How New Zealanders view life insurance, the sector and their experiences of it, has been revealed in the latest research commissioned by the Financial Services Council.
The report, ’Moments of Truth, – Key Insights into the New Zealand Life Insurance Industry’, is the FSC’s second piece of research into the insurance sector of a series of three.
The Risking Everything report was released by the FSC earlier this year (see: Number of Kiwis Seeking an Adviser Still Too Low – FSC…).
The new research found that those who have claimed are more positive about life insurance than those who haven’t.
Around 21 percent of the full survey sample were ‘very negative respondents’, where the majority thought ‘insurers do not like to pay out on claims’.
This is compared to a larger group of 33 percent ‘relatively positive’ respondents, of whom just under 60 percent agreed that they had previously had a good claims experience and were treated fairly when they made a claim.
The research found that there is an ‘unintended’ trade-off triangle when assessing insurance purchase, where Kiwis are considering the balance between cost, the likelihood of an event happening, and the likelihood of a successful claim.
FSC Chief Executive, Richard Klipin, says the research indicates too many Kiwis are making a risk trade-off when considering life insurance.
“People are weighing-up the likelihood of an event happening, and the likelihood of a successful claim, versus the cost of premiums,” he said.
The findings also revealed that those who sought face-to-face advice tended to be more confident that they had the right life insurance products compared with those who purchased online, who are less so.
“We know that tackling life insurance is complex and the research shows clearly that consumers who seek face-to-face advice are more confident that they have the right policy and are supported,” explained Klipin.
“This reinforces the importance of the adviser relationship and getting good advice when making decisions on insurance.”
He said it’s up to the industry to step up to the challenge of building education and awareness of life insurance and the claims process to ensure New Zealanders take a more informed approach to deciding on life insurance cover.
“Perhaps most concerningly, despite a high rate of awareness of life insurance, only 8 percent of those without a current policy had considered purchasing life insurance in the last two years,” he added.
“Over the last year the sector has been undergoing a sea change in culture and conduct. We welcome this and the extra scrutiny it brings. Moments of Truth, in revealing the essential role that life insurance plays in New Zealanders lives, reinforces how important it is that consumers have confidence in the life insurance industry.”
The research was undertaken in December 2018 and May 2019 with the quantitative research carried out by Horizon Research reaching a sample of 2,061 people.
The qualitative research carried out by UMR consisted of two focus groups of respondents who had been through a life insurance, critical illness or income protection product claims process.
Click here to view the full Moments of Truth report.