Underinsured NZ - Why are we risking our life, health and income?
Fact: Most New Zealanders are under-insured
This speaks to our “she’ll be right” attitude which is putting Kiwis in danger of losing their livelihoods as a result of serious medical events. Insurance products are available and effective, they simply offset the risks involved in high cost incidents so what is that we not getting through as industry participants?
In 2011 Massey University released a report showing the state of the county as it relates to insurance. The report “Exploring Under-insurance within New Zealand” found us to be the third lowest ranked of 31 OECD countries for personal insurances.
The study found that consumers knew the value in taking insurance, considered themselves risk-adverse, and they even stated that they are willing to pay to offset risk yet would still not have adequate cover in place (no insurance or too little). These are some of the figures released in that study:
Kiwis are under-insured by:
$195bn for Life Insurance
$58bn for Trauma/Critical Illness
$3bn a month for Income Protection
Skip forward to 2018 and the “Gambling on Life” research, commissioned by Financial Services Council (FSC), provides the same findings: we are under-insured. The common themes through both these studies that I found the most interesting, albeit not the most surprising were:
Product understanding (too complex)
Lack of trust in the industry
Unaware of the risks
Reliance on public systems (ACC and Welfare) without understandings their limitations
Trust, education and simplification is what consumers need.
I could, and will, write a blog post describing the limitations of both the public health system and ACC. They are doing a great job at what they do; the public health system is great for emergency medical care, and ACC is for accidents, but this will not meet all of your needs.
Lack of understanding and lack of trust, now that is on us as industry members and is the area that most concerns and interests me. How can we get the message out about the the purpose of Life Insurance Plus and make the products more accessible for everyone to understand? Through conversations I’ve had with a number of people over lockdown, insurance isn’t the only part of personal finance that Kiwis aren’t getting.
I discussed with Luke Kemeys, a chartered accountant who has gained a huge amount of knowledge about personal finances and planning, the need to provide easy to read advice for Kiwis who are not getting the basics when it comes to money management. He has launched www.keepthechange.co.nz to battle some of the financial literacy issues Kiwis face, as “she’ll be right” isn’t going to cut it.
I spent time on The One Up Project podcast with Sarah Kelsey who creates awesome content for young New Zealanders for “everything we were never taught but should've been”. The truth is that some of the lessons she is discussing don’t need to be limited to those in their 20’s.
One thing that stood out in the interview was when Sarah asked what free resources are available online for young people, “honestly there isn’t much” was my reply. Lack of knowledge and understanding seems to be a major factor in lack of trust, in any subject.
I’ve spent a fair amount of time over lockdown creating a new “guide to insurance” to help bridge this gap and a belief that providing open and honest information fosters trust. Kiwis want to be able to understand what they are getting into, why they should leverage professional advice, and to be able to trust who they receive it from.
Something needs to change to get Kiwis to start thinking about their risk.
Challenge accepted…watch this space!
https://www.fsc.org.nz/bulletin_display/x_blog_code/2101.html