Australia’s life insurance industry should stop telling consumers that they are underinsured by trillions of dollars, according to TAL Life CEO, Brett Clark.
Speaking to riskinfo as part of an industry Round Table event earlier this year, Mr Clark said he believed the messaging around Australia’s underinsurance problem was ‘normalising’ the issue.
“We’ve talked a lot about underinsurance in the life insurance community in the last five years. That has been a very informed discussion; it has been fact-based, and there’s been a lot of research supporting that discussion,” Mr Clark said.
“It is a very relevant discussion for the leaders, regulators and policy makers in the life insurance industry, and it’s extremely relevant for politicians and governments, because of the social impact of underinsurance, and its effect on Federal and State government balance sheets.
“But how relevant is that discussion for consumers?”
Mr Clark said research conducted by TAL found that consumer messages which focused on underinsurance actually had a disengaging effect on consumers.
…messages which focused on underinsurance actually had a disengaging effect on consumers
“The more we talk about underinsurance to the Australian community at large, the more we normalise it. Consumers are saying: ‘Well, I’m underinsured, but this data tells me that a lot of people are. If no-one else is doing anything about it, then why should I?’
“If we’re serious about the messaging we deliver back to the community, then the industry needs to realise that telling consumers about all these unnamed and unseen people who are underinsured by trillions of dollars is not a very effective way to do it.”
He added that the underinsurance message may also be viewed as ‘self-serving’.
“You see all these surveys about trusted professions and trusted industries, and life insurance doesn’t rate anywhere near as high as it should. Sending a message out into that environment which appears to be very self-serving doesn’t help,” he explained.
Mr Clark believes the insurance industry should focus on messaging that is personal and relevant to consumers.
…we now need to create a greater level of awareness and trust in the industry
“Some companies, particularly those that play in the direct to consumer space, are communicating quite well. This is evidenced by the fact that people are becoming much more aware of life insurance today. And as they become more aware, they claim more. We should reflect on that as a really good thing for the industry.
“However, we now need to create a greater level of awareness and trust in the industry. We should be talking more about the benefits of being insured.”
Mr Clark said insurers could take a lesson from advisers, who are able to tailor the life insurance message to the personal needs of the consumer.
“Advisers are able to make life insurance personal and relevant, because they have a host of information at their fingertips that we don’t (at that initial point of sale). They can clearly highlight the financial consequences of being underinsured.
“As insurers, we should be talking more about the benefits of life insurance, and sharing claims stories and claims-paid figures. These are messages that will get consumers more engaged with the category.”
He added: “If you think about it from a consumer’s point of view, which message are they going to respond more positively to? A message that highlights how the industry pays out an enormous amount of claims to an enormous amount of people on a regular basis? Or one which states that Australia has a trillion-dollar underinsurance problem?”
To hear more from Mr Clark on Australia’s life insurance industry, stay tuned for the first edition of riskinfo eMagazine, due out this month. This new, free service will feature in-depth analyses of the issues that matter to you, including a wrap of the TAL/FSC industry Round Table which was held in conjunction with the FSC Life Insurance Conference earlier this year.
I agree Brett, a concerted effort from all of us about the difference we make is a far more reaching message than continually adding fuel to the negativity messages that surrounds our industry.
We are here to manage clients Hopes & Dreams not tell them continually about what Australia’s underinsurance level is.
Totally agree that publicising claims paid figures and examples is the way to build trust and engagement. Why aren’t insurers doing it?
We as advisers are not getting across to our clients what their true capital value is.
The most valuable asset most people have is their income potential over a period of time.
I wonder if they’ve considered the bandwagon approach……….
Tell the world that more and more average Aussies are taking up Life Insurance via their Financial Adviser because it is cheap and protects their family…..
Keep pumping that message and see if the masses respond as they use the same reasoning of “well if everyone else is I better do something too”.
or not.
Watch this space Dean. The 2013 claims paid stats for the industry are finally available and compiled and will be published within the next week or so by the risk store. Members will have access to this great story via a consumer-targeted ‘flyer’. We have done this for the last 8 years so we’re surprised there are still advisers who aren’t aware of this. riskinfo always has been the first publisher to be given our media release each year.
This is certainly a great resource for advisers Sue.
However advisers don’t have the marketing reach to get to the vast majority of consumers who won’t engage with an insurance adviser in the first place, because they are convinced “insurers won’t pay claims”.
If the Risk Store could work with the insurers for a well funded consumer campaign to correct this misperception, everyone would be better off.
Yes Dean and we have banged that drum till our drumsticks have broken. The meat and livestock industry worked collectively, generically and without individual self-interest to bring back red meat…our manufacturing life industry has never done anything meaningful or for the benefit of all, as a collective.
Very refreshing that senior management now recognise the counter intuitive nature of this messaging around under insurance. Commend Brett & Phil Kewin (comments in this edition on this point & Financial Literacy) for their street level intuition & insight . Also need to beware of “headline ” claims figures rather than the people & the stories behind their claims…..it is the emotive elements of what our products actually do that resonates!!
People relate to real life stories and will compare their situation to the story being told.
Having examples of how people lost their life savings, investments and their homes due to illness and accidents that prevented them from earning their incomes and the circumstances that led to the loss of everything they had worked all their lives to attain, is a powerful reality check.
There should be examples of Employee, self employed, working directors, Investors, developers etc, that show how their illness or disability impacted their lives.
It must be real life cases, as people will relate to these and Advisers can use their stories to show how things would have been so different, had they purchased Insurance,
We all have good stories to show people about the claims our clients have had and the benefit to their lives the cash injections gave them, though Australians tend to be a bit complacent and a personal or business situation similar to their own, is something they can relate to and will allow them to realise, “hey this could happen to me” and a wakeup call that will help them to understand they need to act now with appropriate cover.
It is an interesting perspective and makes sense.
Whilst the underinsurance message is important for policy makers, it probably isn’t so important for clients.
I certainly see a lot of prospective clients who have sought advice either because a friend or trusted associate has mentioned to them that they have cover, because of a life event that makes them aware of their financial responsibilities or because a friend or relative has died young.
I have never had someone seek advice because they’ve read that Australia has an underinsurance problem. Not once.
We need to be making applying for IP cover a part of the passage to adulthood
We need to be telling the community that insurance is important because that’s what responsible adults do.
Obviously the message needs to be a little more subtle and cuddly than that but that is the message.
Lack of insurance is a bit like the demise of religion; there are not enough out there to spread the message to those that don’t want to listen. With all of their commission rip offs at least the old lifie system did spread the word. Old lifies could pull on a whole lot of emotional strings to get people to commit and kept business on the books because they were tied agents. This was an age when collectors would go door to door to receive weekly cash premiums for insurance or premiums were paid fortnightly out of salaries.
Nowadays I just service the well healed and don’t pay any heed to the traditional mums and dads. I’m not suggesting that we turn back the clock, but sadly there is no money in preaching to people who are struggling to pay their electricity bills.
I suppose I could walk around my neighbourhood on weekends and talk to people pro bono and apply my skills to convince them to at least top up their life insurance via their super fund, but then again pigs might fly.
This is a great article thanks; refreshing. I’ve never discussed the underinsurance epidemic with a client for this reason. I discuss their needs. And frankly, no-one “needs” insurance. They need the security and protection not offered by the alternative.
Life insurance is the product of an affluent society because if we weren’t affluent, if we had nothing to lose, then it’s an irrelevant issue because we have nothing to protect. But we’re the “Lucky Country” so we do. But we’re not equally affluent either. Some are more and some are less affluent and therefore we’re all going to have different “needs.” So trying to convince the populace to buy a product on a promise only and just because “nobody’s got enough” is completely absurd and it’s great to see an article like this say so.
Instead, I ask, “how much will your super pay you when you have a heart attack or get diagnosed with cancer?” when they tell me that Super will help them or “what’s your current plan to clear your mortgage and feed your children if you die?” or ask them how did their friend’s Mr & Mrs Jones cope when Bill had his bypass and couldn’t work for a year, or anything actually relevant to the client.
Well said, Mr Clark – always knew common sense would overcome actuarial training!
Seriously, there is an absolutely serious issue with such industry debate being irrelevant to the consumer – no matter how well informed industry participants perceive such conversations to be.
Apart from the inherent complexity of the issue, even the terminology, language, and jargon we use tends to alienate consumers.
The ‘claims paid’ stats need to be broken down, simplified, and couched in terms to which non-industry people can relate. If we can get clients to be ‘engaged’ – rather than just satisfied or happy – we’ll have no problem getting other consumers to become clients.
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