The recent headlines paint a challenging picture for Australia's life insurance sector: $2.2 billion in losses from spiralling claims costs, declining premium inflows, and an industry grappling with what many describe as a 'burning platform' for profitabilit, a situation where the current business model is no longer sustainable and significant changes are needed to avoid further losses. Yet the soon-to-be-released 2025 Adviser Ratings Landscape Report data reveals that some insurers are not just surviving these challenges, they're thriving by fundamentally reimagining their relationships with advice practices.
The Performance Premium of Risk Advice Integration
The numbers tell a compelling story about the value of life insurance expertise. Counter-intuitive to most assumptions in the market, practices that include life insurance advice in their service offering achieve average annual revenue of $1.57 million, compared to $1.23 million for those without risk capabilities. More striking still, these practices maintain superior profit margins of 24% versus 22% for their non-risk counterparts.
This performance differential reflects more than just additional revenue streams. Risk-focused advisers demonstrate sophisticated business models that other practices should look to emulate. With 83% of advisers now registered to provide life insurance advice, up from 72% in 2019, the integration of protection strategies into holistic financial planning represents a significant shift from the earlier years' trend toward specialisation.
The fee structures reveal equally impressive patterns. While pure risk specialists in the highest volume category average revenue of $2,786 per client (with a practice focus on efficiency and volume), even those in lower volume categories command significantly higher fees and, far more importantly, profit, compared to the broader market, demonstrating that protection advice commands premium pricing when delivered effectively.
From Crisis to Catalyst: Learning from Market Disruption
While some insurers choose to wage battle over group insurance books, the current industry turbulence creates unprecedented opportunities for insurers willing to invest in adviser success. While legacy players struggle with rising mental health claims and premium sustainability, the top-ranked insurers have used this period to differentiate themselves through superior service delivery and genuine partnership with the adviser community.
The correlation between adviser satisfaction and business outcomes is undeniable. Insurers ranking in the top tier consistently outperform on adviser usage, new business acquisition, policy persistence, and market share growth. This isn't coincidental; it reflects the reality that adviser advocacy directly drives commercial success, particularly during periods of market stress.
Strategic Responses That Build Adviser Loyalty: The Successful Path Forward
The Landscape data reveals that leading insurers are transforming industry challenges into competitive advantages through targeted investments in adviser support:
Claims Excellence as Differentiation: Rather than viewing the surge in mental health claims purely as a cost burden, top-ranked insurers have invested in specialised claims teams with deep expertise in psychological conditions. They provide advisers with detailed guidance on supporting clients through claims processes, recognising that claims handling represents the ultimate test of insurer value. This approach not only improves outcomes but positions advisers as genuine advocates for their clients.
Technology Innovation Beyond Basic Digitisation: While the industry faces pressure on traditional business models, leading insurers are leveraging technology to create entirely new value propositions. NEOS exemplifies this approach, creating tech solutions to "level the playing field" and make coverage more accessible through digital platforms. This reduces adviser workload while expanding market reach—a genuine win-win outcome.
Proactive Professional Development: As commission structures remain under pressure, top insurers are adding value through comprehensive adviser education. TAL's Risk Academy program demonstrates how insurers can support adviser expertise development, helping practices build sustainable business models that aren't solely dependent on product commissions. Similarly, Ensombl's dedicated risk channel provides tools and resources that enhance adviser capabilities.
Product Innovation Driven by Adviser Needs: A Testament to the Industry's Adaptability
The most successful insurers view regulatory challenges as catalysts for product innovation rather than mere compliance exercises. APRA's proposed capital framework overhaul for lifetime income products has prompted forward-thinking insurers to develop broader, more innovative retirement solutions that align with evolving client needs and adviser service models.
ClearView's updates to trauma and underwriting processes illustrate how operational improvements can address both regulatory requirements and adviser pain points simultaneously. By appointing dedicated underwriting leadership and streamlining processes, they're reducing adviser administrative burden while improving client experiences, precisely the type of innovation that drives adviser loyalty.
Addressing the Remuneration Reality
The ongoing debate around Life Insurance Framework commission structures has created uncertainty, but top-ranked insurers are recognised for the clarity and support they are providing based on the reality of today. Rather than simply advocating for regulatory change, these insurers are helping advisers build more diversified revenue models that reduce dependence on upfront commissions.
Successful insurers are:
- Supporting fee-based service models that enable advisers to charge appropriately for ongoing value
- Investing in technology platforms that reduce advice delivery costs, improving adviser economics
- Offering comprehensive training on value-based pricing and service delivery
- Creating efficiency tools that allow advisers to serve more clients profitably at various fee levels
Building Sustainable Partnership Models
The insurers ranking highest in adviser satisfaction share a common understanding: adviser success drives insurer success. Market leaders PPS Mutual and NEOS have gained adviser loyalty through comprehensive approaches to service delivery. PPS Mutual particularly excels in understanding client needs, product quality, and comprehensive coverage options, while NEOS leads in operational efficiency, underwriting ease, and platform functionality.
Rather than relying on history and expecting recognition for the past (while ignoring the challenges of the present), this philosophy manifests in practical ways that directly address current industry challenges:
Transparency in Pricing and Process: Rather than contributing to market uncertainty, leading insurers provide clear communication about premium strategies, underwriting criteria, and claims processes. This transparency allows advisers to set appropriate client expectations and position coverage accurately.
Collaborative Product Development: Top-ranked insurers actively engage with adviser communities to understand evolving client needs and market dynamics. Insurers focused on the establishment of a dedicated innovation function exemplifies this approach, creating new propositions based on adviser feedback and market insights.
Integrated Service Ecosystems: Instead of treating advisers as mere distribution channels, leading insurers create comprehensive support ecosystems that address practice management needs, client communication, and ongoing professional development.
The Recovery Roadmap: Specific Actions for Insurer Leadership
For insurers seeking to improve their adviser relationships and market position, the successful players provide a clear blueprint.
To address our immediate priorities, the message from advisers is on the need to focus on several key areas. First, it's essential to invest in the expertise of the claims team, especially concerning mental health and complex conditions. Streamlining digital processes will also be crucial in reducing the administrative burden on advisers. Additionally, enhancing Business Development Manager (BDM) training is vital to provide meaningful practice management support beyond mere product promotion. Finally, we must implement transparent communication regarding our pricing strategies and overall business sustainability to build trust and clarity with our stakeholders.
In order to achieve medium-term transformation, it's essential to develop integrated technology platforms that create seamless connections with adviser workflows to deal with life insurance advice inefficiency and cost. This includes implementing adviser education programs aimed at enhancing expertise beyond just product knowledge, as well as designing flexible service models that accommodate a variety of adviser business models and client segments. Additionally, building predictive analytics capabilities will be crucial for identifying at-risk policies and uncovering intervention opportunities that can be provided to advisers to support their clients.
To ensure long-term strategic positioning, advisers are looking to partner with innovation life insurance providers to establish new distribution channels and service models. While there is a benefit to life insurers investing and supporting preventive health programs that not only address claims cost drivers but also enhance client value, it helps life insurers more than advisers. An adviser’s primary goal is to create sustainable pricing models that strike a balance between affordability and business viability for the long-term health of their practices. Additionally, turning risk clients into retirement income clients supports practices to build longer-term sustainability of their client relationships; therefore, supporting the development of expertise in retirement income to capitalise on emerging market opportunities is a critical advice practice need.
The Competitive Advantage of Adviser-Centricity
Addressing and supporting the current advice practice challenges will ultimately separate successful insurers from struggling ones based on their approach to adviser relationships. Those that view adviser support as a cost centre will continue to struggle, while those that recognise adviser success as fundamental to their own prosperity will capture disproportionate market share.
The data demonstrates that adviser satisfaction directly correlates with business outcomes across every meaningful metric. In an industry facing structural challenges, this correlation provides a clear strategic direction: insurers that invest most effectively in adviser success will emerge strongest from the current transformation period.
The path forward requires more than incremental improvement; it demands fundamental reimagining of how advisers are seeking support from the life insurers they look to work with. The market leaders, who are primarily the new entrants into the industry, have already begun this transformation, creating significant competitive advantages that will continue to compound over time. For insurers serious about long-term success, the choice is clear: embrace adviser-centric innovation or risk being left behind as the industry evolves around those who understand that supporting adviser profitability isn't just good business, it's essential for sustainable growth in the new life insurance landscape. (And to this point, given APRA, ASIC and AFCA’s pressure on the quality of superannuation funds' life insurance offerings, group policy success won’t be far behind.)
The challenges for advisers providing life insurance advice are real, but so are the opportunities for insurers willing to lead rather than merely respond to change.
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Comments1
"I guess I can be labelled a miserable old cynic. But I have to ask, who wrote this article. It's the sort of thing I expect to see from Cali a bit of a puff piece I haven't seen any of the so-called offers for any of the insurers that I deal with or maybe my business is not big enough to be worthy of an approach. It seems like an attempt by the life insurers to gloss over the fact that most of their problems originate from the implementation of LIF which halved commissions and caused advisers to have to raise fees for advice just to keep up with costs And there is nothing in this article about the open gouging of legacy policyholders nor the deception in misleading of the concept known as duration base pricing. I've just spent half an hour on the phone to a 54-year-old non-smoking mail who is whingeing loudly about paying nearly $800 a month for death and trauma policy (no TPD) of a sum assured just under 300,000. Give me a break "
Bill Brown 15:48 on 23 Jul 25