How consumer views on insurance have changed

How consumer views on insurance have changed | Insurance Business

How consumer views on insurance have changed

As the world grapples with the impact of COVID-19, Swiss Re Institute’s 2021 APAC survey helps us all keep a finger on the pulse of consumer changing sentiment towards insurance.

The report not only confirms underlying assumptions and reveals emerging trends, but it also illustrates how COVID-19 has affected Australia and New Zealand differently than other Asia-Pacific countries.

Below, I’ve compiled a summary of the top findings unearthed in the report, showing how the financial, health and social impacts of the pandemic are driving consumer behaviours – valuable information for insurance advisers to use in their future planning.

Increased focus on self-care

Across the APAC region, the pandemic has put health and wellbeing at the top of consumers’ agenda, with many respondents indicating willingness to seek more insurance protection in the future – particularly through the likes of health insurance and critical illness cover.

However, health concerns are less prevalent in Australia and New Zealand than other countries in the region. With border control and public health measures helping prevent community transmission, just one in three New Zealanders expressed an increase in health concerns due to the pandemic – the lowest among all Asia-Pacific markets.

But that’s not to say that COVID-19 hasn’t had any health-related impact on this part of the world: in line with all other markets, mental health is Kiwis’ top concern (29%) in these uncertain times.

Overall, a silver lining of the pandemic is a more proactive approach to personal and mental wellbeing, with most respondents across the region saying they’re implementing healthier diets, exercising more, and improving their sleep routines.

This is an area where the insurance industry – and insurance advisers within it – can make a difference. Some insurers have already recognised the need for better customer engagement and a more holistic client experience. With their personal knowledge of clients’ needs, not only can insurance advisers help clients protect their financial future, but they’re also in a prime position to get them on a path to better physical and mental health by working through your clients’ goals, needs and obtaining financial health, wealth and wellbeing.

A relatively positive financial outlook

In terms of financial stability, Australians and New Zealanders seem to be better-placed than their other Asia-Pacific counterparts.

According to Swiss Re Institute, half of Kiwis surveyed felt optimistic or confident about their financial future. At the same time, “only” 14% of New Zealanders said they felt overwhelmed or anxious about their financial future – the lowest percentage in the APAC region.

On a similar note, Stats NZ’s latest wellbeing statistics show that most Kiwis have remained resilient, despite the challenges. But as Stats also noted, while border restrictions have kept New Zealanders safe from the virus, there’s no denying that they’ve affected our economy and financial wellbeing (although, I must add, with less severe consequences than first anticipated).

Other recent NZ-based surveys also indicate that both financial confidence and financial literacy have dropped, with more than 40% of New Zealanders worrying about money at least daily or weekly. Can this pandemic be a good opportunity to reset and refocus? And how can advisers help in this space?

Key factors in the insurance-buying decision

Interestingly, Swiss Re Institute looked at the key factors driving insurance-buying decisions, starting with price (83%, up 5% from 2020), ability to process online (60%), and flexibility to mix and match coverages (58%). Plus, for NZ consumers, the ability to set fixed premiums was the most preferred policy feature (31%).

While it’s not surprising that Kiwis are price-sensitive, it’s yet another reminder of the importance of educating them on “value for money”. As we know, price is not necessarily an indication of quality or value in insurance. Quality and value stem from personal interaction with a trusted adviser who really takes the time to understand a client’s unique circumstances and recommends appropriate solutions to meet them.

This is the key message that Financial Advice NZ is committed to conveying with the public: the benefit of focusing on the value of insurance and the peace of mind it brings as opposed to pricing, and seeking cover that’s tailored to their needs and goals, as opposed to being delivered a “product”.

As for the rise of online channels, consumers will always look for convenience. On one hand, it’s important to help them understand the value of insurance advice, so that they can make a better-informed decision. On the other, advisers have an opportunity to think about how they can incorporate digital transformation as core in their business strategy, to offer their clients the best of both worlds.