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.”
