Most Kiwis wary of insurance industry: Study
New Zealanders have a negative perception of insurance and the insurance industry, new research for the Financial Services Council has shown.
Monday, February 18th 2013, 6:00AM 
6 Comments
by Susan Edmunds
A two-year Massey University study has shown New Zealanders are under-insured by $650 billion.
Lives were under-insured by $195.609 billion, permanent disability protection was lacking by $351.827 billion and income protection was under insured by $2.966 billion per month.
About 2000 respondents filled out an online survey that asked questions about their insurance cover, perceived needs and their reasons for not having more insurance.
The research found most New Zealand families had high levels of vulnerability to medium or long-term disability as a result of underinsurance.
FSC chief executive Peter Neilson said the research highlighted serious financial risks
More than half the respondents said they were suspicious of insurance companies and 43% found insurance jargon difficult. About 60% thought finding personal risk insurance was too hard.
Particularly among younger respondents, there was a view that it was too difficult to know what level of insurance was needed.
The data showed the idea that insurance premiums were unaffordable was the major barrier to taking out insurance.
More than a third said cost prevented them from having adequate cover in some way.
Others thought Government assistance would cover them in the event of an accident or illness that kept them off work.
But almost half said having the right level of cover was important to them.
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Comments from our readers
What we need is adviser industry bodies, those with long experience with clients, like IFA or PAA, to work with the FSC to decide what practical changes are needed in the insurance products available or in the way they are sold, so that the 80% who don't buy any or enough insurance can be sold to.
Face it - you are an industry which only successfully reaches 20% of the market for many products. There has been a lot of talk and not much success.
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This is the typical excuse used by many who as we all know are already living beyond their means anyway. I would wager those surveyed would prioritise Sky TV or having a 50 inch flat screen in the living room over the small monthly cost of protecting their loved ones. The likelihood of these people ever taking cover is next to nil unless they are finally forced to.
"…..Others thought Government assistance would cover them in the event of an accident or illness that kept them off work".
And this the key issue at hand. A total lack of personal responsibility by most kiwis fostered by successive liberal politicians pandering to those in society who don't want to be responsible for anything including the wellbeing of their own children and loved ones!
The FSC has a HUGE task on its hand to even attempt to address the issue of underinsurance in New Zealand. The lead must from the Beehive with some politically "unpopular" but socially responsible policies. A growing majority of kiwis can’t be relied on nowadays to make the right decisions for themselves and their families. Their children will be none the wiser either….Fast forward 30 years and see how bad the problem with underinsurance is then!
We seem to be having a great debate in this country currently about compulsory superannuation. How about at the same time we raise the subject of compulsory life & income cover if you happen to have people you are financially responsible for!