Life insurance in Australia

For the second year running, NobleOak has commissioned research to identify customer trends and behaviour in the life insurance and wider financial services industries. Surveying over 1,000 Australians - including a mix of those who have life insurance and those who don't - our findings show an industry that continues to be reshaped by digital disruption. This is in addition to the fundamental regulatory and structural changes it is facing. Underinsurance also remains a significant problem with many Australian families vulnerable should an unfortunate event take place.

With greater use of the internet and digital devices, information about life insurance and supporting calculators and tools have never been more accessible. This accessibility is at the forefront of a shift in power from business (including the Life Insurers and financial advisers) to the consumer. This shift is impacting the longer-term viability of many Life insurers and adviser groups.

Losing the personal touch

As consumers embrace the digital world, inevitably there is less human touch and interaction with insurers and financial advisers. Use of online tools, IVRs (interactive voice response systems) and automation of customer communication (e.g. emails and letters that are automatically generated) are all contributing to a ''low human touch'' customer experience. This is at odds with the aim of many of these businesses to deliver a more personalised customer experience. Everything is 'just a click away'' for consumers and some people are being replaced with machines.

This increasing distance between insurers and consumers means companies now have less opportunity to convey the value and benefits of their products in a compelling way. This results in reduced brand differentiation.

The empowerment of customers through digital solutions means consumers can tune out and turn off anything that doesn't interest them. The power is in their hands.

Leaving the old world behind

Australia's first life insurance policy was written in 1833. More than 180 years later, the old adage that "life insurance is sold, not bought" continues to be the accepted wisdom by some. However, the way life insurance and more recently income protection insurance is sold has evolved a great deal, especially since the birth of the internet.

The research in this paper illustrates that life insurance and Income Protection cover are both sourced and "bought" by consumers - who are empowered with access to digital resources, as well as "sold" by financial advisers. The consumer is empowered with more choice and ability to access information and is taking control.

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