Life Insurance: Framing the Issue

Transcription

1 Life Insurance: Framing the Issue

2 Fcus n life insurance 1. Term Life Insurance (Death cver) 2. Ttal and Permanent Disability Insurance 3. Incme Prtectin Insurance (Salary Cntinuance/Disability Incme) 4. Trauma Insurance (Critical Illness) 5. Credit Insurance (Payment Prtectin Insurance) 6. Funeral plans Distributin 1. Grup 2. Adviser 3. Direct 2

3 Well cntested market Ttal Infrce Premium = $6.6bn, December 2007 Surce: Plan fr Life Ttal Individual Risk Lump Sum 31% Ttal Individual Risk Incme Ttal Grup Risk Ttal f flws in the year t December 2007 # 49% $400m > $100m - $400m $0 - $100m % 3

4 Under insurance vs N insurance millin families with dependent children 2. Mst have a level f cver thrugh super by nly 20% f need Number f years f incme cvered by current levels f death cver Less than 1 year cvered 1 t 5 years cvered 6 t 10 years cvered 10 years r mre cvered TNS research fr IFSA, July

5 Wh has what cver TNS research fr IFSA, July

6 Grup Death Cver Actual versus Need Zer Under $100,000 $100,000 - $199,999 $200,000 $299,999 $300,000 - $399,999 $400,000 - $499,999 $500,000 ACTUAL N/A 38% 28% 13% 7% 5% 9% NEED 21% 8% 11% 12% 9% 9% 29% Average Actual $189,000 Average Calculated Need $550,000 AIST and IFF Research, May

7 At an individual level 16% are ver insured by $100,000 r mre 33% are insured crrectly (+ r - $100,000) 51% are under insured by $100,000 r mre Mst understand rughly hw much they need. Average is perceived need is $483,000 average real need it $550,000 AIST and IFF Research, May

8 Australia cmpares prly by internatinal standards Australia ranks 16th fr insurance density and penetratin 8

9 Australians less likely t perceive the risk? She ll be right - it just wn t happen t me! Surce: AXA, December

10 Evidence f the she ll be right attitude n life risks Majrity felt it was unlikely that they ll face any f the fllwing life risks in the next 20 years 84% 89% 80% 86% 88% 83% Becme unemplyed Have an accident and be unable t w rk Have a serius illness Suffer serius financial prblems due t market vlatility Suffer serius financial prblems due t changes in the husing market Pass aw ay Surce: ING Australia s Attitudes Twards Life Insurance, December

11 She ll be less right attitude n prperty risks TNS research fr IFSA, June

12 Understanding the barriers Affrdability 81% say life insurance is t expensive, yet 61% ver estimate cst. Demnstrate affrdability Trust 44% f Australians wuld have cncerns abut the insurance cmpany paying ut if they die Demnstrate value Cmplex and inaccessible Nt an easy cnversatin t have 41% say life insurance is t cmplicated. 1 in 4 dn t knw where t start, 1 in 5 say it s t hard t select a prduct that meets their need 63% f thse with partner say they have nt discussed life insurance with their partner. 29%say life insurance is t unpleasant r difficult t discuss Surce: ING Australia s Attitudes Twards Life Insurance, December 2008 Address the labeling, educate at the pint f need Prvide tls t make the cnversatin easier 12

13 The industry s visin fr 2020 Australians will have sufficient levels f life insurance cver (either thrugh super r directly) t meet their persnal liabilities and ensure financial security f their families in the event f death, sickness r accident. Over the next five years we ll be 1. Equiping Australians with the infrmatin they need t demystify the prcess 2. Raising awareness f the value f life insurance 3. Building trust by putting the custmer at the centre f all the industry des 4. Imprving accessibility by making the cnversatin easy and reducing cmplexity 13

14 An industry-wide campaign Develping a campaign t encurage Australians t take apprpriate steps t prtect themselves frm the financial hardship which can result frm accident, sickness r death. Lng term gal 1.Cnscius f ptics 2.Cnscius f the challenge 3.Cnscius that insurance is nt the nly answer 14

15 Building partnership supprt fr the cause thrugh cnversatins with: The industry 20 Life insurance cmpanies Advisers FPA, AFA Super funds Regulatrs - ASIC Media Rss Greenwd, Nicle Pedersen McKinnn, Paul Clithere Cmmunity Grups Yuth Insearch Call t actin: Sign ur Stakehlder Agreement & becme a partner We ll help yu help us c-branding, material, articles ID a key persn t c-rdinate activity internally 15

16 Creating tls fr educatin and awareness Website Cntent/Cpy Calculatrs Case studies/testimnials/media Grabs Call t actin: Prvide cntent and case studies Cnsider hw yu can keep the mmentum ging research etc 16

17 One umbrella brand a cnsumer fcus Lifewise Belief everyne shuld make a cnscius infrmed decisin Character straight talking wise friend Cmpetence makes chice abut life insurance accessible 17

18 Timeline t launch 02/09 03/09 04/09 05/09 06/09 07/09 Finalise brand Tier 1 stakehlders Develp web cntent Finalise calculatr Tier 2 stakehlders Agreements signed Internal cmms wrking Finalise website All stakehlders identified Test website Plan launch event Plan subsequent PR activity Launch - 1 st May Lunchen Media Research? Case studies Assess impact Track web traffic Feedback lp n brand usage. Start planning fr next year? Present plans fr 2009> 18

19 Realising the value f insurance! The risks 50,000 heart attacks in Australia ever year (Health Fundatin, Australian Facts, 2004: Heart, Strkes and Vascular diseases) 1/3 men and 1/ 4 wmen will suffer frm cancer in their lifetime - 50% f which will live lnger than 5 years after diagnsis (Cancer Cuncil: Mre than 42,000 peple are expected t die frm cancer in 2009 Over 1,600 peple die n Australian rads every year, mst age f years (Australian Gvernment, Rad Deaths Australia 2007) The burden Husehld debt is nearly 160% f average dispsable incme (Reserve Bank statistics) The average Australian brrws $235,000 n a new mrtgage which requires 35% f incme t meet the repayments (Real Estate Institute f Australia) 19

20 Realising the value f insurance! The industry paid ut $3.6 billin That s nearly $10 millin per day 81c in every $ Cvers the lives f ver 7.5 millin Australians 20

21 Imprving accessibility understanding emerging risks Mental Health Issues One in five Australians suffer a mental illness 25 40% f thse aged years One in ten have a lng term cnditin (lasting mre than 6 mnths) Mental illness and suicide accunts fr just unde 15% f ttal health burden But cnditins vary widely unpredictable = difficult t cnduct risk assessment Mental health/life Insurance MU Wrld-first MU signed 2003 signals nging cmmitment. Mental health stakehlders and industry stakehlders Cmmitment t cmmunicatin, feedback and imprving access t cver 21

22 Change in underwriting utcmes fr peple with a mental health cnditin 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Ttal & Permanent Disablement (TPD) Incme Prtectin Decline Other nn-standard Lading Exclusin Standard 22

23 Other areas Genetics Testing HIV/AIDS Arthritis Australian Defense Frce Reserves Challenge is t imprve access while apprpriately pricing the risk 23

24 Industry Experience Studies Cmparing underwriting and claims experience acrss the industry Individual lump sum business initially 2007 already cnducted 3.8m recrds, 6,500 claims analysis enugh t recnstruct the Graduated Tables/Mrtality tables 2008 analysis and beynd Mrbidity study Incme Prtectin very imprtant t insurers 24

25 25

26 26

27 27

28 GFC - Implicatins fr the industry Gd times = Financial risks harder t cmprehend Cnfidence and ptimism prevail Increased incentive t cntinue wrking Increased reserves allws premiums t fall Increased use f whistles and bells Bad times = Financial risks are real Prtectin is sught Advisers fcus n risk Self insurers return t prduct Increased claims incidence, duratin and csts Increased ptential fr reputatin damage Ersin f reserves hardening f the market 28

29 S what s in stre fr 2009? The year f life insurance Insurers nw fcused n Risk Grup, Advised and Direct Industry wide campaign galvanising supprt and awakening Australians Ding mre t understand risks and imprve accessibility Higher levels f claims Greater ptential fr criticism Cntinue t demnstrate the value ffered 29

30 Thank yu