Advisers reckoning with direct risk sales growth: Research

Life insurance products sold directly to consumers are gaining prevalence over an area historically dominated by financial advisers and dealer groups, Strategic Insight's latest statistics show.

The researcher found that in the decade to 2017, risk products sold via advisers - either independent or aligned to a banking or insurance group - are gradually becoming under threat from direct channels such as telephone or online marketing.

Direct purchases accounted for about 20% of in-force annual premiums worth $9.7 billion at the end of September 2017 (comprising $7bn of lump sum and $2.7bn of income). Aligned dealer groups edged out non-aligned dealer groups, holding 41% and 39% respectively.

Compared to 10 years ago, the direct channel held 14% of the market, while aligned and non-aligned advisers each held 43%.

The report also found more people are holding onto their life insurance as the rate of discontinuances, measured by lapsed or forfeited policies, has declined since peaking in 2013.

The discontinuance rate for lump sum products dropped from about 16.5% four years ago to 15% currently.

Strategic Insight said several facets should be considered when looking at how the mix of policyholders has changed over time.

Over the past five years the proportion of smokers, the majority of which were men, fell from 12.7% to 11% based on in-force premiums. The number of female smokers slightly decreased from 27.1% to 26.9%.

People living in New South Wales, Victoria and Queensland are more likely to have life insurance policies compared than those living in other states, the report said.

In terms of products, term life policies have dominated in-force annual premiums (42%) over the last decade, followed by income protection (27%), trauma (14%) and TPD (10%).

TPD recorded the fastest-growing segment, 8.1% over the past 10 years and 13.8% year-on-year. Stepped premiums dominated at 93.7% market share, while the proportion of level premiums inched 4.6% to 10.9% over the decade.

Of the providers, Strategic Insight noted smaller companies such as Allianz (36.8%) and ClearView (19.2%) grew significantly over the decade. Among the larger players, AIA (19.2%), BT/Westpac (13.8%), TAL (10.8%) and OnePath (10%) experienced the strongest growth.

Read more: Life insuranceStrategic InsightAIA AustraliaAllianzClearView
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