Oh to live in a perfect world...

03 February 2014 Jonathan Faurie, FAnews

“You cannot escape the results of your thoughts. Whatever your present environment may be, you will fall, remain or rise with your thoughts, your vision, and your ideal. You will become as small as your controlling desire; as great as your dominant aspiration.” James Lane Allen

We would all like to live in an ideal world. In fact, if we were to calculate the amount of time we dedicate to thinking about this every day, we would be surprised at how much time is actually spent on this venture.

The ideal world from an insurance perspective

The aim of the insurance industry is to offer the greatest amount of protection that caters for the unique and specific needs of the policyholder. FAnews approached a few advisers and asked them what the industry would like in an ideal world. The responses we received painted an interesting picture.

One of the aspects which would play an integral role in the ideal insurance world, would be a product which is flexible enough to be adapted to the policyholder’s specific needs.

One of the participants in the article noted that one risk product would exist that can be totally customised and benefits could be renamed to suit the planning for each specific client. “For instance, instead of giving a disability product a name,, I must be able to capture my own description of a product for the client. I can, for example, call the product, Capital to settle outstanding debt should you get disabled’. I must be able to add as many of the same benefits to a policy as what the clients wants and be able to rename each of them.”

Income generation would be a major moot point

With the introduction of the Retail Distribution Review (RDR) in many international markets, the very way in which income is earned in the financial services industry has changed significantly. This looks set to be the case in South Africa with the Financial Services Board formulating its own version of the law.

There is a debate on how this would be structured in the ideal environment. On the one hand, there seems to be a certain level of contentment with the industry’s current earning structure. “The current model works for both the client and adviser. If we change that to a model where the adviser has to negotiate a fee, there will be resistance from the client as they are already overburdened by the cost of living,” says an anonymous respondent.

However, another adviser disagrees saying no commission should be payable on life products. “I must charge a fee based on the advice only, so that no matter what the advice is, I get paid for the work I did and no one can take the fee back. Life companies should pay the fee to me based on premiums under management with them, almost like an ongoing advice fee on investments. In an ideal world, clients obviously have the ability to pay for the advice.”

Go green, save the planet

According to the respondents, one of the biggest frustrations in the industry remains the amount of paperwork which needs to be worked through when selling a life product. “A way to avoid this may be to only answer yes or no to the underwriting questions on the app. The insurer then phones the client to ask more detail only on the yes questions.

The only way to make everything easier is to ask less but very specific questions, in order to ask less information at claim stage,” concludes an anonymous respondent.

To live in an ideal world would be a dream come true. Or would it? Constantly working towards improving the industry is one of the aspects which attracts policyholders towards the industry.

Ambition is the corner stone of improvement, and an industry which constantly seeks improvement is an attractive industry.


Quick Polls


What do you consider the most significant challenge in implementing the Two-Pot Retirement System?


Coping with new, unfinalised legislation, leading to uncertainty in implementation
Adapting to brand new claim types, requiring the development of digital, member-initiated claims capabilities
Addressing member education and awareness to correct misconceptions and ensure understanding of the system, including tax implications
All of the above
fanews magazine
FAnews June 2024 Get the latest issue of FAnews

This month's headlines

Understanding prescription in claims for professional negligence
Climate change… the single biggest risk facing insurers
Insuring the unpredictable: 2024 global election risks
Financial advice crucial as clients’ Life policy premiums rise sharply
Guiding clients through the Two-Pot Retirement System
There is diversification, and true diversification – choose wisely
Decoding the shift in investment patterns
Subscribe now