Life groups build adviser support
Lifeinsurance houses have finally admitted what the funds management industry has known for some time — that third party financial planners hold the reins when distributing product to clients.
In a market evaluation report on the risk insurance industry released by Gerling Reinsurance this week, nearly two-thirds of senior executives surveyed within risk insurance groups say that distribution will become more powerful in the next five years.
In response to this, the executives said they believed there would be competitive advantages in supplying product support to financial planners, with 57 per cent stating this area was of importance, up from only 14 per cent last year.
This was also reflected in the fact that senior executives felt that direct ties to distribution were of less importance with only 29 per cent stating it offered a competitive advantage compared with 57 per cent in 2001.
“Distribution is not being seen as something that belongs to life insurance groups anymore. Rather, the relationships are with independent planners and life insurers can only supply support mechanisms without influencing the direction of those planners,” Gerling Reinsurance assistant general manager Steve Vincent says.
He also says that 86 per cent of life insurers now sell their product through independent planners and that as part of focusing on the provision of support to advisers, senior executives said they would concentrate on the core competencies. These include product development, underwriting and claims management, with more than 60 per cent of senior executives identifying these three areas as crucial in the coming year.
Vincent says this focus on product development fits in with the executives’ position on supplying support to advisers and was widely reflected throughout the survey.
However, he says other reasons for such a shift include the fact that 93 per cent of life insurance executives feel the market will face further rationalisation and the need to stand out in a competitive market will become more important.
Interestingly the price of insurance products has not remained an issue among the majority of senior executives surveyed, with only 14 per cent regarding it as an advantage, a statistic which has remained unchanged since last year’s survey.
The survey covered senior executives working in a range of positions within the life industry and was based on the responses from 15 major life insurers operating in the local market.
AUTHOR
Jason Spits
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