Pinnacle Life received notification of a complaint recently that was made to the Advertising Standards Authority.
The complainant (Tom of Auckland) took issue with Pinnacle Life’s assertion that Pinnacle's 20% lower premiums are due to the fact that they operate "more efficiently" than the other insurers.
Tom’s complaint was based on his view that Pinnacle Life’s lower premiums have little to do with better efficiency, and instead, provided these two reasons for Pinnacle’s lower premiums…
- Pinnacle Life pay little if any commission to brokers to provide advice to clients… so they save on commission costs and
- Pinnacle Life doesn’t underwrite people applying for life insurance… it relies on the work done by previous life insurers, thus avoiding significant costs.
Both of these points are, of course, nonsense…
Let me explain.
- Firstly, Pinnacle Life spends proportionally more on advertising, so commission costs are simply replaced with increased promotional costs.
- Secondly, Pinnacle Life underwrite every application received. Any suggestion that Pinnacle Life doesn’t undertake its own underwriting is simply a myth.
- Finally, here’s why Pinnacle Life’s premiums are the lowest in the industry… over 60% of policies are issued without touching a human hand (other than the insured person), and without filing a single piece of paper. It's called 'efficiency' Tom.
Unsurprisingly, the Advertising Standards Authority rejected Tom’s complaint.