Will the Royal Commission impact Life Insurance? NobleOak Whitepaper 2019
For the past three years NobleOak has surveyed more than 1,000 Australians to better understand the impact of technology on consumer behavior and the Life Insurance industry generally.
In this year’s survey we also asked people about the impact of the Banking Royal Commission including how confident they were that the issues identified into Life Insurance companies will be fixed and the impact on their actions regarding Life Insurance.
The results make for interesting reading.
People have confidence in the Royal Commission
Respondents indicated a high level of public confidence that the Life Insurance industry issues identified by the Royal Commission will be addressed and rectified after the report is delivered to the Federal Government in February 2019.
A total of 72.3%, or more than seven in ten respondents, are confident that the Royal Commission will deliver positive change to the industry.
The Royal Commission has influenced the Life Insurance plans of many people
When asked if the findings from the Royal Commission would influence their behaviour in terms of sourcing and purchasing Life Insurance, just over four in ten people said their behaviour would change.
This includes 23.9% who said they would “explore different insurers’, while 9.5% said they would now “not take out Life Insurance” as a result of what they had read and heard from the Royal Commission.
Online and digital channels continue to gain traction
The research also shows that eroding trust in advisers and direct selling is combining with the previous continued trend of consumers becoming more self reliant, resulting in increased usage of online digital tools and consumer reviews when purchasing life insurance. These trends highlight a transforming industry.
Over three years the NobleOak research has identified continued momentum for consumers to research and purchase Life Insurance and Income Protection through online channels, and the Royal Commission has accelerated that by undermining trust in the adviser channel.
The research found that more than a third, or 35.1%, of respondents said their confidence in buying cover through advisers had been “undermined” by the Royal Commission. The percentage of people that would use an adviser to compare insurance products has fallen to 19.9% in 2018 from 22.7% in 2016.
At the same time, the percentage using websites has increased from 62.9% to 68.6%, with the percentage comfortable with using “chat bots” has gone from 9.7% to 12.3%.
Customer reviews are important
With the increase in the reliance on customer reviews in other industries, we asked respondents about their importance in taking out cover.
Surprisingly, more than one third of people say that customer reviews on Life Insurance products are important to them. A combined 35.8% of respondents said customer reviews were either “extremely” or “very” important to them. Only 16.7% said they were “not at all” important.
People with Life Insurance are happier than those without
Respondents were again asked in this year’s survey to score their level of happiness on a scale of one to ten, and people who have Life Insurance say they are happier than those without.
Across all respondents, the 2018 average was 7.0. For people with cover, the average was 7.2, while for those without it was 6.6, a 9% difference.
The research findings again show that the Life Insurance industry continues to evolve, driven both by technology and the erosion of trust in traditional channels. Where once the purchase of Life Insurance was outsourced to financial advisers and banks, today’s consumer is accessing increasingly effective digital tools and customer reviews online, while taking control of this decision making.
It is heartening to see that the public believes the Royal Commission will drive positive outcomes, but it is up to the industry to play its part and deliver the necessary changes.
This environment presents insurers with many challenges, with the issue of trust a critical differentiator. The Life Insurers who will thrive in this world will be those who win the trust and confidence of consumers, and whose online advocacy will become their greatest asset.
The research referred to in the 2018 Whitepaper was conducted independently by PureProfile in December 2018 from a survey completed by over 1,000 Australians.