The time is coming for the financial services industry to start to shift its lobbying focus from the Government back to educating the consumer – particularly on the topic of underinsurance, according to CommInsure’s general manager of retail advice, Tim Browne.
Over the past 12 months the industry has spent considerable time and energy working with government, regulators and the media to help them understand the vital role that advisers play in addressing the underinsurance problem. But much of the detail of the Government’s Future of Financial Advice reforms is now public and most of the lobbying phase is behind us, Browne said.
Over that time, the industry was successful in communicating with government and building a rigorous fact base, and it is time for industry participants to do the same directly with consumers, he said.
"I don’t think we’ve been effective in clarifying that a better result is achieved where a financial adviser is involved, rather than people doing it themselves," he said.
A starting point may be to reflect on why consumers choose not to insure – to get clarity on those issues to maximise the effect of advisers’ responses, then choose the message of engagement. "That may be personal conversations, group forums, through the media or online," Browne said.
Browne pointed to the approach successfully adopted by former US president Al Gore in generating attention for his global warming message, initially speaking to small groups, engaging the relevant community and relying on facts to relay his message.
It is important to first understand consumers’ perceptions and preferences and then respond with the facts in their preferred method of engagement, he said.
There are two distinct groups that need to be addressed: those that choose not to have insurance – possibly because they think "it won’t happen to me" or that it is too expensive and not worth the cost – and those that have insurance that is inadequate, but don’t realise they have insufficient cover, Browne said.
One issue to address is the idea that insurance is too expensive: "We haven’t presented effectively enough that life can become very expensive in the event of not having insurance in place," Browne said.
The classic underinsurance example is those who believe they have adequate cover through their default industry super fund insurance, in the belief that if something goes wrong the fund will look after it, he said.
