Platforms play increasing role in life cover

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30 August 2010

The imminent decision by the Australian Competition and Consumer Commission (ACCC) on the NAB/Axa merger plan will have implications on the distribution of life insurance.

The ACCC has been concerned about the role distribution platforms play in the financial services sector. While they have previously been used mainly by financial advisers to distribute investment products, platforms are now a growing sales channel for life insurance.

ING Head of Retail Product Gerard Kerr says platforms have become an important distribution vehicle for life insurance products.

“Life insurance can be written on a platform, although it does depend on the client’s needs,” he told insuranceNEWS.com.au. “We have seen an increase in retail life insurance being written on platforms during the past 12 to 18 months.”

Mr Kerr admits that could be due to the global financial crisis and how this has caused clients to reassess their insurance needs.

AIA Market Analysis and Solutions Manger Shannon Anderson says platforms present distribution opportunities for life insurers, and although AIA doesn’t own a platform, “we do see them as a growth opportunity to expand our market share”.

“We do see advisers wanting to give holistic advice which covers all areas of financial advice, and the platform is part of that solution,” he told insuranceNEWS.com.au.

There are opportunities to put AIA’s products on non-bank owned platforms, although Mr Anderson says the company has not ruled out trying institution-owned vehicles.

Mr Kerr says life insurers are increasingly recognising the benefits of using a platform. “It’s a way of increasing their presence and helping to deal with the underinsurance problem.”

But not everybody agrees. ClearView MD Simon Swanson told insuranceNEWS.com.au his company has no plans to put its products on platforms.

“I don’t think they are that important,” he said. “Life insurance needs to be dealt with through an intermediary rather than pushing a button.”