Many members are not aware of their cover options, and member engagement is one key area that will benefit from future innovations in group insurance, according to Dan Taylor, General Manager, Partnerships at TAL Australia.

Speaking at the recent Investment Magazine Group Insurance Summit, Taylor and Anthony Clough, General Manager Group Distribution, AIA Australia said industry innovation would present exciting opportunities for those who embraced it.

They both agreed innovation would change the group insurance landscape in many ways for members, advisers and funds alike.

Simplified product constructs, streamlined underwriting and claims, and in particular greater opportunities for member engagement, were just some of the likely flow-throughs.

“Increasing member awareness is a significant opportunity for our industry,” Clough said. “We’ve already seen a lot of innovation in this space as funds are thinking more about the member journey and how insurance is a part of that holistic experience.

Anthony Clough

“All insurers are already invested in digital innovation, where far more information is provided to members. They can make choices and claims on line and these are processed much faster.”

Clough said there was plenty of scope for more innovation as the industry meets the challenges presented by legislative changes.

“I think the Your Future, Your Super (YFYS) reforms may have unintended consequences,” he said. “A member can amalgamate accounts online without being provided with any information of the impact to their insurance cover.

“We don’t want people making decisions based on communications that don’t talk about insurance. We need to provide this information. How super funds might engage with employers to address this could be an important innovation.”

Encouraging engagement

Taylor said that looking at innovative ways to encourage members’ engagement with insurance represented a huge opportunity.

“Research indicates many members are not aware of their cover options, and whether these meet their needs,” he said. “Only around two per cent of members upgrade their cover each year.

“This sort of engagement is also beneficial to the funds as members who take an active interest in their cover stay with the fund longer and show higher satisfaction. They are more loyal.”

Taylor agreed the YFYS legislation would likely drive an increase in transfers. He also said there was a significant innovation opportunity around channel convergence and the sources of advice and support provided to members.

“We are already seeing a blurring of the traditional lines between group insurance and individual direct cover. Advisers are steering their clients to super funds to access group cover.

“Stapling is also likely to lead to greater member engagement and this presents a chance to review and update their cover. We need to remind people insurance is not a set-and-forget and that the default core product may not be fit for purpose. We must also continue to demonstrate the value of group insurance to the disengaged.

“An important innovation will be how we help employers ensure their employees are properly informed and protected.”

Artificial Intelligence

Clough and Taylor were of the same mind about the degree to which artificial intelligence (AI) innovation would continue. But they cautioned that while AI is already shaping the brave new world of group insurance, for the full benefits to flow through to stakeholders, it must be carefully managed.

“We’re seeing the emergence of AI in the underwriting and claims spaces,” said Clough. “It’s all around us; taking a process and making it simpler, quicker and more efficient.

“AI can improve processes, but from a member’s perspective it’s more powerful when you combine it with behavioural science. Together these can help members understand their choices and give them the confidence they are making good decisions.”

Taylor’s AI caveat concerns information input. He said the industry is awash with data but it is not always of the highest quality, perhaps due to the old systems of manual entry and paper records.

“TAL has embraced digital technologies, including AI, and we have been using these to improve straight-through processing and the quality and consistency of underwriting for some years.

“We’ve also evolved our call centres to incorporate voice analytics. We’re expanding this into our claims area as well to ensure the right conversations are being had.

“AI is not just about smart algorithms. It’s about the data it can learn from. First and foremost, we must get our data into shape so we can take full advantage of AI.”

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