AIA: Reconsidering remuneration

It seems the collective brains trust of the industry is failing New Zealanders

If aliens were to land tomorrow and take a dispassionate view of our industry, they would surely think the consumer was the loser

Churn is an age-old industry issue, but it's getting increased airplay in the market at the moment thanks to the arrival of a new insurance player. What's important to understand is not only what it means for insurers, advisers and consumers in simple terms, but the cynical calculations that swirl away beneath. Reinsurers price for genuine policy lapses, but they also price for churn, so the very people we're trying to engage with - current and potential customers - pay the price for the nonsense at the heart of our industry. It is hardly surprising, then, that for some customers cost exceeds the perception of benefit.

Insurers aren't the only ones to experience churn, though. Banks do too, and suffer equally for what amounts to a simplistic, kneejerk approach that serves only to shrink the financial services industry as a whole. It seems the collective brains trust of the industry is failing New Zealanders.