The head of MLC Life Insurance has opened up about how scandals have affected the industry and outlined plans to tap big data to give policyholders the "Uber experience".
"Rightly or wrongly, we're not as trusted by the community, by consumers, by policyholders, as we should be," executive director David Hackett said.
"We pay out over $1 billion of claims every year as a company and we know the great things that does for the community in Australia but we're not perfect."
The Commonwealth Bank's life insurance arm, CommInsure, has attracted the most serious attention after a joint Fairfax-ABC investigation revealed it denied heart attack claims by deliberately using an outdated definition buried in customer policies.
The Joint Parliamentary Committee on Corporations and Financial Services has launched an inquiry into the life insurance industry and will report by next June.
In the meantime, the industry has launched its first code of conduct to try and stem negative fallout.
'More to be done'
Mr Hackett said the code was a good first step but there was more work to be done to win back trust.
"I think if you asked the man in the street, they certainly hear the noise and the level of trust I think has been diminished as a result of the questions being asked," he said.
"It might just be CommInsure in that case but there are other cases in other publications, and it has created a question mark in the minds of people about whether or not life insurance companies are acting in their interest."
As of October this year, MLC Life Insurance is 80 per cent owned by Nippon Life Insurance and 20 per cent by National Australia Bank.
As part of the change, the company's legacy back-office systems are being transformed and the move is central to Mr Hackett's plan for reinventing customer relations.
"We need to be better in the moment with our customers, more responsive," he said.
"After all, they're used to the Uber experience now and you don't get that with life insurance. We've got to hold ourselves to higher standards."
Big data
And how does Hackett plan to get there? Big data. That is, by "partnering" with policyholders to access their health and other data which can then be used to create bespoke policies.
Wearable technology, for example, is already being used to track movement as a proxy for lifestyle-related risk.
"What's really cool about this industry is the great alignment of interests," Mr Hackett said. "We want our customers to stay well and if they do get crook we want them to get better. And they should want the same thing."
The approach will work best if information flows both ways, Mr Hackett added.
"Because we see lots of information across a large pool of people we can give policyholders insights into how they compare to the general population.
"We can say look, you're insured so don't worry about that but you should know that you're moving into a high risk category based on what we can see. Here are some of the things you might want to do about it. Of course, we would only do that when we were invited into that sort of relationship."
Indeed, a brief report commissioned by MLC Life Insurance and the Financial Services Council says the biggest challenges associated with big data are information security and privacy concerns.
MLC is already dabbling in the new world with MLC on Track. In 2015 it became Australia's first insurer to use smart watch technology to track customers' habits and reward them for good behaviour. More than 17 per cent of all new policyholders have signed up, according to the company.
"We launched a product and as we did we expected a whole bunch of things and they didn't really happen or they didn't happen as we expected," Mr Hackett said.
"It's even the basic things around how do we communicate with customers other than with an annual policy renewal statement.
"Now we've got a really active relationship with our customers and we've found out, 'Gee, we've got some capability to build in this space because we're not very good at it'."
