There are numerous benefits for life insurance companies to start offering health insurance products or enter into partnerships with health insurers, according to AIA Australia chief executive Damien Mu.
Speaking at the 2017 Financial Services Council Life Insurance Conference in Sydney, Mu said he sees a "strong case for life and health coming together and creating shared value. After all, our biggest concern in this country is the rising cost of healthcare."
He noted that as a product, life insurance is generally engaged with in drastic circumstances, which he said ongoing health cover can potentially reduce or prevent. This, in turn, could conceivably reduce instances of life claims.
Speaking on the same panel from the consumer perspective, Choice campaigns manager Erin Turner said she saw some serious issues with this idea"We need to be careful about merging life and health insurance because these are already such complex products on their own," she said.
Referring to the behavioural economics research Choice regularly undertakes, Turner said consumers encounter many problems with bundled products. She said that even with a much simpler product like a smartphone, the variety of models and bundled plans available tends to become so overwhelming that "they tend to fall back on brand loyalty or comparison websites, which can give inconsistent results."
She added: "This would create issues for a combined life and health insurer down the line, because you will likely find consumers not fully understanding what they're buying upfront, which will cause a lot of problems at claim time."
Having said this, Turner ended on a positive note, suggesting that "there is an opportunity for insurers who do this with a customer-friendly approach. They would need to put customer needs at the heart of their product structure and communication."