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FMI: Opportunities exist



The views expressed in this article are not necessarily those of the FIA. The article below was supplied by FA news.

2018 FIA partner, FMI protects future dreams by offering a complete suite of life insurance products including temporary and long-term disability, critical illness and life cover. In the press release below, FA news speaks to Brad Toerien, CEO of FMI, to find out more about what the insurance industry of the future will look like. 

Over the past few months, a lot has been written about the uncertain future that insurers are faced with when it comes to designing new products and distribution models.

While this may be the case, insurers have also acknowledged that their current list of products needs to be updated. This needs to be done in order to cater for the client of the future who will inherently be looking for innovation before anything else. 

The mounting challenge

One of the challenges that insurers face is that they have to prepare for a future that is completely uncertain. Industry experts have often raised concerns about preparing for a future that is 20 years away when we don’t even know what the industry will look like in five years’ time. 

“We agree there’s going to be massive change driven by technology. However, some of the fundamentals around the insurance industry will remain unchanged. We still need to deliver a product that protects people and we’ve still got to find a way to communicate to them in a relevant way, and we’ve got to make the sales process as easy as possible. Traditional insurance and insurtech are travelling on parallel paths. But for us, the answer to deal with this uncertain future is to combine them – to use technology to attract more people to the industry and to enable advisers to give advice more efficiently,” said Toerien. 

He added that the Retail Distribution Review (RDR) has also created uncertainty, but the basics are still going to remain the same. “Some of the regulatory requirements that come through may make it more difficult for advisers to give advice cost effectively. But again, this is where we think technology can support this. RDR is going to affect us, but it’s not going to change the things that need to be done. We’ve still got to deliver products to people, we still need to convince people they need cover and we need to make it easy for them to understand,” said Toerien. 

Opportunities for growth?

While a lot of insurers have seen this as a challenge, some may see it as an opportunity. 

“FMI thinks that sometimes creativity and products adds complexity. Further, FMI believes that the industry needs to go back to basics. Our whole back to basics approach is around putting income first; protect your ability to earn an income, look after your life before you start preparing for death and make sure you take care of the basic issues,” said Toerien.

He added that creativity comes in when insurers simplify the product and the process. 

Future products and legacy worries

What will the products of the future be and what will be the trends driving this? Further, how will existing products fit into this future? 

“Some of the trends we’re seeing is cash value, cash backs and non-risk rewards. We think these trends are making products more difficult to understand, and it seems like many insurers are trying to market these products to people by giving them gimmicks and rewards rather than fundamentally sound products,” said Toerien.   

He added that when it comes to products of the future, Toerien pointed out that it will be interesting when technology can allow on-demand products. “This will be best suited when an insurer can answer an immediate need. For example, I’m about to do a race, protect me for the race. When this occurs, we’ll see much more innovation around hyper-personalised products,” said Toerien, “additionally, we are seeing an increasing shift from predominantly lump sum benefits to income benefits because it’s the way our clients think.” 

He added that income based products are a natural fit, especially to people who are new to the industry and don’t have an existing perception that products are always lump sum. 

An industry bugbear

One of the biggest issues in the financial services industry is that cost is a major determinant when it comes to designing products. Pricing has become difficult and may only become more so in an uncertain future. 

“The uncertainty about pricing products in an uncertain future will be offset against the cost savings that technology will bring. There are far more positive trends than negative. There is some uncertainty around cost of distribution, for example, but technology will help drive costs down, and there’s an improvement in quality of life that will also bring costs down,” said Toerien.  

Source: Faurie, J. (2018, July 25). Opportunities exist. Retrieved from: https://www.fanews.co.za/article/views-letters-interviews-comments/18/all/1102/opportunities-exist/25034