Consumers turn to the web to weigh up life insurance options
Evolving web-based technology has helped to create more active and better informed consumers, but the insurance industry has struggled to keep up with this changing demand, according to the Ernst and Young 'Global Insurance Customer Survey'.
The survey of 24,000 insurance customers across 23 countries found that 70 per cent of Australian consumers intend to proactively research their options before making an insurance decision, with the use of online resources set to more than double.
According to Ernst and Young customer advisory leader for insurance in Australia Andrew Taggart, "there is frustration with the industry's apparent complexity", and suppliers who are unable to keep up with changing consumer demand risk being left behind.
"Consumers have traditionally turned to family members or personal financial advisers for third party validation, but the survey findings highlight a global trend toward supplementing these with independent research using online sources," he said.
Taggart was quick to point out however that traditional methods of consumer interaction including face-to-face and phone-based consultation will not become obsolete and will need to be integrated effectively with newer forms of communication.
Call centres for example will need to adapt to less volumes of traffic, but from more informed customers seeking more sophisticated interactions, he said.
"Unless the industry addresses these issues, we expect switching rates to increase in the next decade and non-traditional providers with better service platforms could use the opportunity to take market share," he said.
The survey also revealed that 80 per cent of Australian customers felt they had received little contact with their existing insurance provider at the point at which they were due to renew their general insurance, with over 60 per cent reporting that they received no contact at all.
"The largest reason for consumers changing life insurance provider, affecting a third of respondents, was that their adviser recommended the change," Taggart said.
"Australian life insurers are clearly failing to anticipate and address the changing needs of their customers in advance of advisers prompting customers to switch."
Despite the fact that the average level of trust and satisfaction with Australian insurers is around seven out of 10, a third of Australian respondents described existing life and wealth products as too complicated.
On a global scale, Taggart said life insurers needed to align themselves to a "truly customer-centric model" in order to a transition to a new regulatory environment and to gain a competitive advantage.
AUTHOR
Staff Writer
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
