While Aviva Australia’s upgrade guarantee aims to provide surety for advisers and their clients, policyholders of some other providers could be forgiven for worrying if definitions of an insurance product sold today will meet their potential needs tomorrow, according to Shaun Williams, Aviva’s general manager of group business development.
While Aviva Australia’s upgrade guarantee aims to provide surety for advisers and their clients, policyholders of some other providers could be forgiven for worrying if definitions of an insurance product sold today will meet their potential needs tomorrow, according to Shaun Williams, Aviva’s general manager of group business development.
"The fast rate of definition changes in the protection insurance market can create confusion and uncertainty. It’s important that insurance providers and advisers are in a position whereby they can reassure policyholders," Mr Williams said.
"For example, rapid innovation in medical science continues to improve the diagnostic techniques available to identify illness. In the case of heart illness, modern techniques can identify a heart attack and the risk of a repeat attack by assessing the levels of myoglobin, troponin I and CK-MB in the victim’s blood as a more accurate alternative to ECG tests," he said.
"Insurance policies should keep pace with these sorts of improvements and thereby give policyholders peace of mind," Mr Williams said.
"The industry best standard is an 'upgrade guarantee', whereby policies are automatically upgraded to include improved benefits if such improvements result in no increase in premium rate," he said. "The beauty of having this guarantee in a policy is that advisers do not have to go back to all existing clients and replace their policies with new contracts incorporating the benefit improvements. That scenario would be extremely costly and time consuming for the advisers and a nuisance for their clients."
However, not all upgrade guarantees are equal. According to Mr Williams:
- the upgrade of policy conditions should be automatic, rather than subject to the approval of the insurance company’s actuary;
- the upgrade should occur as soon as the improved conditions are announced, rather than at the next policy anniversary; and
- the upgrade should give the client the choice of the old or the new conditions, if for a particular claim the previous conditions are found to be more appropriate.
"The inclusion of a sound upgrade guarantee provides an important safety net for advisers," Mr Williams said. "They can recommend that a client effects a long-term policy knowing there is a written guarantee that the most appropriate benefits and features will automatically be made available to them. Benefits will automatically improve as definitions develop without any action being required by the client or their adviser," he said.
"In Aviva’s case, our upgrade guarantee is about providing surety for advisers and their clients, and about making it easier to do business with us."
-ends-
For further information please contact:
Bernadette Collins, Public Affairs Manager
Tel (03) 9829 8818
Notes to editors:
- Aviva Australia is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners, the Australian funds management arm of Aviva plc, is a sister company. Through these companies we provide products and services in the areas of wealth creation, wealth management and wealth protection for more than 300,000 customers throughout Australia.
- Globally, Aviva Australia is part of Aviva plc, the world’s seventh largest insurance group, the largest insurer in the UK and one of the top five life companies in Europe. Aviva was formed in May 2000 through the global merger of CGU plc and Norwich Union plc.
- Aviva is the world’s seventh-largest insurance group and the biggest in the UK. It is a leading provider of life and pensions products to Europe and has substantial businesses elsewhere around the world. Its main activities are long-term savings, fund management and general insurance. It has premium income and investment sales from continuing operations of A$68.32 billion, and more than A$488 billion of assets under management (as at 1 July 2003). The group has more than 59,000 employees and 25 million customers worldwide.
- The information in this document reflects Norwich Union Life Australia Limited's (NULAL) and NULIS Nominees (Australia) Limited's ('NULIS') understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information is not, nor is it intended to be, comprehensive or a substitute for professional advice on specific circumstances. The securities advice or information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision on the basis of the advice above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the advice is appropriate in the light of their particular investment needs, objectives and financial circumstances.
- Applications to invest in a financial product issued by NULAL and NULIS or any of its related entities must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Aviva or your financial adviser. Investors should consider the PDS before making an investment decision or deciding to continue to hold a product.