Although there is a marked change in consumer awareness towards the need for greater self-reliance and financial protection, Swiss Re’s latest insurance report entitled “Facing life’s responsibilities”, shows that consumers are delivering an austere self-assessment of their financial exposures. Swiss Re calls on industry and government to focus on simplifying products to build trust, before considering how messages are delivered.
Swiss Re’s findings are supported by extensive research among more than 1000 consumers and over 500 employers, and draws on interviews with leading industry figures. The report is a strategic overview of the life market and explores how the industry, employers and government could help shift towards greater personal responsibility in a time of reduced welfare expenditure.
Russell Higginbotham at Swiss Re says: “There is a marked change in consumer awareness. We should build on this and help consumers address their uncertainty by offering simple products which consumers will consider essential – through a medium which suits them – and get them to buy insurance instead of the latest iPhone or other gadget.”
Consumers recognise need for insurances. When asked why they had not bought life insurance, consumers indicated that affordability was a fundamental barrier to buying. 46% said they could not afford life cover, 47% could not afford critical illness and 39% could not afford income protection. Only 10% had not thought about life cover, and the results for income protection and critical illness were almost identical. Many consumers see reducing their debt levels as a higher priority.
Ron Wheatcroft at Swiss Re warns, “The issue of re-engaging with consumers as the state withdraws from provision is so fundamental that direct government involvement is needed.”
Russell Higginbotham adds: “We need to change the way we think about how insurance is understood before we continue pushing the same old and rather tired propositions. Behavioural finance suggests that simple products would help consumers. People will not buy what they do not understand, but increasing understanding creates more confidence that will help people make more informed choices. Financial capability is about helping people understand their needs and giving them the tools to understand their options, enabling them to engage with and manage their finances better themselves.”