An open letter to developers of disability insurance products

Apr 13, 2022 – Products are now being developed based on whether they are accepted in sales and perform well on a comparison calculator, says biometrics expert Philip Wenzel. What the customer expects or needs is neglected. For example, it would be better if you had disaster support to get back in shape. Therefore, product providers would have to steel themselves for rates that are not comparable.

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Philip Wenzel (Image: Doris Koehler)
Philip Wenzel (Image: Doris Koehler)

For some time I have been criticizing the evolution of disability insurance towards insurance for academics. This development is not necessarily intentional, but it is the result of the fact that the protection is constantly expanding and therefore more expensive.

Runners are partly to blame for the development

We insurance brokers like to say that we are the trustees of the client. And yet, we are largely to blame for development.

Surely it cannot be in our clients’ interest that invalidity insurance for the target group that really needs it becomes more and more unaffordable and academics, who could also afford more expensive protection, have to pay less and less.

The clients of the insurer are the intermediaries.

However, when talking to product developers about BI insurance, there are roughly two criteria that they feel should be considered:

  • Do middlemen sell it? And derived from it:
  • How would the product behave in a comparator?

From an economic point of view, this is quite understandable. The clients of the insurer are the intermediaries. And if they don’t like a tariff, then it won’t sell. That is why products today are increasingly adapted to intermediaries.

Ask end customers for a suitable solution

The end customer is probably much less interested in the issue of liability than the intermediary. And if consumers were asked for a suitable solution, they would probably say that they only need money for the recycling period or when recycling is no longer possible.

Disability insurance can do that. But it would also pay if the insured does not retrain in the event of a loss or retrains and only works so long at the new job that it does not reach 80 percent of the previous salary.

Temporary disability insurance perfect solution

In fact, temporary BU insurance would be the perfect solution. But they no longer exist. I think the savings in contributions for non-academics through the differentiation of professional groups would now be attractive enough.

It is also a pity that many innovations remain in the background of insurers. And that has to do with the fact that they are not relevant to comparison calculators. But if a solution is useful, then it costs money. But why should you make your product more expensive if the benefit is not yet visible in the comparison calculator?

Support in professional reorientation

Personally, I suppose that the insured would prefer to recover in case of loss than receive a pension for the rest of his life that may not even be high enough. There are definitely service providers here who, in the worst case scenario, will help you find the best measures to get back in shape.

If that doesn’t work, they help the insured to reorient himself professionally to the point of professionalizing the application documents. Or, if the interested party wants to become self-employed, by examining the business situation, the conception or by finding workers.

I also like when the insurer also supports the request for benefits in case of loss. Ideally, the performance tester visits the customer site to record the data.

Both ideas can still be improved. In this way, the insured could receive support even if the damage has not yet occurred. For example, when the boss starts to get on your nerves or starts pinching you on the back. Or an independent claims examiner is paid if the client has reservations about the insurer.

Solutions that are difficult for comparison calculators to understand

These would be sensible solutions for the end customer that is not yet established in the market because they are difficult for a comparison computer to understand.

It would be good for BU insurance’s image if it focused more on helping customers again. I’m sure enough middlemen can be found who would also recognize this.

But to do this, product development must get bolder and move away from full financial support. Insurers would only have to offer support to clients if they also show a willingness to retrain or are no longer able to retrain for health reasons.

More courage for incomparable products

We also need more courage for incomparable products. People need individual solutions. Disability insurance may not always fit. And there are still intermediaries who also open solutions outside of comparison calculators.

As long as there are products that help people, there will always be insurance brokers who will sell them too. If we continue to look only at what sells well to the middleman, we increasingly forget what insurance is all about.

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