Risk policy switching 'remains high'

In its June 2014 Planner Risk Report – which surveyed 885 financial advisers on their use of insurance – Investment Trends found advisers are expanding the number of insurers they use. However, levels of switching have increased, up five per cent from last year.

“The typical planner now uses 3.7 insurers each, up from 3.4 in 2013. However, levels of insurer switching remain high with 40 per cent of planners saying they stopped using at least one insurer in the last 12 months, up from 35 per cent last year,” the report said.

Investment Trends senior analyst Recep Peker said advisers are “aggressively expanding” the numbers of insurers they use, while cutting the ones that aren’t “exceptional”.

"Insurer relationships are in a state of flux," Mr Peker said. “There are great opportunities and risks for insurers to either benefit or lose out from this switching.”

The report also found, despite insurer relationships changing rapidly over the past 12 months, that it is still crucial to be an adviser’s most-used insurance provider since advisers currently provide 59 per cent of premiums though their most-used insurance provider.

"Whilst planners are using a wider range of insurers, the market is also becoming more concentrated," Mr Peker said.

"The top five insurance providers now account for 66 per cent of primary planner relationships, up from 62 per cent last year," he said.

“Satisfaction is crucial in the insurance space, as business is not very sticky and planners can easily stop writing new business with an insurance provider,” said Mr Peker. “That’s why there is a very strong relationship between satisfaction and switching behaviour.”

Zurich and AIA Australia were found to have the highest satisfaction ratings among adviser users, followed by Asteron Life.