The group insurance market in Australia is under the spotlight. We are seeing a period of rising claims and premiums, increased regulatory requirements and heightened solicitor involvement. Recent media reports have questioned the sustainability of the current group insurance market in Australia.

The word sustainability is something that gets talked about a lot. In fact, with just a month to go until the 2014 AIA Australia / Conexus Group Insurance Summit, sustainability – and the transition to it – will be the overriding focus for the event.

So, what can we do to ensure the sustainability of group insurance both now and in the future?

Importantly, group insurance through superannuation has been a policy success providing cover to millions of Australians who would otherwise have had no protection at all and whilst we have a responsibility to improve engagement with customers, we need to recognise that a lot has been achieved to ensure that the underinsurance gap in Australia is addressed.

However to have a truly sustainable industry we need to innovate and improve the way we engage with customers. No industry, group insurance or otherwise, can progress effectively into the future without looking at ways to innovate.

The good news is that this is already happening, but more is needed in future.

Let’s look at claims management for instance. A number of group insurers are seeing the power of implementing occupational rehabilitation programs and early intervention to help people get back to work sooner and therefore reduce claims duration. This is a must-have capability for group insurers with increasing income protection and total and permanent disablement claims, making the need for innovation in this area crucial. These programs can not only positively influence a person’s recovery, but also provide cost savings for employers and the group insurance industry.

The area of benefit design is also high on the innovation agenda, by determining the appropriate benefits relevant to a specific membership demographic and base. This spans from life stage default arrangements that tailor cover to meet the needs of a member at different times in their life, through to definitions and eligibility requirements to ensure the cover is meeting its original purpose and needs.

The rising incidence of chronic disease in Australia presents another opportunity for super funds to innovate their offering to members. In March, we launched health and wellness program AIA Vitality in Australia to play our part in improving the health of our policy holders, and therefore changing the conversation around life insurance. By shifting the conversation from “what if something happens to you” to “what if you could improve your health and get paid for doing so”, we think we can put the customer in the driver’s seat and deliver tangible value in life insurance. We can also reduce the likelihood of our policy holders claiming in the first place, and can keep a lid on premiums.

Innovation in technology is another area where we are already seeing great development, and allowing super funds to be more engaged with their members, rather than just at the point of claim. As highlighted by market research company Forrester in its report of key trends for 2014, it is no longer a “nice to have” for businesses to provide a “great digital experience”. AIA Australia is seeing great benefits in allowing people to top up their cover through our LifeApp system and easier and earlier lodgement of claims through our E-claims system. We are also seeing across the industry improvement in the use of data, improving online claims management systems, and giving members access to their superannuation accounts via mobile devices.

While the discussion around the sustainability of group insurance is right to have, it is important to look past the headlines to see that many insurers aren’t simply waiting to innovate. Yes, these are challenging times for the industry, but seeing the glass half full rather than half empty and embracing innovation should be our focus to ensure a bright future.

Damien Mu, acting chief executive, AIA Australia

 

 

 

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