Advisers have an opportunity to boost the uptake of personal insurance, after the insurance head at a leading financial services organisation warned the product had fallen down most Australian’s list of priorities.
According to AXA Australia head of insurance Derek Hogg, rising pressures on household budgets meant many Australians had opted to “chance their future” to meet current living expenses.
Research on Australian attitudes to personal insurance released by AXA revealed that while most people understood the necessity of insuring everyday items like their home, car and medical health, they regarded life, income and trauma insurance as a lower priority.
According to the research, this meant that when inflation, petrol prices and interest rates rose, Australians were likely to re-assess the need for personal insurance.
But according to Hogg, this was contrary to prudent behaviour.
“Just look at the odds — one in two Australians over 30 will be diagnosed with a serious illness or suffer injury,” he said.
“In addition, one in two men will develop coronary artery disease and one in four women will be diagnosed with cancer.
Levels of under-insurance suggest opportunities for advisers, with AXA’s research revealing the amount of under-insurance for life insurance at around $468,000 per person.
This figure takes into account levels of Australian household debt and, in the case of an insured person with dependants, the cost of a replacement income.
Based on these assumptions, the average annual premium required to cover this exposure was $11.04 per week, which Hogg points out is the cost of a lottery ticket.
According to Hogg, insurance providers must work harder at presenting a contemporary case for insurance.
“We need to continually redefine our product offering,” he said.
“The truth is, Australians need insurance that evolves and responds to both their immediate and future needs.
“When it comes to the financial health of Australians, insurance can’t afford to be considered a discretionary item.”
