Put policies online for greater client takeup?

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Many Australian insurers already offer online access to insurance policies and policy disclosure statements but these tend to be for car, home and travel insurance, and often the question asked surrounding these is: ‘have you read and understood the policy?’.

Given the complexities within a wealth protection policy, such as life or income protection insurance, would placing these documents online threaten or enhance the role a planner plays in providing advice and assisting clients in selecting the right insurance product?

This debate is currently taking place in parts of the USA where Rutgers University insurance law professor Jay Feinman says insurers should be pushing more policy details online.

Feinman says insurance in the USA is such that many people don’t know what they are buying until they have bought it, despite choosing their level of cover, excess and premiums up front. He says people taking insurance are not able to read the fine print until after they have become a customer.

However he points to a scheme in Nevada where the state regulator publishes the standard policy forms from the states’ 10 largest home and car insurers allowing people seeking insurance to shop around to compare policies.

Feinman admits this step alone will not tackle the problem of insurance education, with many people choosing not to read, but consumer groups could take on the task of creating guides that compare and rate the benefits of one policy against another.

While it appears that the Australian market is ahead of the USA in placing information online the issues around insurance, education and understanding seem to be similar.