‘It’s time’: Shifting focus to the next generation

MLC Life Insurance chief customer and strategy officer Jane McGovern argued that regulatory reforms have a key role to play in helping address the advice and insurance needs of young Australians.

While there are a number of reasons Millennials and Gen Z are often overlooked, such as their potential inability to afford advice and their unprofitability as a client, McGovern said “it’s time that we recognise this younger cohort of consumers”.

“Too often, discussions are focused primarily on 55–65 year-olds. Generations of Millennials and Generation Z, who themselves will also retire, are overlooked,” McGovern added.

As such, she argued that the changes expected in the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms that will allow insurers and superannuation funds to provide simple advice through a new class of advisers, otherwise known as NCAs, will allow them to provide service for young people that may otherwise be unable to access financial advice.

“We welcome and support the second tranche of the Albanese government’s advice reforms, announced recently by Minister Stephen Jones MP. The proposed changes simplify the financial advice framework to provide Australians with the advice they need,” McGovern said.

“Without reform, these generations will have fewer options to address their increasingly complex financial, health and wellbeing needs.

“That’s why we’re looking forward to a year where we build consensus as an industry, unifying consumers and decision makers behind a vision and reform agenda for delivering affordable, accessible and appropriate insurance.”

Meanwhile, McGovern noted that the proposed changes will also allow insurers and super funds to help address Australia’s overall underinsurance and advice inaccessibility struggles, due in part to a sheer lack of financial advisers following the royal commission.

“We’re continuing to focus on how we can assist our current and future customers in retirement as well as help younger customers on their protection journey,” she said.

“To this end, the past year has seen some positive changes in the advice and retirement income landscape with the promise of simpler advice offerings.”

Further highlighting the need for greater attention on young clients, McGovern noted the substantial rise in mental health-based insurance claims in recent years, particularly among younger generations.

“The KPMG Australia’s Mental Health Check Up report highlighted an unprecedented 732 per cent increase in mental health total and permanent disability (TPD) claims in 30–40 year-olds over the past decade,” she said.

“Not only does this demonstrate the increasing need and complexity of mental ill health across all cohorts but it also illustrates the vital role insurance will need to play, not only as an essential pillar of the social safety net, but also as a support structure in empowering their recoveries.”