Why Mutuality Powers Successful Adviser-Insurer Relationships

Australia’s financial advisers are feeling a renewed sense of optimism after years of grappling with tough challenges like regulatory shifts and rising business costs. The drop in adviser numbers since the 2018 Hayne Royal Commission is finally stabilising, which is a promising sign for the industry.

This period of renewal offers insurers a valuable opportunity to enhance their support for advisers and continue the growing momentum of quality financial advice. A standout approach to this that is gaining traction is the mutual model, which, according to Adviser Ratings’ 2024 Australian Financial Advice Landscape Report, is hitting the mark with advisers.

This is clearly evidenced by the numerous accolades won by mutual life insurer PPS Mutual – the firm ranked highly among advisers in various categories, scored an industry-high Net Promoter Score (NPS) of 42.3, well above the industry average of 13.32, and won Best Retail Life Insurer in 2023 and 2024.

It’s no surprise when you consider its underlying mutual model. Unlike traditional shareholder companies driven by profit maximisation and shareholder interests, mutuals are owned by their members—i.e., policyholders in the context of insurance. This structure means that the company’s goals are directly aligned with those of its members. Naturally, this results in higher-quality outcomes for advisers and their clients.

Notably, the Adviser Ratings report uncovered three key qualities that advisers value in an insurer: personalisation, service quality, and ease of doing business – all areas in which a mutual excels.

1. Enhancing Personalisation and Meeting Clients’ Needs
A key advantage of the mutual model is its natural focus on personalisation. PPS Mutual, for instance, delivers a focused proposition of tailor-made insurance products for professionals and provides Australian professionals with access to a mutual insurance model. This is delivered through PPS Mutual accredited advisers trained to work with these high-earning professionals.

Mutuals are client-focused by design, since their members own a part of the company and develop a deeper investment in its success, fostering a stronger, more personal connection. For advisers, this translates into clients who are more engaged and committed, fostering enhanced loyalty and long-term relationships.

In an industry where understanding client needs is paramount, mutual insurers are particularly adept at customising their services. For instance, PPS Mutual’s focus on professionals—like engineers, lawyers, and accountants— ensures their products are perfectly suited to this demographic. This specialisation has contributed to PPS Mutual receiving Adviser satisfaction scores well ahead of the industry in the categories of ‘Reputation’, ‘Trust’, ‘Understanding Clients’ Needs’, ‘Quality of Product’, and ‘Claims Handling’*.

Advisers understandably value insurers who show a deep understanding of their clients’ unique needs and offer tailored solutions. This approach not only strengthens adviser-insurer partnerships but also guarantees clients receive the most relevant and effective solutions.

2. Driving High-Calibre Service Support for Advisers
When it comes to choosing an insurer, high-quality service is crucial for advisers. This means having reliable support from business development managers (BDMs), top-tier online tools, and a wide range of product options.

BDM support is crucial, a professional bridge between advisers and insurers. Advisers rely on BDMs for their product, industry and competitor knowledge, as well as “on-call” product and technical assistance. This support function is reflected in the Adviser Ratings report, where BDM support was one of the factors against which advisers measure the quality of insurers.

High-quality online service is also vital, as digital access provides advisers with the tools and resources needed to manage clients’ policies efficiently. This includes user-friendly platforms, quick access to policy information, and seamless transaction processes.

Mutual insurers often stand out in these areas because they focus on member satisfaction and building lasting relationships – as evidenced by PPS Mutual ranking first for Online Service Quality and Adviser Support in the 2024 survey by Adviser Ratings.

3. Ease of Doing Business

For advisers, how easy it is to do business with an insurer is crucial. The mutual model stands out for its focus on making things straightforward and supportive. This approach helps explain why advisers are leaning towards insurers that simplify their work.

PPS Mutual ranked first for Claims Handling, and were rated second in Competitiveness, Ease of Underwriting, Platform Functionality, and BDM Support, highlighting the firm’s commitment to enhancing the adviser experience. Its focus on customer retention, satisfaction, and sustainability is evident in its industry-leading lapse rate of 5.1%, compared to the industry average of 15.6%.

With rising living costs and financial strain hitting hard, the need for a sustainable, long-term approach to insurance has never been clearer. The mutual insurance model shines during these uncertain times, with its focus on long-term stability and high-quality outcomes.

As the industry adapts, mutuality is proving to be an impactful solution. Advisers are increasingly seeing the value in partnering with insurers who are dedicated to building lasting relationships and truly understand their clients’ needs.

There’s never been a better moment for mutuality. It’s not just a good fit—it’s a strategic advantage for future success, and advisers are clearly on board.

*Adviser Ratings’ 2024 Australian Financial Advice Landscape Report