Australians are less satisfied with risk and life insurance, according to new research from Roy Morgan.
Roy Morgan’s Single Source Survey (Australia) revealed that satisfaction with risk and life insurance dropped to 64.6% in July 2019, from 65.6% in 2018 and 68.4% in 2016. At these levels, risk and life insurance continues to have the lowest satisfaction of all major household and personal insurance types, including general and health insurance.
The three largest players in the industry experienced contrasting results, with both MLC and Comminsure scoring above average and AMP maintaining its market-average score from a year ago. MLC’s satisfaction rating rose 4.3% to 67%, Comminsure’s was up slightly by 0.5% to 67.3%, and AMP scored 64.6%.
Although overall satisfaction with risk and life insurance declined over the year, some companies showed improvement. The biggest gains were from Allianz and MLC (up 4.3% points) followed by Zurich (up 3.4% points), and Westpac (up 2.1% points). In contrast, major brands that showed declines in satisfaction were Suncorp (down 13.8% points), Real Insurance (down 5.3% points), and AIA Australia (down 3.8% points).
Roy Morgan said companies with a satisfaction rating of 72.4% were “extremely likely” to retain its customers and that the likelihood of renewing with the same company declines in companies with far lower satisfaction levels. Among policyholders who are unlikely to renew with the same company, only 24.6% are satisfied with their current insurer, compared to 66% satisfaction among those who are at least fairly likely to renew.
Although most policies are renewed each year, there is a total available market of almost 1.2 million policies each year. Of this figure, 199,000 are new and the rest are at risk of changing provider, with 201,000 actually changed and 787,000 were subject to comparative consideration.
“These results show that although 86% of risk and life insurance policies are renewed automatically without shopping around, there is a risk associated with having below average satisfaction as this has the potential to discourage renewal and new clients,” said Michele Levine, CEO at Roy Morgan.
Findings also showed that as purchasing channels for obtaining risk and life insurance became increasingly fragmented, employers as part of superannuation recorded the biggest increase, up from 16.6% to 28% over the last three years, while the share of online comparison sites and online brokers was up from 7% of purchases to 9% in the 12 months to July 2019.
“In addition, the use of insurance brokers and financial planners remains an important channel to purchase risk and life insurance which now accounts for around 17% of the market, but this is down from 21.3% three years ago,” Levine said. “The use of these third parties to purchase risk and life insurance has the potential to take the customer relationship away from insurance companies and as a result they are likely to have less control over satisfaction and retention levels. These results also indicate that fewer Australians are taking out risk and life insurance, 199,000 in the past year down from 236,000 three years ago. This is likely to lead to a smaller market over time if this trend continues.”