Only 6% of life policy holders advised into provider switch
Only 6.1 per cent of those risk and life insurance policy holders looking to switch providers are doing so upon the advice of a broker or adviser, with only 3.1 per cent doing so upon the advice of family, friends, or a workplace colleague, according to new research from Roy Morgan.
Price is the big driver of risk and life insurance policy holders either switching or looking around, the research showed, with the main reasons including “better price/premium” (42.8 per cent), “always shop around” (26.8 per cent) and “renewal price higher than last year” (9.0 per cent).
The research showed that in the 12 months to June 2018, 1,008,000 risk and life insurance policies (10.8 per cent of the total market) had the potential to change companies.
This potential is the sum of the 242,000 that actually switched to another company and the 766,000 that renewed with the same company after having approached other companies, Roy Morgan said.
This combined figure represented a high predisposition to switching or lack of brand loyalty in this market, it said.
Roy Morgan industry communications director, Norman Morris, said this research has shown that there is obviously considerable potential in this market for insurance companies to either gain or lose customers.
“This is due to the fact that in the last 12 months, one million risk and life insurance policies, or 10.8 per cent of the market, were either switched to another company or were under consideration to do so,” he said.
“Life and risk insurance is likely to be regarded as a grudge purchase and is often included with superannuation or switched as a result of price as we have seen in this release.”
Morris pointed out that the segment with the greatest number of potential switchers is the 35 to 49 age group with 425,000 or 42.2 per cent of the total.
“This group is also likely to be coping with young families and other cost pressures including mortgages and as a result may not always be interested in taking out risk and life insurance despite the fact that often they have the greatest need,” he said.
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
