Majority won’t pay for risk advice

11-Jan-2017

By Daniel Paperny

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A deep behavioural shift in consumer attitudes meant financial advice was “undervalued” and more than one in two Australians refused to pay for life insurance advice, according to a new study.

The “Consumer Behaviour Transformation” white paper by life insurer NobleOak found a significant problem with the perceived value Australians received for financial advice when it came to life insurance, with 56.5 per cent of respondents to a survey saying they were “unwilling to pay anything” for it.

The white paper found only 55 per cent of respondents currently had life or income protection insurance, yet 72 per cent would be comfortable with purchasing cover online, without financial advice, if the right resources were available.

Commenting on the findings, NobleOak chief executive Anthony Brown said as Australians became more self-directed and digitally savvy, there was likely to be an “imminent transformation” in the way they made purchase decisions about life insurance.

That would place a greater strain on advisers as consumers turned away from traditional advice channels when it came to seeking life insurance or income protection products, Brown noted.

“Buying behaviour is quickly evolving - while a majority of customers previously outsourced their financial affairs, we are moving to a new state where people are taking more control and insourcing these decisions,” he said.

“During the next three years … more Australians will end up with the insurance cover they need, purchased directly from insurers.”

While more consumers now had a better understanding of the life insurance products available to them, the white paper identified other areas of the decision-making process that still needed to be addressed, including improving consumer understanding of the type and level of cover required.

“The survey identified that many respondents are self-directed in making financial decisions at every stage of the purchasing cycle,” the paper said.

“To assist this behavioural change, more comprehensive and self-directed sources of information are required to help them consider their life insurance needs.”

The white paper comes on the back of an ongoing push for reform in the life insurance sector, with the Senate referring an inquiry into the life insurance industry to the Parliamentary Joint Committee on Corporations and Financial Services in September last year.

The committee is expected to report its findings on 30 June.

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