Consumer Behavior Transformation – NobleOak Paper
Article Synopsis :
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 accepted wisdom by many. However, does that mantra still hold true?
“Life Insurance in Australia – Consumer Behaviour Transformation”, from NobleOak, shares the results of a comprehensive research study conducted in December 2016 by independent research firm Pureprofile. Over 1,000 Australian adults aged between 30 and 60 were asked about their buying behaviour with respect to financial services and products, including life and income protection insurance.
Key findings of the report include:
- Life insurance is now bought and sold – Consumers are becoming more aware of the need of life insurance with 61% wanting to seek financial advice online.
- Life insurance advice is majorly sourced online, however advisers still play a key role – 32.2% prefer using the Internet, while 25.4% use a financial adviser and 20.4% rely on family members.
- Online comparison tools have become a key driver of needs – 66.4% use websites as a way of comparing life insurance and income protection policies; 22.7% rely on advisers. 34% seek life insurance advice using online comparison tools.
- Changes in buying behaviour in the financial service industry – 79% believe technology has changed the way they interact with banks in the past three years, versus 37.3% for life insurance and 33.6% for income protection. Technology usage is expected to increase in the life insurance segment in the near future.
- There is a stark difference between purchasing behaviour and future intention – Though a majority research life insurance online, very few buy directly online. While only 6.5% have purchased life insurance products online, 38.6% said they would purchase life insurance online or through a mobile device if they needed it.
- Advice is undervalued with evolving digital resources – A majority say they are unwilling to pay anything for financial advice. 72% are confident purchasing a life insurance or income protection product online, without financial advice, provided the right resources are available.
The results suggest a major behavioural shift is taking place with further acceleration likely. NobleOak believes the change from push to pull will be driven by:
- The regulatory environment
- Rising competition from Direct Life insurers and comparison sites
- FinTechs and consumer behaviour shifts to more reliance on the Internet, mobile devices and social media
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Digital Insurer's CommentsIn Australia, as elsewhere, the role of financial advisers or insurance agents in the sale of life insurance is steeped in tradition. In Australia, as elsewhere, after 180 years of minimal change, consumer behaviours and the life insurance industry in general are now changing very quickly.
When it comes to making a purchasing decision, the traditional process of starting with “needs awareness”, then “information search”, through to the “purchase decision”, is still relevant today. Today’s digital consumer in our view, is increasingly confident in working through this process themselves, sourcing help along the way if required, without professional assistance or advice.
With 83% smartphone penetration in 2017, and e-commerce expected to double by 2020, we expect insurance saturation in Australia, as elsewhere, to increase overall, with adviser rates trending downward.
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