Currently showing: Funding longer lives

12 Oct 15 14:30

I googled it. As usual the living collection of human knowledge known as Wikipedia proved helpful. Awareness Days - just how many are there actually? Wikipedia lists them conveniently, and not just the days, but there are weeks and months as well. The causes are many; I considered counting them. However I noticed that the one cause which inspired me to google was not there, and simultaneously realised that even this long list was incomplete and so a count would be futile. This is how I first became a Wikipedia contributor: under the heading "months", I have added for September: Life Insurance Awareness Month.

Before I continue, let me clarify. The pursuit of greater awareness on many human welfare issues is both noble and correct. In particular, consumer education about the tremendous difference that adequate life (and health) insurance makes in the lives of many is good. It is also personal. When, a few years ago, one of my best friends became a mother, that moment though joyful was also undoubtedly the most trying experience of her life. Her baby boy was born very prematurely and needed months of crushingly expensive specialist medical care. Without health insurance, my friend and her husband may have needed to sell their successful family business and the source of their livelihood to pay for his care. With health insurance, their family savings and livelihood are intact, and most importantly, their baby boy is now a thriving toddler with a love for books and stories and a growing vocabulary that inspires me to read more.

As much as I am an advocate of efforts to raise awareness about the need for individual financial protection, I am also an advocate that awareness alone is not enough. In today's highly connected world of information overload, it should not be surprising that people become weary of awareness. While awareness may raise intention, data verifies that action will not automatically follow.

In the latest publication of Swiss Re's European Insurance Report, we could observe the industry's failure to convert intention to action for one of the most important protection solutions offered to society. For working individuals, especially young adults, their most valuable financial asset is how their health and wellbeing enables them to continue working and earning a living. A disability insurance product, which can come in many forms, is the solution the insurance industry offers to protect this asset. In the previous iteration of the research, we measured the percentage of consumers who were aware of their need and declared an intention to buy cover in the next 12 months. In the latest study, out of those who were unprotected 12 months earlier, we measured what percentage actually purchased some coverage. Disappointingly, no matter which way you segment the data, with age and country shown in the accompanying graph as an example, the number of consumers who inevitably act make up consistently less, and usually less than half, of those who intend to act.

So this begs not one, but two questions to be answered:
1) How can the industry better engage with the unprotected consumer whose awareness was not sufficient to inspire any intention or will to do anything about it?
But also not forgetting to ask…
2) How can the industry make insurance solutions more accessible to those who "fall through the cracks" despite a full understanding of their needs, and still remain exposed and vulnerable?

Re/insurers need to make a more concerted effort to understand and influence these dynamics of human behaviour. We study our competitors' actions intensely, but I would argue that our greatest competition is not another insurer; rather our greatest competition is the inaction of the consumer himself. Do we really understand if our solutions do what consumers need them to do? Are there unmet needs or points of frustration in the purchase process that keep too many shut out of the peace of mind that life and health insurance could give?

While promoting consumer awareness will take us partway to overcome inaction, society's weariness of awareness is the reason why I don't believe it will take us quite far enough. Consequently, the industry needs to do more.

Category: Funding longer lives


Oliver Werneyer - 12 Oct 2015, 4:38 p.m.

I would imagine that one of the main things to get rid of when looking to educate and engage people about this topic is not to do it with the intention to sell. This intention is immediately clear to people and is perceived as a hidden agenda (as it is not clearly stated upfront). This seems counter-intuitive to insurers because why else would they spend the time and money to educate people about the need for insurance. And that (to me) is the crux of the matter. While the education is actually about the insurers profits it will always fail. If it is client centric and about the client then they will succeed.

Shai Harman - 13 Oct 2015, 8:57 a.m.

Well done on your first post, Melissa, and on becoming a Wikipedia contributor!

I believe Oliver makes a valid point, in that most awareness/advertising push-campaigns are branded, and people easily switch off. Perhaps it's worth exploring bringing the insurance regulators/consumer protection agencies on board to promote a general white-label message of protection.

For me, your key message to the consumer was captured when you mentioned young working adults. I'd hazard that if you had to poll these 'bullet-proof' individuals about their most valuable assets, only a minority would identify it as 'future earning potential'.

One factor that would probably outweigh many others in converting intention to action is the number of dependents those surveyed had. Does your data include that?

Melissa Leitner - 13 Oct 2015, 9:03 a.m.

Thanks Oliver, I partially agree. Consumers need incentive to buy, but equally, insurers need incentive to sell, which is profit. However you're right that there is a conflict between the profit motive and the desire to do what's best for customers.
Your point also leads to the importance of independent agents who can give quality, unbiased advice to their customers that is not distorted by e.g. commission levels and structures. In my experience, it's very difficult to find such advice!

Karthik Sampath - 15 Oct 2015, 8:48 p.m.

Allow me to throw in my two cents. If your best friend had herself narrated how health insurance came to her rescue on an independent platform free of any insurance sponsors, that's how I think people will believe in the product, see it as a necessity and act on it.

Rashunda Tramble - 16 Oct 2015, 7:28 a.m.

I totally agree Karthik. Real customer testimonials have power. If the messages only come from those who profit, potential customers tune out.

Melissa Leitner - 16 Oct 2015, 8:04 a.m.

I hear you, Karthik.
But first a) a logistical problem: if the product was life insurance and not health, then the purchaser of the policy is no longer around to give that testimony.
And b) even if it is totally independent and unsolicited, I'm still not convinced this is enough to get other people to act. It's still just raising awareness, not driving action.

Alicia Montoya - 19 Oct 2015, 8:34 p.m.

Hmmm, I hate to be the one to say this but... I think insurers need to seriously reconsider their value proposition to consumers. The fact is, no matter how much you raise awareness and no matter how many positive testimonials you gather, nothing replaces good customer experience. At the end of the day, insurers need to pay. A common perception is that insurance is expensive and often pointless as, despite paying for cover, many customers then find their needs are not covered.

This just happened to me with my dentist. I have a molar disease, which are covered in Switzerland in theory... But "because my molar disease seems to have grown from the outside in, rather than from the inside out, it's not covered", according to my dentist. No need to go into how unimpressed I am with my health insurance, how quickly I plan to dump that company and how angry I am.

So my two cents? Exclusions are the insurance industry's biggest weakness, together with affordability. And until those change, people will increasingly just put money aside for a rainy day, as I found most people I spoke to do in The Philippines:

Melissa Leitner - 22 Oct 2015, 9:13 a.m.

Thanks Alicia. Exclusions should be a last resort in product design.
I think your unfortunate story shows just how difficult it is for insurers to rely on "raising awareness" as a growth strategy. It is questionable whether a positive story will directly lead to others buying insurance, but it is a certainty that a negative story is a deterrent that makes the trust gap between consumers and insurers ever wider.

David Bernert - 19 Nov 2015, 3:37 p.m.

Nice blog, Melissa!

I think general information/education should be provided by "more independent" stakeholders, e.g. governmental institutes or consumers' associations.

Our industry should reach out to these stakeholders and collaborate more (and obviously vice versa). After all the interest is aligned - to provide best-possible insurance-cover and minimizing the "protection gap" of the consumers.

I could imagine some very challenging (esp individual UW and exclusions), but constructive discussions/workshops with open-minded participants of both sides, which would result in good products/solutions!

Other things our industry should do, is to get to know their customers better, both analytically and emotionally - after all life is not just about numbers...

IMHO other industries are doing that much better.
Of course initial emotions about death/disability/illness are much less positive, than about a nice drink with friends on a sandy beach or the roaring sound of a nice car (*possibly gender-biased ;-)), but I believe it's not impossible, as we'd be helping in case of a bad event.

I fully agree that "young families" are a good "target group", as both their need for L&H-insurance-cover and awareness about the risks & consequences are highest.

Yilan Xu - 26 Nov 2015, 2:22 p.m.

Good to hear that your friend's baby is a healthy and happy boy now. Have to say that even people like me (who doesn't not buy any insurance unless it is compulsory) would by health insurance for me and my family. It is sad to see we failed to reach out and provide essential protection to people who need it (especially they can easily afford it).

Back on the topic - why we can't sell / close the gap?I am thinking one of the reasons must be: people have different personal beliefs/value and attitude towards "protection". Sorry for stating the obvious;)

Just a simple personal example:I have relatively low interest in critical illness (CI) insurance. Hence for the price insurance companies charge me (as a healthy person), not sure I'd ever pay for it. (I am more than happy to go through a full medical examination to get a super cheap CI policy matches my personal risk. Anyone knows if such thing exists?)However I have extremely high interest in "making sure I don't get CI" insurance. I have paid so much money and time to learn nutrition and cooking, buy health food, go to fitness classes, etc... If I have to choose, I always choose to spend money on insuring/ensuring "my health", not "my illness". (Btw, "critical illness insurance" sounds really depressing.)

Am I scared of CI? Of course. Why Don't I buy? It is not because of the lack of awareness, affordability issue,etc.. It is the "interest, life prospect and attitude" mismatch. My focus point is never on "getting critically ill & being in financial trouble" but on "being as fit as I can and have fun in life". Hence I choose to spend my money differently. How many people pay for expensive gym membership that they don't use much, pay for expensive diet pills that never work, etc.. but never buy insurance? See what people value/want?

Maybe when I am in my 60s, my attitude will change. Probably not before then... Unless some interesting packages full of "positivities" come along... I'll keep my mind open and keep my hope high!Last but not least, great article, Melissa!

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