The frictionless movement of assets is becoming a common feature of markets around the developed world, yet Australia remains a step behind. The ASX is in no mood to rush the move to T+1, however, after its calamitous attempt to implement distributed ledger technology.
It’s a dire situation for consumers but a massive tailwind for financial advisers. More people and more capital in the superannuation coffers than ever, with a stubbornly small number of advisers to service them.Â
Brand, advice or price? The factors that drive consumers to purchase life insurance
Consumers put brand strength above all else when it comes to selecting a life insurance provider, with brand recognition carrying more weight than insurance advice or premium costs according to new data from Investment Trends.
And while 6.7 million of the 20 million adult Australians are covered by some for of life insurance, it is seen as a secondary measure of financial security compared to saving and investing habits.
The research group’s Consumer Insurance Needs Report reveals several important trends occurring in the sector, which is going through a challenging period due to a confluence of factors including regulatory change, increased costs and ebbing consumer confidence.
That brand would come before advice and premium cost in importance for consumers indicates just how important the marketing and branding function has become at major financial services providers. “A robust brand reputation is the foremost consideration for consumers when selecting a life insurance provider, ahead of advisory services and premium costs, the report states. “Notably, 20 per cent of policyholders intending to switch providers seek assistance with policy cancellation.”
Perhaps more notable, however, is the finding that life insurance is rate by consumers as the least important tool available to ensure their personal or familial security. Out of five options – saving, investing, general insurance, health insurance and life insurance – life insurance ranked least important for all demographics, including singles (living alone), Singles (living with parents), those living with a partner or spouse and those living with a partner or spouse and children (see below).
According to Investment Trends, while a large portion of Australians recognise the importance of life insurance they don’t necessarily see it as a “cornerstone” of financial stability.
“Even with 34 per cent of the adult population holding life insurance, it’s often seen as less integral than other financial tools,” commented Irene Guiamatsia, head of research at Investment Trends. “This underscores the need for the industry to bolster the perceived value of life insurance in one’s financial portfolio.”
In order for the industry to bring more consumers into the life insurance fold, Guiamatsia says providers need to lean into the importance consumers place on trusted brands. “In a market where 800,000 Australians are interested in Total Permanent Disability (TPD) insurance, and 1.8 million are considering Income Protection insurance, the impact of a trusted brand cannot be understated,” she said.
Moreover, she added, claims processing times need to come down if consumers are going to engender greater levels of trust within the community. Life insurance claims processing takes an average of 7.3 days within super and 5.1 days outside of it, while death benefit claims average around 10 days according to the report.
“Policyholders are clear in their desire for more straightforward and prompt claims processing,” she said. “A seamless and efficient claims experience is vital for client retention and satisfaction.”
