Andy Marshall
Zurich’s recently released white paper ‘Misinformed, Misinsured?’ has certainly created a stir in the industry by shedding light on the lack of knowledge and understanding Australians have when it comes to their life insurance. The research also reinforces the critical role of quality advice and education to drive awareness and engagement of Australians, thus addressing this ‘misinsurance’ challenge and ultimately ensuring they have the type and amount of insurance cover they need.
Let’s take a look back at some of the more astounding stats that came from surveying employed superannuation members…
- Of those who are covered by their superannuation group life policy, a number wrongly believed they were covered for traumatic illness (11%), hospital expenses (7%), retrenchment (6%) and even dental and optical costs (5%).
- A lack of awareness of Income Protection insurance (sum insured and waiting period) also revealed significant misunderstanding amongst the polled group. Less than a quarter were aware of the amount they were covered for and just 15% correctly identified the waiting period (the time lapse between a claim being made and payments beginning).
- A majority (38%) of poll respondents said they would survive financially, for just one month before needing to sell assets if personal illness or injury prevented them from working and earning an income.
- Almost 80% of those surveyed said they had never conducted an analysis of their own life insurance needs.
From these statistics alone you can see there are great opportunities for education and advice here – but what are the next steps? What is the solution to this misinsurance challenge? It quite simply comes down to having a conversation.
First and foremost, we need to acknowledge misinsurance as an industry-wide issue. This means the entire industry needs to take up the challenge of improving the awareness and education of Australians when it comes to their insurance – it is up to all of us to be having the misinsurance conversation. This is not just about getting the facts right – it is also about getting the important message out to Australians on the value of advice and the value of insurance so they better engage and are adequately insured as a result.
The misinsurance conversation
IBIS world in their insurance industry report suggested that to successfully connect with clients and convey this message, insurers will have to improve consumers’ knowledge and understanding of life insurance and disability income, as it is this lack of knowledge that contributes to consumers’ ambivalence towards life’s risks.
The best way to engage with people is to have a conversation. Importantly, a conversation that resonates with them – that taps into what drives them. Then, through this conversation you can educate and assist as you progress with clients on the path to putting a robust strategy in place and to providing them with the peace of mind and money when they need it the most.
Before you can start the conversation with a client or prospect, there are a few things you need to do:
- Create a compelling value statement which illustrates the value of the insurance advice process
- Develop techniques to find out more about your clients and have them willingly engage in the process Capture referrals from your existing clients (friends, family, colleagues) Identify methods to engage with clients on types and levels of cover, how to structure it and handling any objections.
Then, think about the outcome(s) you want to achieve from the conversation – how you can engage with your clients to maximise the possibility that:
- They consider a full suite of cover
- They select cover at the right levels for the exposure they have
- They take on the recommendations you have provided and understand the impact of not sticking to the recommendation.
This sounds like a lot to consider, but what if you had a client engagement resource that could help you deliver on all these points and more?
The client engagement resource to help with misinsurance
Zurich has developed a resource that advisers can use in their first meeting with a client to explain the insurance process and how cover levels may be calculated. Clients can see that there is a defined process and method to the insurance solution and will feel more comfortable with the process as a result.
The tool takes into account the client’s age and budget, and provides a visual demonstration of what types and levels of cover should be considered. On presentation of the insurance recommendations, the client and adviser can work through the matrix to ensure that should any variation be made to the recommendations the client is cognisant of the impact and exposure they face.
This resource can be used as a powerful review tool and importantly the adviser and client can sign off on the process they have both participated in to protect both parties and provide clarity around what has been discussed and implemented.
Most importantly though, this is a resource that will help you educate, connect and create meaningful discussion with your clients about the risks they face and how they can ensure they have the right type and amount of insurance cover in place. This tool is the first part of Zurich’s response to the ‘misinsurance’ challenge and to helping advisers address that challenge through meaningful conversations.
By Andy Marshall, Head of Sales Strategy and Research, Life Risk