New insurance claims data released by the Australian Prudential Regulation Authority (APRA) shows many benefits of using advisers as opposed to dealing direct with insurers. It found that “advised business shows higher admittance rates than Individual non-advised for the same cover type”. The reports and data can be found here.
But the real value of advisers can be seen in the average sums insured paid by claim type compared across the various distribution channels. Cover given automatically to groups in superannuation funds makes up a big segment of life insurance in Australia. And besides the issue of people paying for cover they don’t know about, the average sum insured is very small and may be insufficient to meet the financial needs of the insured or their family. This is demonstrated in the graphs below that compare the average claims size for each of Death, TPD, Trauma and IP cover across the various distribution channels. For example, how can $131k of life cover be sufficient ? Yet this is the average paid from a superannuation fund.
Note that, in the above table on Income protection insurance, the number of paid claims in the reporting period is 12,601 for advisers and just 2,913 for group cover (not in super).
