Collaborative solutions needed to bridge Australia’s life insurance gap

Speaking with ifa, the co-founder of Keep Insurance Co, D Hannigan, emphasised the need for solutions that complement existing financial advice services rather than compete with them.

“Everybody’s talking about the same problem, not enough advisers want to write life insurance, anymore, and so we’ve got this huge underinsurance gap, huge amounts of people who are just, their commission wouldn’t warrant them getting a full, personalised advice proposition,” she said.

Recent data revealed a sharp decline in new life insurance policies issued, plummeting from 103,000 in 2018 to just 44,000 in 2023. With various suggestions on the table, including the reintroduction of limited advice by insurers, the focus for Hannigan remains on fostering a supportive environment that addresses these challenges head-on.

She is all about creating a flexible platform that ensures everyone gets the tailored financial advice they need, making it easier for all to access the support they deserve.

“What we want is complementary, not cannibalisation,” she stated. “It’s about helping bring people into the advice-driven product channel.”

Hannigan believes everyone in the industry is eager to tackle the challenges facing financial advice, and her goal is to help create a supportive solution rather than compete with what’s already there.

“I think everyone in the industry is trying to solve the problem, and I think we just want to be part of the solution and I think times are tough for advice, for the advice industry, and we want to be part of complement and helping things along.

“To us, the function of financial advice and what it does for people is critical. We want to be part of a broad solution to the problems we’re seeing, certainly not any sense of wanting to undercut what is an already struggling environment.”

Hannigan’s platform operates in two main ways: it directly serves customers and also offers a white label solution for advisers.

“We have a direct-to-customer offering, where we offer commission return in exchange for that self-service proposition they actually get; we collect commission, and we return a portion of it,” Hannigan said.

“So that’s one part of our business, but a growing part of our business has now been developing white label offerings for other partners, and so we’re getting a lot of interest.”

According to the latest findings from the Adviser Ratings 2024 Australian Financial Advice Landscape Report, consumer attitudes towards life insurance are mixed. While the majority of Australians acknowledge the importance of having life insurance, nearly half of the population still lacks coverage.

Adviser Ratings found that the impersonal nature of acquiring insurance through superannuation funds is contributing to a lack of understanding among policyholders, with less than one in 10 (8 per cent) policyholders purchasing their life insurance through an adviser, while as many as 62 per cent obtain insurance via their super fund.

The firm also underscored that the Australian life insurance market holds significant potential for growth and development, with advisers, in particular, said to have a considerable opportunity to offer life insurance products that consumers understand and appreciate.