RISK – Understanding the insurance needs of clients

Leading insurer AMP Life will launch a series of workshops and seminars over the next few weeks to help financial advisers to better understand the risk insurance needs of their clients.

The education campaign follows an overhaul by AMP Life of its application and underwriting procedures for risk insurance, designed to make them simpler and more relevant to advisers and their clients.

The new procedures will make risk coverage less bureaucratic and more personal and relevant to the client, says AMP's national manager of life and risk, Rob Fraser. The overall aim, he adds, is to lift the present low level of personal and business risk coverage amongst Australians.

The changes to AMP's risk insurance processes partly reflect the fact that financial advisers have tended to neglect risk coverage," he says.

"There's a perception amongst advisers that risk is harder than investment, so advisers have tended to lean towards investment planning rather than full financial planning" Fraser says. "But that means they're not doing the full range of wealth creation and wealth protection."

AMP Life has streamlined underwriting and application procedures for crisis care (CC), term (life), income protection and total and permanent disability (TPD) insurance coverage.

The result is a less bureaucratic application process, which has also resulted in improvements such as increased medical limits for many risk areas, says AMP Life's chief underwriter Tassin Barnard. The new application and underwriting procedures will also focus more on individual situations such as clients' life stages and medical histories, rather than the previous practice of across-the-bard screening.

The overhaul has also streamlined AMP's tiered "Special Case/Special Service" facility for dealing with large cases, aimed at achieving a 72-hour turnaround time.

Barnard says changes were necessary because AMP's previous procedures involved too many forms and medical tests. These resulted in errors, confusion and ambiguity, and did not allow advisers to complete applications on behalf of their clients.

AMP Life has now replaced 104 separate forms and questionnaires with a single, 24-page colour-coded personal statement.

One consequence of the new procedures is that AMP has now shifted from its traditional conservative market position in some areas of risk cover. For example, the firm now leads the market in non-medical limits for term (life), trauma (CC and TPD) and income protection.

"We could do that because we have the claims experience - so many people insure with AMP," says Barnard. "Our market power means we can manage risk rather than avoid it."

AMP Life has produced a single set of financial guidelines which Barnard says will allow advisers and underwriters to work together to select risk. She says this is aimed at breaking down the traditional "territorial barriers" between underwriters, product developers and advisers.

"The new guidelines now define the real financial worth of individuals to their families," Barnard says.

The new procedures will produce better outcomes for clients, says Barnard. For example, a healthy 35-year-old who previously required a full medical for a policy worth over $500,000 now needs only the new personal statement and a blood test for policies up to $1 million.

"We will only test for, and request information on what's appropriate for an individual client rather than testing for a while range of diseases, some of which may only be relevant to certain age groups or certain product risks," she says.