Our modular insurance product, MetLife Protect, has been designed for the way people in Australia live today. In this Q&A, MetLife’s head of retail sales, Matt Lippiatt, explains how it works.
What prompted MetLife to create a new type of insurance product?
About three years ago, we started looking at retail insurance in Australia and asking ourselves how it could be done better. Our sense was that whilst the way Australians live and work today looks very different to what it did 20 years ago, there hadn’t been much genuine innovation in that time when it came to insurance.
We asked consumers about their experiences with insurance: how much they knew, what they valued and what they didn’t. What we discovered was that even after having gone and spent time with an adviser most people still didn’t understand what insurance they held, how it worked or why they needed it. They told us that they found insurance confusing and not especially valuable because it wasn’t tailored to them, especially as their circumstances changed over time. Most viewed it as an expense rather than an investment.
Armed with these insights, we set out to design a solution which was easy for advisers to fit into their advice process and something clients would truly understand and value.
You describe MetLife Protect as ‘modular’. What does this mean?
Historically, insurers have taken an all or nothing approach when designing their products. They only offer advisers two kinds of solutions; ones which are pretty basic or ones which are overly comprehensive. The basic contracts are often insufficient to really cover clients properly yet the comprehensive contracts force clients to pay for a whole bunch of features they may not need, can’t understand and don’t value. We think the comprehensive contracts on the market today have actually had the unintended effect of commoditising advice. Because they are over spec’d and extremely hard for advisers to customise, the only way to easily compare the various offerings is on price.
By contrast our modular product is like Lego: each piece ties to a specific objective and an adviser can work with their client to assemble these different pieces into bespoke combinations which match directly to the client’s specific goals and objectives.
As a client’s needs evolve over time, they don’t have to replace the whole product – they simply add or remove pieces as they go. And because each piece has a specific purpose, it’s easy for clients to understand and appreciate the value of. The best news is that when we showed this to real life clients they loved it.
Which consumers did you have in mind when designing MetLife Protect?
We identified two under-served segments of the market: people who are busy caring for a family while building up their wealth through property; and people who are building small businesses.
We learned that these people wanted insurance but felt the products currently in the market weren’t tailored to them – so we’ve designed MetLife Protect with a special focus on these two segments.
Let’s get into a bit more detail. Are there certain modules that every customer needs to select?
Yes: we have four base modules or core benefits – Life+, TPD+, Trauma+, Income Cover+ – that correspond with the main types of insurance currently available in the market. Every customer should select between one and four of these core benefits to form the backbone of the product. Then there are 11 extras packages you can add to the core covers which can be turned on and off over time. Each extras package has a specific purpose and bundles together with what we believe are logical combinations of value added features relevant to that purpose.
What’s an example of an add-on module?
Let’s say you’ve chosen the Life+ base module – we have an add-on module called Buy/Sell for small business owners that allows them to upgrade their cover to match the value of the business as it grows over time without having to come back again for underwriting. That’s obviously very useful for a small business owner, but it’s not relevant if you don’t run your own business.
Another example is the Home Loan module, which is relevant if you’re building wealth through property. It has a range of benefits; for example, if you lose your job, it waives premiums on your cover for up to 3 months at a time.
It certainly sounds like a new approach. Why aren’t other insurance providers doing the same thing?
MetLife is taking a lead on the move to modular products but no doubt others will follow in time. Because we are a new player in retail, we have the luxury of being able to think differently about insurance and build solutions for the new world of advice without having to deal with the legacy of the past. From where we sit, the future looks bright. We are backing quality advisers and looking to partner with anyone in the industry who share our values and also have a passion to lead change.