Last week, SKL consultants attended the 2017 Insurance Council of Australia (ICA) Annual Forum. Here are some highlights of the day.
Social license given by the community was discussed. We never thought of the insurance business in this context but fundamentally speaking, any operating business or industry only exists because community has given it the social license to operate. Recent bad press related to claim issues in life insurance can lead to the wider community and therefore governments questioning the social licence which has been given to the whole insurance industry (life, health and general insurance) to operate in the current capacity. This is something the industry leaders need to be very aware of.
Therefore, it is extremely crucial for the insurers to do the right things for the community and effective disclosure to customers is at the heart of this issue. This year, we can see that the ICA is focusing on the problems in relation to adequacy of Product Disclosure Statement (PDS). The long and complicated words have been gradually simplified over the years to allow customers to understand the PDS better. However, from the survey result presented by the Lab (a quantitative research company), it has come to light that a lot of people do not read the PDS and even if they attempt to read it, their understanding of it is usually poor. This essentially is a behavioural problem as most people tend to avoid reading or understanding something that seems long and complicated. It will be interesting to see what strategy that they will use to motive customers to rectify this behaviour.
On another note, ICA is making concrete steps towards achieving the goal of helping insurance customers to better understand their premium calculations. Now, the ICA’s DataGlobe tool can be used by brokers and insurers to help people to check if their houses are in the hazard zones (which they might never have known before). Although it is not widely used at this stage, it will be a useful tool for the community to have a broad understanding in how the premiums are added up.
Overall, the ICA conference has given us a lots to think about and it was well worth attending.