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Connexus : Issue 43
Act fast Life insurance is becoming a hot product, creating opportunities for customer- owned banking institutions -- if they move quickly. BY CHRISTINE LONG T he way life insurance is being sold is changing, with more people buying directly, via websites or the phone. Several trends are converging to create a 12 to 24-month window of opportunity for the sector to occupy a more prominent place in the life insurance market, says Anthony Brown, chief executive at NobleOak Life. Rice Warner predicts life insurance will grow 8.4 per cent a year in the next 15 years, with direct sales becoming a larger proportion of the market. Plan for Life research suggests that direct (non-advised) sales of new life insurance will increase from 25 per cent to being 40 per cent of the market in the next fve to 10 years. "A major factor is the increased education and the confdence of the market," says Brown, adding that, since the global fnancial crisis, many people have been forced to get a better understanding of their fnancial situation and products. Another factor is increased awareness of life insurance driven by television advertising, he says. Craig Meldr um, head of personal fnancial ser vices at Australian Unity, says a combination of print and TV advertising is putting the message of the importance of insurance into people's minds. "Without having that direct marketing, a lot of people wouldn't think to phone and ask [about life insurance]." Brown says inbound calls about life insurance are on the rise and often don't need a hard sell to convert them. Previously, such calls would have been primarily outbound. Mortgage link The growth in interest offers several opportunities for fnancial institutions, says Brown. As a starting point, the best time to cross-sell life insurance is when people are taking out a mortgage. This can be a way of addressing the issue of underinsurance by linking benefts to the mortgage with a simple product, says Steve Hitchcock, NobleOak Life's chief operating offcer. There's also the opportunity for soft promotion through traditional print or electronic mail-outs to membership bases, with a compelling offer attached. Thirdly, says Brown, there's the more aggressive approach often used by the big banks whereby they segment their customer base based on likelihood to convert and then target specifc segments through both direct mail and outbound phone calls. There can be high levels of churn in the life insurance market, mainly driven by advisers or the mis-selling of direct products. Recent fgures from Credit Suisse put lapse rates at 16 per cent across the industry, up from 12.5 per cent four years earlier. "It's a sticky annuity stream of income if sold properly," says Brown. "Once you've written a life policy, you have an ongoing stream of income for the ter m of the policy, and, importantly, your member knows they are covered." Super fund scope Brown sees a particular opportunity in the self-managed super fund area. Since July 1, tr ustees of SMSFs have had to show that they have considered insurance, as part of the requirement to regularly review their investment 34 Connexus Insurance