Insurance Articles
Travel Insurance is not all the same
Posted by admin - 18/12/08 at 02:12:39 pmNot all travel insurance is the same, so don’t go on price alone.
Travel insurance is often a reluctant last-minute purchase or something thrown in as part of a package deal but events of the past few months show it has never been more important to make sure you have the right cover.
“What’s clear is that travel insurance can no longer be a grudge purchase,” the general insurance ombudsman, Sam Parrino, says. “Our experience is that people are having to rely on it [now] more than ever.”
That’s because of the increased frequency of severe weather, he says, and of civil unrest and terrorism – the latter being something your policy may or may not cover.
“There seem to be an increasing number of hot spots,” Parrino says, pointing to three examples in November alone: Indonesia, Thailand and India.
Australians were advised to reconsider travel to Indonesia because of the execution of the Bali bombers on November 9, while many people were stranded in Bangkok or had to cancel planned holidays after anti-government protesters blockaded the city’s airports later that month.
In Mumbai, Australians were among those killed and injured when terrorists targeted, among other sites, two luxury hotels and the main railway station.
At the time of writing, the Department of Foreign Affairs and Trade website, smarttraveller.gov.au, was advising against travel to eight countries, including Iraq, and suggesting Australians “reconsider” travel to a further 18, including India, Thailand and Indonesia.
Parrino says the department’s warnings are becoming a more frequent event, “therefore it’s really important that people understand what the exclusions [in their policies] are”.
The importance of reading the policy fine print was underlined last week with the release of statistics showing that of the 360 disputes over travel insurance that reached the ombudsman in the year to the end of June, 335 were to do with exclusions or conditions.
By the same token, Parrino says, “It’s also important for insurers to continue to modify their policy documents and sales and marketing material to ensure customers don’t have to be rocket scientists or mathematicians to understand what is and isn’t covered.”
Two of the biggest areas of dispute in the past year were – again – pre-existing medical conditions and the loss of “unattended” luggage and belongings.
Most policies specify the insurer won’t be held liable for lost belongings if they’re left unattended but disputes arise when the insurer’s definition of what constitutes “unattended” differs from the traveller’s.
In its guide to travel insurance (available at http://www.fos.org.au) the insurance ombudsman’s office says, for example, you might not be covered if belongings are stolen from a car.
The definition of pre-existing medical condition also varies across policies.
In some policies, the mere investigation of a symptom – without a diagnosis – may prompt the insurer to question whether there was in fact a pre-existing condition.
Parrino says disruption to travel, or disruption to the enjoyment of your holiday, is an emerging issue – as evident from the events in Thailand.
“The industry is on notice that this is a sensitive area,” he says. “Overall, [companies] have been fairly supportive of customers.”
With the Thai state of emergency, for example, some insurers decided to make payments to stranded travellers even though their policies specifically excluded claims arising from rebellion or insurrection. Others stuck to the wording of the policy.
It’s important to check whether a policy excludes war, civil disturbance and terrorism and how it treats advice from DFAT. You might not be covered at all, or you might be covered only for death or medical expenses. If you are covered, it might be on the condition that you don’t travel to a country where DFAT has specifically advised against it.
On the flip side, the department’s advice at the secondary level of “reconsidering” travel may not be deemed strong enough to support a claim for cancellation costs.
Peter Edwards, managing director of travel insurer Mondial Assistance Australia, says it’s vital people read the product disclosure statement that must be provided with every insurance product, so they know precisely what a policy covers.
Using this information, they should ensure they buy travel insurance that fits their specific needs, he says.
It may be convenient to take the standard insurance policy sold by your travel agent but it’s best to compare different options.
“Not all policies ‘off the rack’ will provide the cover needed,” he says, advising travellers to use the internet to research the different policies but also to speak to someone on the phone who can explain details more clearly.
The Australian Securities and Investments Commission warns against chasing the cheapest policy “without checking exactly what it covers you for”.
Money obtained 10 online quotes for comprehensive insurance for two adults taking a four-week trip to the US (see table). The results are standard prices that don’t account for any extra charges in relation to risks such as pre-existing medical conditions or advanced age.
The most expensive insurance was more than double the price of the cheapest. However, what makes a policy the best value depends on the mix of excess, exclusions, conditions and benefit limits that suits the traveller’s needs. Larger insurers also argue consumers need to assess the level of service some groups can give overseas.
Some people might rely on travel insurance linked to their credit card but consumer group Choice says this has pitfalls. Cover may depend on you paying for the trip in full on your card and on the extent of your credit limit.
Some cards provide cover only for injuries at the point of departure or arrival, not while you’re at your destination. Others do not cover domestic travel.
“Before you travel, get written confirmation of the coverage,” Choice says.
Don’t be tempted to travel uninsured, Edwards adds. “Many overseas destinations don’t have the same standards of medical care as we do here in Australia, so if you need to access medical treatment it may cost you thousands of dollars – like a recent medical repatriation Mondial Assistance performed that cost in excess of $120,000.”
BEFORE YOU GO
* Keep a record of all your personal effects and belongings.
* Store it in a safe place at home.
* Gather original receipts and credit card records as evidence for any claims.
* If you can’t find receipts, take photos of the items.
* Obtain current valuations for valuable items.
* Make two copies of your policy – one to take and one to leave at home.
WHILE YOU’RE AWAY
* Report any loss or theft to local authorities.
* Observe your policy’s time limit on making a report (e.g. 24 hours).
* Keep receipts for expenses such as replacement items.
Source: General Insurance Ombudsman / Insurance Council of Australia / ASIC
Insurance Articles
Non-Insurance in the Small to Medium Sized Enterprise Sector
Posted by admin - 17/12/08 at 04:12:39 pmThe Insurance Council undertook analysis into non-insurance in the household sector. This research is deliberately targeted in the small to medium sized (SMEs) business sector.
The Insurance Council survey of SMEs was conducted by Woolcott Research in early September 2008. The Insurance Council made use of Woolcott’s monthly omnibus survey which covers 1,000 registered Australian small businesses defined as those with less than 20 full-time employees.
Sole traders accounted for around 25.0% of the sample population while businesses with 1-4 employees, 5-10 employees and 11-19 employees accounted for 42.0%, 22.1% and 10.4% of the sample population respectively. The distribution of participating SMEs on an industry basis is shown in the graph below.
The key findings of the report were:
· 26% of all small to medium sized enterprises (SMEs) do not have any form of general insuranc
· Sole traders have the highest rate of non-insurance with 40.0% operating their business with no general insurance.
· Of the SMEs that purchase general insurance, 94.0% indicated they considered that they were adequately insured. Taken together with the rate of non-insurance, this means that under two thirds of all SMEs have adequate insurance.
· Over 80% of SMEs who indicated that they were inadequately insured cited the cost of insurance as a barrier to purchasing. Reform of taxation on general insurance products would therefore reduce the cost burden to SMEs and contribute to a reduction in the incidence of non-insurance amongst SMEs.
· For the majority of small businesses, profit expectations do not appear to impact on planned insurance coverage, at least in the short term. 50.0% of respondents indicated they would leave their insurance coverage unchanged despite the expected change in profits over the coming year.
Source: Insurance Council of Australia, 17/12/08
Insurance Articles
1.8 Million Homes Un-insured
Posted by admin - 17/12/08 at 04:12:36 pmResearch undertaken by the Insurance Council has found that 23 per cent of Australian households, or 1.8 million of them, do not have home or contents insurance.
Christmas/New Year break offers burglars the prime opportunity to nip in and take what’s not rightfully theirs.
Businesses that are closing up shop over the festive period also risk a run in with burglars, and making sure your insurance policy is all in tact is a must.
“Updating your insurance policies should be first and foremost in the minds of homeowners during the Christmas period, particularly if you are planning to travel or if you live in a bushfire-prone area,” said the Insurance Council’s chief executive officer Kerrie Kelly.
Related Coverage
She said that this time of the year is when most burglaries occur.
“It is extremely important for householders to check the security of their car, home and contents of their home and avoid becoming a burglary statistic this holiday period,” she said.
She said that before you even hit the road, you should ensure all property is protected in the following ways.
• Ensure your insurance policy is up to date and that they are adequately covered. If you’re not, the chances of receiving a full replacement on assets is unlikely;
• Make a detailed list of all your possessions/stock, including serial numbers;
• Mark all big-ticket items with a code or name to prove ownership;
• Ask neighbours, friends or family to pick up any newspapers or mail that builds up while you are away;
• Take photos of special items and jewellery and keep a copy of your insurance policy in a safe place;
• Renew your cover after Christmas to include any new valuables;
As well, she said people should check all the details of their insurance policy to ensure they are still covered whilst they are away – particularly if they are holidaying for a long period.
If they have friends staying in the house while they are away, or if they are house swapping with another family then speaking with your insurance provider is a must.
Source: News.com.au 17/13/08
Insurance Articles
Life Insurance in Australia
Posted by admin - 16/12/08 at 04:12:55 pmAPRA statistics show that the Australian Life insurance industry managed over $250 billion in assets last year, receiving a total of $51.6 billion in annual premiums.
90% of this market is accounted for by life insurance held with-in Superannuation funds; the remainder is ordinary life insurance business ($5.22 billion in annual premium). Most people purchase their life cover via their super fund for 2 main reasons; tax effectiveness and ease of application. The significant limitation with this type of life insurance is the level of cover offered. Studies by Rice Walker Actuaries estimate the average insurance amount payable from superannuation is only $70,000. 6 out of 10 parents with dependent children lack enough cover to support their family for more than just one year if they died. For those with the average superannuation death cover, the amount represents less than 20% of their needs.
Its established that the Life insurance market in Australia is huge by any comparison, and the level of under-insurance for Australians is substantial, providing huge upside growth potential for the industry. A recent study by Tower Australia forecast market growth in excess of 13% each year until 2018.
In considering the factors that have contributed to this level of under-insurance, the application process for ordinary life insurance stands as an obvious barrier for consumers. A time consuming paper based application, involving a financial planner and broker, obtaining a statement of advice and perhaps a medical, comes at significant expense, paid either directly of indirectly by the consumer. Most people are reluctant to endure this, and the idea ends up in the too hard basket.
If its not the application process that puts us off its the perception – “I’ve got Life insurance via my superannuation fund, so I’m covered”. Which can be interpreted as a lack of appropriate financial advice. As the statistics indicate they are likely to be significantly under-insured.
The question is; what upside is there for a company that offers easy to find easy to use Life insurance products available online or over the phone? With the ability to offer instant quotes on various different life insurance products, with an easy application process with no paperwork or medical? If that company can offer improved pricing that reflects the low input process? What if that company can go one step further and offer the consumer free, fully interactive advice and a compliant statement of advice over the Internet, telling them what level of cover they actually need and what products suit them best? A product that is currently unlike anything offered in the market.
1300 Insurance and DiY Insurance – Watch this space!
Insurance Articles
General Insurance, Car & Pet
Posted by admin - 16/12/08 at 04:12:01 pmGeneral insurance premiums written in Australian last year were over $33 billion, with the market growing at a rate of around 10% per annum. The market is characterised as mature and highly competitive with consolidation the underlying theme. A few large competitors now dominate the landscape.
The market timing for 1300 Insurance is opportunistic. The Insurance Council of Australia believes that opportunities exist for new products, new marketing avenues or combination’s of existing products & new distribution channels.
Insurance companies are grappling with how to connect their existing distribution channels with consumers, how to make them relevant and how to evolve with technology. Many of the large companies have spawned offshoot brands in an attempt to make this relevant connection and to embrace some of the emerging trends in the industry. Brands suck as, Just Cars, Bingle, and Insure My Ride are examples. Using descriptive names and positioning themselves online to capture consumers who have limited association with established brands including acronyms such as AAMI, NRMA, and RACV.
Pet Insurance is relatively unknown in Australia, yet widespread in countries such as the UK. Less than 1% of pet owners in Australia have pet insurance. There are currently no dominant brands in Australian, with the market wide open.
Insurance Articles
Phone Words in Australia
Posted by admin - 16/12/08 at 02:12:01 pmPhone words have existed for some time and proliferated in countries like the US and UK. A phone word is dialed by spelling out the word on a regular phone keypad, in much the same way, as you would identify sending a SMS. It has been a manufacturing requirement for phones in Australia to carry the alphanumeric keypad since 1999.
Roy Morgan research conducted in 2008 shows that the majority of Australians in fact 93%, are aware of phone words and the alphanumeric concept of dialing. There has been a dramatic increase in the actual usage of phone words since 2006 across all age groups.
The use of phone words in advertising is becoming increasingly popular as it is widely accepted, consumers recall a phone word such as 1300 Insurance far more easily than stand alone phone numbers such as 1300 467 872. In fact 30 of Australia’s top 50 advertisers now use phone words as part of their strategy.
• Phone words improve effectiveness of TV advertising by up to 300%
• Phone words improve the effectiveness of radio advertising by up to 14 times.
• Phone words improve the effectiveness of print advertising by up to 6 times.
Australia has been slow on the uptake of phone words in advertising relative to its international peers, however this is rapidly changing. Large Companies have done their homework. Companies like WESTPAC (1300 WESTPAC), TELSTRA (1300 TELSTRA), RAMS (13 RAMS) and 1800 REVERSE all use Phone Words. They realize that there is a competitive advantage in promoting their Phone Word, which reflects their Brand, Product or Service.
• Mortgage Choice adopted a phone word in February 2007 and has experienced a 1% increase in new leads every week.
• Motor Finance Wizard adopted the Phone word 1300 CAR LOAN in January 2006 and it is now receiving more than 10,000 calls per month.
• Pivot Point Heaters a Victorian based heating service adopted the phone word 1300 HEATER in 2007, after rapid business growth they are now a national company.
• 1800 REVERSE commenced operation in October 2000, within 4 years its profits had skyrocketed to $15 million per annum. It is now listed on the Australian Stock Exchange with a market capitalisation of over $160 million!
As a result popular phone words have rapidly gained in value and are now worth significant sums of money.
• 1300 Flowers sold in 2007 for $2.4 million.
• 13 Taxi sold for $1 million in 2004 and has since been touted for $10 million +
• 1300 Home Loans sold for $1.2 million in 2007 with 1300 Australia predicting a valuation between $5 – 10 million with-in 3 years.
As the majority of people phone to buy insurance products, 1300 Insurance aims to capture a share of the market by positioning itself as easy to remember, and offering excellent value.
Insurance Articles
Travel insurance boom as Aussies get nervous
Posted by admin - 16/12/08 at 02:12:52 pmA majority of Australians going overseas in the next year are planning to take out travel insurance, according to an American Express survey.
The American Express Platinum Card Travel Trends Survey polled 1000 people aged 18 years and over to gauge travel intentions in the current economic climate.
And it found 56 per cent were more likely to financially protect themselves by taking out travel insurance.
This contrasts with a Travel and Lifestyle Trends Report conducted by travel website lastminute.com.au last year which showed that one in three Aussies never, or only sometimes travel with insurance.
Luisa Megale, Vice President of Public Affairs for American Express, says the change in attitude could be due to “unfortunate recent events in popular overseas travel destinations,” with people’s confidence in overseas travel dealt a blow.
And she says travel insurance is now viewed by the majority as an essential travel requirement, especially when according to the survey 8.6 million Australians have suffered a misfortune during their travels.
The research shows having makes travellers more definite about their travel plans. Those who are more likely to take out travel insurance are more certain of a trip abroad in the next 12 months.
“These are uncertain economic times and people are feeling the pinch,” Megale says. “Insurance is essential. If an incident was to occur overseas and a traveller wasn’t insured, it may now be more financially difficult for them to cover the expense.”
Megale says many people don’t realise that they may already have some form of travel insurance, despite never signing a separate policy. There are many financial providers, including American Express, that offer travel insurance as one of the built-in features of their credit and charge cards.
But one in 10 still wouldn’t bother with travel insurance, and of this group men (51 per cent) are significantly more likely than women (27 per cent) to buy it.
In instances like the recent Thailand protests, where travellers were delayed from leaving the country, cardmembers could have lodged an insurance claim for assessment. But if they’d been caught up in the Mumbai attacks, cover would not have been provided in instances of terrorism.
This is the case with many travel insurance policies, which don’t cover for losses arising from terrorism and acts of war, with many insurance providers also unwilling to cover for countries deemed dangerous by the federal government.
Travellers need to check to see if their insurer covers medical expenses and repatriation if they are injured as a result of a terrorist attack while on holiday.
While not part of any insurance policy, American Express offers cardmembers a service in disasters such as the tsunami and the recent events in Mumbai.
It checks to see who’s booked a trip to the area and who’s recently spent there on their card and contacts them to see if they’re OK.
When asked why they would travel without travel insurance in today’s climate, the top five responses people gave were:
It’s too expensive – 62 per cent
I don’t think I’ll need it – 41 per cent.
I’ve never thought about travel insurance – 13 per cent.
I’m only intending a short trip – 17 per cent
I don’t know anything about travel insurance – 17 per cent
The most common travel mishaps cited by those surveyed are:
lost or delayed luggage – 31 per cent
delayed or cancelled flights – 31 per cent.
Getting sick or injured and requiring medical attention – 17 per cent
Having money lost or stolen – 11 per cent.
More details: www.smartraveller.gov.au/
www.fido.asic.gov.au/fido/fido.nsf
Source: www.theage.com.au 16 December 2008