Understanding consumer attitudes to protection is key to driving up sales. But as the latest research from Protection Review’s research arm The Syndicate shows, the insurance industry still has a lot of work to do when it comes to winning the public’s trust.
Its study has found that although consumers recognise insurance as the most robust support strategy if they were unable to work for longer than six months as a result of illness or accident, confidence in the sector remains low. Just one in five people trust insurers, with this only rising to one in four among those with protection.
Instead, when asked where they would turn for financial support if they were unable to work, respondents placed their partner (42 per cent) and their savings (38 per cent) in the top two positions. Protection only managed to muster eight per cent of the vote.
However, the research also found that many respondents significantly overestimated how long their savings would last. For example, those with between £5,000 and £10,000 tucked away expected this to last 10 months on average. Based on average net monthly income, this would leave them with a monthly shortfall of more than £1,500.
Having overseen the study for several years, Jo Miller, director of research at The Syndicate, is not surprised by this year’s findings.
“There is evidence of a rainy-day mentality, but people still do not want to go into any detail about the possibility of being unable to work long term,” she explains.
“It is positive that consumers can see the value of insurance but insurers need to find ways to turn this into sales.”
One area where there appears to be a barrier to sales is disclosure, with The Syndicate’s research highlighting something of a contradiction in the public’s view. While more than half of those surveyed felt medical conditions should be disclosed at application stage, a significant proportion of respondents believed claims should be paid even in the event of non-disclosure.
To illustrate this, the research used an example of a life insurance claim for someone who did not disclose they were a lifelong smoker when they took out the cover. If they had died in a car accident, 64 per cent of those surveyed said the insurer should pay the claim in full, with just 11 per cent saying it should not pay anything.
The reaction changes where death is a result of a condition linked to smoking. If it is caused by a heart attack, 29 per cent believe the claim should be paid, with 21 per cent saying it should be declined. But even if they died from lung cancer, 18 per cent would still be in favour of a full payout.
Ms Miller believes this could be due to the contract mentality. “Consumers believe that if they have been through the application process and taken out cover, they have a right to a payout if they make a claim,” she says.
“Insurers need to be clear about the ramifications of non-disclosure at the outset, but this does feed into consumer mistrust.”