Population changes could lead to decline in insurance take-up

by Maryvonne Gray 07 Nov 2014

Population changes could lead to decline in insurance take-up

New Zealand’s growing cultural diversity and rapidly ageing population will have serious ramifications for future insurance coverage, Insurance Council of New Zealand (ICNZ) president and IAG CEO Jacki Johnson has warned.

Speaking to delegates at ICNZ’s annual conference, themed Changing Risk, Johnson said the country’s substantial Asian population did not tend towards insurance buying.

“We’re seeing a big wave of migration and at IAG we have emerging Asian operations and we’re not seeing people having a natural propensity to buy insurance, we’re having to stimulate their purchasing,” she said.

She said while they often championed the fact that New Zealand was the most highly penetrated insurance market in the world against property insurance, breaking it down revealed worrying trends.

“If you’re of European descent 88% are more likely to have insurance which goes back to our history with Lloyd’s and people getting used to using insurance as a mechanism.

“If you’re of Asian descent it’s 55%. However, that’s people who’ve been living here.

“So to the new migrants, how relevant are we being to understand that consumer participation?” she asked.

She said some of the learnings from IAG’s China market showed that people have been used to having big extended families living in the household.

“Their form of insurance as an alternative product was someone will always be home.”

Insurance take-up amongst the Pacifica population was just 25%.

The issue of diversity did not just affect who insurance products were geared towards, Johnson said, but also the biases that came back from the customer base.

She cited examples of racism and sexism including customers complaining about having to deal with an Indian staff member and another saying IAG would deteriorate with a female CEO.

“We can face our biases but we have to actually help influence around us the biases that will impact how we stay relevant, affordable, accessible for our people and our customers and for New Zealand to make sure we keep an insurance industry.”

Earlier in the day, delegates saw professor of demography Natalie Jackson’s startling graphics that showed New Zealand’s ethnic composition alter from 77% being UK and Ireland born in 1936 to 26% in 2013 while the percentage of Asian born jumped from 2% to 32% in the same years.

“What is scary listening to Natalie is of those growing groups if they’re not going to find us as relevant and therefore participation might be lower and we’re a very small market,” Johnson said.

“How are we going to have a very competitive small market be relevant to the rest of the world so we attract our wonderful reinsurers if we’re not maintaining consumer participation?”

Johnson said the scariest moment of her career had been the prospect of not getting reinsurance after the 2011 Canterbury earthquakes.

Jackson also detailed the growth in New Zealand’s ageing population. She predicted that in just 12 years, there would be more elderly than children followed by more deaths than births.
Johnson said numerous issues were triggered from these findings.

“How do we still make it affordable for the growing number of people who are on fixed income and who are going to have to pay more for their healthcare, life insurance and all those other components.
“How are we going to balance that household spend and help people understand the choices they’re making?”

She said insurers faced challenges engaging with people with decreased vision, hearing and mobility and things such as the font size on websites needed to be considered.

Equally, assumptions should not be made that more mature customers were technophobes. Johnson said her direct team found that over 65s were among the fastest to download their app.

Economist Shamubeel Eaqub had earlier pointed to the growth in 1-2 person households and Johnson questioned how insurers would respond if more people bought into the ‘share economy’ for instance, letting other people drive their car or signing up to Air BnB and letting out spare rooms or empty houses.
1 Comments
  • Perception 7/11/2014 2:46:10 p.m.
    This should not be seen as a revelation. This is all part of forecasting and recognising trends. Now the industry has to see it as an opportunity and to be creative to find the solution
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