Instead, they want to be empowered to make informed decisions about the life insurance policies they buy, the sigma study called “Life Insurance: focusing on the consumer” revealed.
Evidence from surveys in the Americas, Asia and Europe picked out common themes as to why people do not buy life insurance. These included price, concerns about value for money, perceived lack of need, product complexity, cumbersome buying processes, and lack of trust in the industry.
Many consumers turn away from buying life insurance simply because they don't fully understand the benefits of it or are put off by a lengthy and convoluted buying process.
Sales agents remain the main channel of life insurance product sales across the world, but a key finding of the report was that increasingly the consumer wants to research options and make proactive buying decisions based on objective information from unbiased sources and trusted peers.
With easy access to information, the modern consumer is empowered and increasingly independent in his or her purchasing choices. In this environment, the challenge, and opportunity, for insurers is to change their approach so that their products and services are 'bought, not sold', the report argued.
There were also suggestions as to how insurers can become more consumer-centric. The areas to consider include simplification of product design, streamlining the underwriting process, improving consumer communication and education, building long-term relationships with consumers and, with the growth of mobile and internet technology, being innovative in the use of different distribution platforms.
"A very large proportion of consumers can be described as 'non-shoppers' when it comes to life insurance" says Milka Kirova, co-author of the sigma study. "If insurers understand the reasons for this, they will be better positioned to design products that people want and make life insurance more accessible for all. In turn, increased uptake of life insurance improves individual and societal welfare."
There were significant differences in buying patterns across insurance products, both
between non-life and life insurance, but also within life insurance.
Evidence showed that customers were more willing to research and purchase non-life insurance products online. This is understandable given the short duration of policies and the ability to switch providers.
In the same vein, more simple and transparent life insurance products such as term insurance can be more readily sold online. Notably, in Germany 21% of term insurance is sold via direct channels.
In general, the proportion of respondents who said they were willing to buy term insurance at
market prices was higher in developed Asia-Pacific countries than in emerging markets.
One reason for this may be that in emerging markets the coverage could be beyond
needs and unaffordable for many, supported by the finding that income has a
much higher impact on willingness to pay in emerging compared to developed markets, the report stated.
Percentage of people willing to pay for term insurance in Asia:
- Singapore 59%
- Korea 54%
- Hong Kong 54%
- Japan 45%
- Taiwan 37%
- Australia 36%
- Developed Asia-Pacific 48%
- India 65%
- Malaysia 44%
- China 33%
- Vietnam 24%
- Indonesia 16%
- Emerging Asia-Pacific 38%
