Changes in Product Offering

2.1 Changes in Product Offerings The ‘era’ before (pre ‘80’s) was characterized by traditional/conventional products and distribution models, i.e. whole of life (WOL) and Endowment style contracts distributed by tied agencies fully managed by the life insurers of the time5 . The scene was dominated by the big four mutual – the AMP, National Mutual, Colonial Mutual and City Mutual. (Today of these mutuals only the AMP remains, and it too has demutualized becoming a listed company6 ). Then in the early ‘80’s a UK company called ‘Occidental Life’ introduced the concept of unbundled products with the slogan ‘Buy term, invest the difference7 ’ – the idea being that doing so gave the policyholder more control over the investment aspect of their policy. This gave rise (or at least greater prominence) to term insurance products as well as investment account/investment linked products for the savings or investment elements of the policy which were once ‘bundled’ in with the protection in the old WOL/endowment contracts. This also gave rise to the unit trust industry in Australia and to the rise of a whole range of medium sized life insurance companies such as Australian Eagle who sought to capitalize on these changes in the landscape to gain market share. In his best-selling book ‘The Tipping Point’, journalist turned author Malcolm Gladwell explored the question of what causes some ideas to really take off (‘tip’) and others not to. His thesis was that tipping points occurred when there was a serendipitous confluence of connectors, salespeople and mavens8 . In the same way, I believe the change that took place in the ‘80s occurred because of a confluence of two to three supporting factors which I think may be rather neatly expressed by the following equation: