Advisers must form network to address underinsurance

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Advisers should take advantage of a great network opportunity that will also help to alleviate Australia’s massive underinsurance problem, says the director of a referral management firm.

David Phelan of Effective Referral Management is calling on advisers to forge bonds with other professionals such as lawyers, brokers, and accountants in an effort to combat underinsurance.

“We strongly advocate that advisers should be forming relationships with other professionals because all of these people have got large client bases that need advisers,” he told Wealth Professional. “These [professionals] are in a strong position to refer their clients because they already have an existing relationship.”

Phelan’s comments are in light of Australia’s significant underinsurance problem, an industry he said has seen a sharp decline in both the level of insurance and the number of insurance advisers.

“There are some pretty alarming statistics around about the levels of life insurance cover with an average of about $80,000. A lot of people don’t have income protection or trauma insurance,” he said. “For people between [the ages of] 25-40, the overall level of insurance has dropped 25%.”

The number of advisers active in the insurance market has also steadily declined, potentially because many have branched into planning and turned to investments, Phelan said.

Industry professionals working together is a good solution and one that could start turning the statistics around he said, but advisers also need to make the other party aware that forming a common relationship will also be beneficial to them.

“Everyone will be a winner, but the key thing advisers must do is help these professionals understand that [referring and] enhancing a relationship with the client will grow their business. That’s the way to get them see what’s in it for them,” he said.