Will the communications revolution solve the underinsurance crisis?
Allen Iu writes that the communication evolution is changing the way the life insurance industry connects with customers – and could help us solve the underinsurance problem once and for all.
Across our industry, most of us are well aware of the scale of the underinsurance problem facing the nation, currently standing at $669 billion according to Rice Warner Actuaries.
What is less well understood, however, is why so many Australians do not take out adequate life insurance.
Some might say that the answer lies in the (often inflexible) insurance products that were on offer in the past, but we suspect that the way in which the life insurance industry traditionally communicated (or rather didn’t communicate) the value of life insurance to customers may also be partly to blame.
These days the best insurers understand that success lies in developing flexible products to meet the needs of individual customers.
We have come so far as an industry.
Nonetheless, we have a long way to go in communicating, and educating Australians about, the benefits of life insurance.
When we think about how best to communicate that value with our customers, the view at TAL is that we need to approach the challenge from two angles.
At the macro level we need to speak out about under-insurance in general and the high cost to the community.
But at a micro level we need to reach out and connect directly with our customers so we can best respond to their needs.
For us, this is where our financial adviser partners are crucial.
We know that through our advisers we become closer to our customers.
We also know that, by virtue of the one-on-one personalised contact, it is the channel that provides the best opportunity for customers to receive really comprehensive, genuinely tailored cover.
Advisers are reporting that their clients are becoming more and more informed and savvy in their financial decisions, including their decisions about life insurance.
Once they have made the decision to purchase, they are keen to compare products and services, eager to ask questions – and they expect sensible, informed answers.
It is therefore incumbent on all insurance companies to explain their policies and their value propositions in the clearest possible terms, because with increased consumer sophistication comes increased scrutiny.
This is the flipside of a communication dynamic which is constantly opening up and evolving – communication with insurance customers has become a more pointed and important dialogue than ever before.
Of course, insurance companies need to back their communication up with good policy options and service. In the past, if customers had a problem with the policy they had been sold, they had few options to take it up with the company, and the methods at their disposal were often ineffective.
These days, if policies sold are not backed up with excellent execution and delivery on promises, modern communication methods – and in particular social media – allow consumers to vent their frustration very effectively.
Today, the rise in the use of mobile and tablet devices and the ability of tools like social media to reduce the importance of geographical location continue to change the way we interact with each other.
For all companies the biggest communication opportunity occurs when the three trends collide, giving us the so-called Social, Local, Mobile or SoLoMo phenomenon.
One of the most striking features of SoLoMo, surprisingly, is that it has so many similarities with the direct sales methods of the past.
It sounds astounding, but just think of the salesman clocking up the miles in his car: social, local and mobile sums up what he was doing.
The big difference is that the modern incarnation offers consumers the ability to be in control of the process and for the communication to become a two-way, rather than a one-way, street.
This communication evolution not only allows us to better communicate the value of life insurance, but our ability to listen – and learn – from our customers will also enable the insurance industry to develop better and more innovative products.
The role of advisers in this conversation is critical.
Ultimately, we hope to see a future where better, more personalised communication brings customers, their advisers and the life insurance industry together to create a virtuous circle that can only drive improvements in product and customer experience, as well as understanding of the value of life insurance.
In this way, we could all play a part in closing Australia’s underinsurance gap.
Allen Iu is head of digital services at TAL Retail Life.
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