Held last month, ASFA’s Spotlight on Insurance in Super conference put focus on the critical issue of society’s most vulnerable in terms of their insurance requirements.
Default opt-out life insurance was designed to protect the most vulnerable who would otherwise not be able to access cover or couldn’t afford it. Historically though, life insurance has faced low levels of engagement and financial literacy. Research conducted by AIA Australia found awareness of insurance among working Australians was worryingly low, with only three in 10 knowing they had life insurance in their super. While there has been a focus in recent years on simplifying the language used to explain life insurance, and its policies and products, for many it remains complicated.
This is of concern as it’s often the most disadvantaged members of a community who stand to lose the most through poor insurance literacy (either by having inadequate cover, or by not claiming on events they are eligible to). Whether it’s because English isn’t the first language, low level of literacy, ill health or complex policy wording causing poor customer understanding of policies, insurers and trustees must work at expanding and improving their communication to ensure customers’ needs are met.
While this gap in awareness and understanding presents a challenge to the sector, it in fact presents a valuable opportunity: in pursuit of a fuller engagement with customers, the industry now has the chance to redefine its image, value and role. As an industry, we need to look for ways we can do more to make Australians aware they have default insurance and understand what level of cover is right for their situation, what some of the future changes in their life may mean to their need for cover e.g starting a family or buying a house, and finally when insurance can be claimed on and how it helps. To someone who has met with accident or misfortune, group insurance can provide an incredible life-line. But there is also a risk if insurance is seen to only be of value if it pays out claims. The sector must emphasise its worth as a provider of service, advice and product, broadening its agenda to pay attention to community engagement and start delivering a return to customers from the earliest interaction.
How we are making insurance easier to understand
To simplify the process of managing and understanding life insurance within super, we are extending the functionality of our current digital underwriting tool, LIFEapp. The enhancements provide personalised life insurance education and digital advice, making it easier for members to learn about life insurance, assess their needs and manage their cover. Learn more about how we are simplifying insurance to empower Australians here.
At AIA, innovation and operational excellence have long been strategic priorities. With technological advances come great opportunities to more meaningfully understand the wants and concerns of our customers, and to support on a more granular level those who may need our help the most.
As only one insurer, we can’t educate all Australians on the value of life insurance. We as an industry must work together to create this shift in awareness and help to ensure Australian’s have the right insurance for them. Our next generation LIFEapp tool is one part of the puzzle to better protecting the most vulnerable.
Copyright © 2019 AIA Australia Limited (ABN 79 004 837 861 AFSL 230043). The views expressed in this article are of AIA Australia. This is general information only, without taking into account factors like the objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, medical, nutritional, health, fitness or other advice.