Independent financial advisers are looking for insurers who truly understand and support their evolving needs. Discover how insurers can optimize distribution models, strengthen adviser relationships, and unlock growth opportunities by addressing key challenges and improving processes in an increasingly competitive market.
The Australian life insurance market is growing increasingly competitive. Therefore, optimizing distribution models is critical for insurers seeking to strengthen their relationships with independent financial advisers and, by extension, better serve their customers. In this blog, we present actionable strategies for insurers to refine their distribution approaches, focusing on understanding and meeting the needs of advisers, which are intrinsically linked to the expectations of end customers. By aligning support systems, product offerings, and processes with these needs, insurers can drive business growth and enhance their market positioning.
Understanding the Australian life insurance market: Why it matters
Today, insurers must prioritize the needs of independent financial advisers, whose demands are increasingly more sophisticated as they navigate a post-Royal Commission and post-pandemic world. The life insurance market has been undergoing significant structural changes for the last six years, driven in large part by regulatory reforms and their unexpected flow-on impacts on placement channels.
Listening to financial advisers and bridging the gap
The long-term sustainability of the life insurance market and consistent new business inflows depend on the distribution processes of the value chain. This includes fully understanding independent financial advisers’ needs and creating processes and teams that support advice practices of all sizes.
Through the course of late 2024, we interviewed advisers from several top-performing practices representing over 10 percent of new businesses every year. These advisers highlighted areas where change was necessary and where insurers have made positive adjustments.
In particular, more than 60 percent of advisers have noted the lack of ‘Development’ in traditional Business Development roles as typically more ‘Administrative’ than business improvement and the failure to prioritize value-added time in an adviser’s practice. However, a third of advisers still do business with an insurer regardless of the availability of a BDM team.
Breaking down barriers to success
Our survey results show there is adviser consensus on optimization potential, with the top areas for improvement being:
Issue resolution efficiency: Advisers encounter longer than expected wait times for administrative issue resolution. Speed and reliability in the sales process are critical to adviser success and are fundamental to demonstrate the value of the BDM. Over half of advisers noted challenges with timely BDM communication, including updates on their products, and the progress of client specific case matters.
Product complexity and transparency: Many advisers struggle to articulate an insurer’s products and value proposition to clients. 55 percent face regular difficulties communicating key metrics and policy details required at the point of sale. This is largely due to limited communication around updated product terms/ inclusions supporting educational material about the product portfolio, and an insurer’s competitive advantages.
Centralized information during underwriting: Transparency and clear lines of communication between all parties are essential to reach the right client outcome in a timely manner. Two-thirds of advisers regularly encounter significant delays at the underwriting stage, driven by incomplete information, lack of information trails, and communication delays between underwriters, medical practitioners, and the advice practice. Changing information requirements, growing loading and exclusion considerations, and indirect lines of communication hinder the underwriter’s ability to consider all relevant client factors, creating decisioning opaqueness and leading to client dissatisfaction.
Partner-centric mindset: Advisers expect to grow side-by-side with insurers. Over 65 percent of advisers recognized the high value BDMs can bring by acting as a ‘partner in growth’. For true partnerships, collaborative practice planning, discussing customer segment strategies, and contributing ongoing education support are the top priorities for demonstrating commitment.
Initiatives that are making a difference
Despite these challenges, insurers have made considerable improvements across several areas. The top three most favorable to the adviser and client experience are:
Claims process and support: Transparent and efficient claims management have an outsized impact on demonstrating care for clients during times of need. Over 60 percent of advisers reported noticeable improvement in claims handling and payment in recent years, unsurprising given the focus on this during the Financial Services Royal Commission.
New business onboarding: Timely, automated onboarding process enables advisers to communicate certainty to clients and refocus on day-to-day policy maintenance. While complexity around documentation can still present challenges, over 70 percent of advisers expressed satisfaction with the improvement in insurer’s portals and the efficiency in uploading required information to successfully finalize coverage for clients.
Policy maintenance: Updated client management portals and administrative process improvements have materialized in adviser efficiency improvements. Over half of advisers experienced process improvements driven by reduced documentation exchange and the ability to act on the client’s behalf to make policy adjustments as necessary during renewal.
Innovating the adviser-insurer relationship: How can insurers respond to create lasting impacts?
Implementing an optimized distribution model requires careful planning, prioritization, and ongoing collaboration with key stakeholders. The following steps are crucial for successful implementation:
Prioritizing key adviser support initiatives
Starting small and scaling support gradually
Actively engaging with key accounts
Integrating pragmatic technology systems
Enhancing BDM education and communication
By optimizing distribution models to better align with the needs of advisers and their clients, insurers can achieve several key outcomes:
Increased adviser loyalty: Tailored support and efficient processes will enhance adviser satisfaction and loyalty, leading to stronger partnerships.
Higher quality business: Better-aligned products and services will enable advisers to attract and retain high-quality clients, driving business growth.
Enhanced market competitiveness: Insurers that excel in supporting advisers will stand out in the market, gaining a reputation for superior service and product offerings.
Conclusion
Optimizing distribution models to meet the evolving needs of independent financial advisers is essential for insurers aiming to increase market share and improve business outcomes. By focusing on product simplicity, process efficiency, competitive value propositions, and personalized support, insurers can build stronger, more productive relationships with advisers, ultimately benefiting their end customers. Those who prioritize these strategies will be well-positioned to thrive in the dynamic Australian life insurance market.