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Govt needs to help on underinsurance
The Government needs to become involved in promoting and solving the underinsurance problem in Australia, according to AIA chief distribution officer Damien Mu.
Mu said that while super funds, planners and insurance companies could continue to promote and deliver life insurance products to their clients, the Government needs to play an important “overarching role” in promoting the need for insurance, as well as conducting reviews of the efficiency of the insurance system.
“That would resonate really positively with the Australian public, when traditionally the [public] view of life insurance companies has not been positive,” Mu said.
The awareness and understanding of insurance isn’t as strong as it should be, and instances of the family breadwinner dying or becoming incapacitated without leaving insurance isn’t publicised enough, Mu said.
However, Mu warned that while the structure of fees and commissions needed to be reviewed, the Government shouldn’t throw it all away or it would risk exacerbating the issue of underinsurance.
“There is a cost to distributing that life insurance product, and we need to be able to fund that in some way. Whether it be for the adviser, or whether it be for the super fund, there needs to be a conversation [there],” he said.
“It might not be a commission, but there has to be some sort of fee in there to cover those costs,” he added.
Mu also called on the insurance companies to develop products that were more relevant to the public.
AUTHOR
Mike Taylor
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