you have a competitive product, but it shouldn’t be the all consuming reason that you develop definitions,” Hawke said.

But Swanson said the “real issue” with risk research is that it “doesn’t take a particularly holistic view”.

He said while benefits and premiums are covered, ratings don’t cover the financial strength of the product provider, nor do the ratings account for service levels or claims payment.

“[The] financial strength [of the product provider] isn’t taken into account, claims paying isn’t taken into account É there’s lots of issues that aren’t taken into account in the risk research ratings,” Swanson said.

“The risk research house view is only a small part of the criteria that should actually be taken into account [by an adviser] when making a recommendation to a customer about where their insurance solution should come from.”