There’s competitive advantage to be had in the insurance space for superannuation funds using behaviour-change thinking and models, says behavioural consultant Michael Daddo, managing director of The Shannon Group.
“Some of the funds are waking up to the importance of insurance as a value creation and a way of getting members engaged with the product in the here and now,” he said.
Daddo said Australians are typically underinsured and insurance differs by age group.
“The young might be closest to overinsured if they’ve had multiple funds. People who have got kids and families are the ones who are underinsured. And it’s not just through funds; it’s a general population issue about insurance that we are typically underinsured,” he said.
Daddo argued people are more willing to insure cars, property and valuables but are reluctant to insure themselves, the most important asset.
A lack of understanding about the real benefits of insurance and feeling confronted by the thought of “bad things happening” are factors in underinsurance.
Hope is stronger than fear
However, Daddo said language and how it’s packaged can make a difference to how insurance is received, adding that hope is a potentially more powerful motivator than fear.
“We do a lot of work with WorkSafe about insurance. We’ve found the power of hope is stronger than fear. There’s a potential in insurance to sell on the hope of [what super brings]. It brings comfort, it brings me certainty, it brings me peace of mind that I can live my life if something did, God forbid, happen to me, that I could still live a good life, an active, engaged and involved life. So all the positive sides on what the outcomes of insurance are.”
The Shannon Group has set up a think tank with Monash University focused on understanding behaviour and how to influence it, accessing world’s best academic thinking and models around behaviour change.
“In things like social norms and normative language and role models, if we continually say that Australians are underinsured, most Australians don’t have enough insurance or young people aren’t engaged in super, if we keep talking like that, we reinforce to most people that that’s what most people do and therefore it’s OK.”
Daddo said changing the language to “more Australians are getting insurance and contributing to super” will influence people to make positive change.
“There’s a range of different techniques, but the emotional connection to it, which is around fear and hope, is really the important thing. I invest in super, and I put money away in super, and I do super so that I can have a great time when I stop work and that super becomes my new income stream.”
Michael Daddo will be speaking the Conexus Financial Group Insurance Summit on August 13 in Sydney