The July 2013 Investment Trends Planner Risk Report also found planners are increasingly using platforms to write risk, but spending less time overall talking about insurance needs.
The recently completed survey of 1,159 financial planners found 29 per cent of planners reduced usage of an insurer in the 12 months to July 2013 and 35 per cent stopped using an insurer, while 8 per cent did both.
This resulted in the total number of insurers used per planner dropping from 3.8 on average to 3.4.
“This has resulted in the greater concentration of risk businesses written,” said Investment Trends senior analyst Recep Peker. “Planners write 64 per cent of premiums through their most-used insurance provider, up from 61 per cent in 2012 and 54 per cent just five years ago.
“It has become even more crucial to be a planner’s most-used insurance provider.”
The top five insurers by primary planner relationships are AMP (the most used insurance broker of 18 per cent of planners), OnePath/ANZ (14 per cent), AIA (11 per cent), followed by TAL and BT Life. However TAL came top in terms of planner satisfaction, ahead of Zurich and Macquarie Life, with good BDM support listed as a key factor by respondents.
The report found planners now write 39 per cent of new risk business via a master trust or wrap platform, up from 34 per cent of premiums in the prior year and close to zero written on-platform a decade ago.
“The reason this is so significant is because the concentration of risk business is even greater among advisers using platforms, partly due to the limited range of insurers available on most platforms,” Mr Peker said.
“This means insurers without a platform will need a more compelling proposition to compete.”
He said the main factor inhibiting more risk businesses on platforms is the limited range of insurers on offer, with planners asking for choice of insurer on platforms.
The report also found planners had slightly decreased their total client time spent discussing insurance needs overall, from a high of 20 per cent in the prior study to 18 per cent.
“The volatility in the markets that lasted most of 2011 and 2012 had driven planners to focus on increasing the role of insurance advice within their businesses, but the return in confidence earlier this year has meant planners were able to write a lot more non-risk business this year,” Mr Peker said.
“Despite this, those who write risk estimate they have written 5 per cent more in annualised risk premiums in the last year than we recorded in the previous study, and remain optimistic predicting future growth, as they have for several years.”
