Despite the efforts of life insurers to implement rehabilitation, prevention and awareness programs consumers have been slow to reassess their needs and are still underestimating the risks they carry, according to a senior staffer within a global reinsurer.
Swiss Re, Head of Life and Health, Alison Martin said gap between the amount of insurance people need and what they currently have has not closed and said the insurance sector has not done a sufficient job of showing consumers their levels of risk and helping to close the gaps.
“Behavioural economics has shown us we need to look at the context and content of people’s actions and we see that life insurance becomes relevant to people when certain events take place, such as when they have a dependent to care for,” Martin said.
“Despite this being a common occurrence we still only see a small percentage of consumers starting discussions around life insurance needs. They still see it as a grudge purchase that is transactional and in which they don’t get anything in return and they hope they don’t need it in the long term.”
“…we still only see a small percentage of consumers starting discussions around life insurance needs.”
Martin said health and wellness programs were having a greater impact and were improving the levels of persistence in policies but she questioned how widespread the programs could spread beyond early adopters and those naturally inclined to take up the programs.
“People don’t get much gratification from their life insurance but they are seeing benefits within the eco-systems of these programs. It is shifting mindsets but the impact has been small so far and the percentage of people impacted by the programs has been limited,” Martin added.
“There has been a positive impact on costs for life insurers with wellness programs and so far the small percentage who have been sold on them tend to be people who are fairly evangelical about it.”
Advertising doesn’t always work, especially when it is broadcast to a broad community and not specifically targeted. People are bombarded with ads and automatically switch out when ads come on either radio or television and increasingly internet.
The most effective method for client engagement is to be physically in front of them and present the case on how it will affect them.
Insurance will rarely sell itself because it is seen as a grudge purchase and another grab for the ever precious shrinking dollar. When more than 70% of the population are living pay check to pay check it is little wonder few will spend on insurance. There will always be other priorities until you have a way to show them why THEY need it.
People relate to and are interested in other peoples stories that are similar to their own situation.
It is a basic human trait to compare and this leads to an opportunity for Life Companies to talk to clients that have had their lives changed for the better by having sufficient Insurances at claim time, with the Life Company putting their stories into a catalogue of categories that advisers can show people in order for them to have their own light bulb moment of, “that could have been us and we would be in real trouble now, as we are not insured or have insufficient Insurance”
There are numerous categories such as Single renting / Single with a mortgage / Married with a mortgage or renting / having children / Running a Business with personal and Business debt etc.
The key to having a larger take up or interest in Life Insurance, is building a story that people relate to.
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