Insurance products that are marketed and sold through advisers need to undergo radical reform to ensure providers stay competitive in a post commission world, the CEO of Aegon has warned.
Products need to be simplified and made clearer to consumers in order to make them commercially viable to providers following the abolition of commission-based marketing, Aegon UK CEO Adrian Grace has said.
Speaking at a round table discussion at the Association of British Insurers' biennial conference, Grace warned that too many life insurers were still stuck in the commission-based world, setting their businesses up to deal with intermediaries rather than consumers.
He told the panel: "There needs to be a revolution in terms of advice because if you look around the UK at the moment there is no trusted, universally accepted advice brand or retirement planner.
"At the moment many brands in this space are getting ripped off for product push rather than proper consulting and that's a problem and that needs to be revolutionised."
He said the way to become profitable as a providing business without relying on commissions was to target consumers' needs.
"The reality is that you've got to completely change the way you do business because the systems, the processes, the way that you've run your business for the last 13 years are now redundant and you have to fundamentally change.
"The way you shift business is by starting to understand what it is the end consumer actually wants."
Grace identified five things that needed to be implemented in order to appeal to life insurance customers:
- income certainty - and the feeling that the consumer's investment is being actively looked after.
- Simplicity - so that consumers can understand what it is they are investing in.
- Reward mechanisms - consumers want to be rewarded for sticking with a brand
- Tools and continuing guidance - to help them figure out what their long-term goals are once the initial advice has disappeared.
- Digital offering - consumers want to be able to do things online and in a simple, straight forward way.
Grace said that technology in particular was becoming an increasingly imortant driver underlying all modern products, as more consumers are looking to access their life savings in a single easy-to-use platform online.
