FSC insurance advice claims rejected
Claims by the Financial Services Council (FSC) that consumers don’t know where to turn for insurance advice have been rejected by two prominent industry figures.
Wednesday, October 31st 2012, 7:28AM 
9 Comments
by Benn Bathgate
FSC chairman Jenny Shipley says one of the findings in a recent report is that “people don’t know where to obtain objective advice.”
“Market research indicates there is no hostility to the idea of personal risk insurance. In fact most people understand its value but don’t know how much they need, or feel confident about purchasing it,” she said.
TNP managing director Jeff Page says the issue isn’t about awareness but the fact that life insurance remains, for many people, a ‘grudge’ purchase.
“I would say everybody knows where to go [for advice], and if they don’t it’s not hard to find out where to buy insurance,” he said.
Page’s views were also echoed by industry veteran Ron Flood. “Insurance has never been bought, it’s always been sold. Very few people go out and say I must get some life insurance today, where do I go?”
“It’s something that is triggered by an event in their life and normally, nine out of 10 people, as soon as they need life insurance they turn to friends, family, workmates and ask who looks after your life insurance?
“This crap about not knowing who to turn to, it’s normally from people who haven’t had any time in the business, they don’t have a feel for it.”
FSC chief executive Peter Neilson said the research indicated consumers appreciate the need for life products, but he said it did also highlights challenges for the advice world.
“We’ve got to find a way of creating less costly, scalable advice. In other words, advice that can go to a large number of people and help them work out what their needs are going to be in order to make the industry work more effectively,” he said.
“The public...are not saying the last thing I want to buy is insurance. They’re saying I think I’ve got a need but I don’t quite understand what I’m being offered and I don’t know where to go in order to make that more clear.”
Benn Bathgate is a business reporter for ASSET and Good Returns, email story ideas to benn@goodreturns.co.nz
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Comments from our readers
Here's a great infographic
http://www.lifehealthpro.com/2012/10/29/infographic-consumers-just-dont-understand
The point regarding objectivity is not lost, but how that term is defined varies depending on which perspective is adopted. Independent, objective, unbiased, etc, etc - variations on a theme, and difficult to prove/disprove. Ultimately, the consumer decides and a rapidly growing and significant percentage of consumers go online to find out what they need to know before making a purchase.
Mr Neilson's adage re lower cost advice is pretty standard fare, but perhaps he might direct that suggestion to some of his life company members who are paying out the highest upfront commissions in the OECD territories. Good luck with that one - and a read of Russell H's piece on commission management might provide a more realistic perspective for the less experienced.
To link phonebook cold calling with churning is silly, as long as people have good cover for a good price then everybody wins.
If some bright spark adviser finds that walking the golden mile and door knocking is bringing rewards then let him/her continue to do it.
If people wish to search the web and buy online, let them.
If people want to take time out of their busy lives to visit an adviser in their plush fancy offices, let them and if advisers want to work evenings and help their clients that way, let them.
Every single way of getting business written is okay by me and one particular way is no better than any other, it is just guided by our own experiences and success. And there is plenty to go around, more than any of us could ever hope to work with!
And this research although being quite vague on specifics is probably spot on otherwise we would all have a mad stampede of clients knocking on our doors, which we don't! Everyone of those consulted in this research may in fact not have any - quite easily. So in essence it may be very accurate but in a very inaccurate kind of way.
Enough already....
What other research has shown is that NZers are underinsured compared to their needs. As Mrs Shipley pointed out this is particularly extreme for income, trauma and TPD cover. The current industry, companies and agents have not been able to get these accepted as normal products by the middle class. The problem with life cover is that a lot is now issued via banks, who tie cover levels to mortgage amounts, not actual need.
Rather than infighting the industry needs to discuss how to change NZer's attitudes to personal insurance.
A comment from a non-adviser who thinks to tell us lowly adviserish types how we should do our jobs. The 'middle class' don’t have enough insurance because we haven’t made it normal? or some such nonsense.
With a pithy bit about infighting for good measure, and some great bright light-bulbish revelation about what we should all be doing!
People who want it have many ways to buy insurance. The problem is people don't, and when they do they often don't buy enough. This we already knew. And the discussion Dr mike says we need to be having is already going on. Every conference, marketing initiative and every company and every little advisory firm and all the online and direct mail campaigners are doing something every day.
Much of the comment on here is good debate, and its pretty good to see all sides of an argument - except when one isn't on a side and has no real field experience to bring to it.
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I hate it when "the research" isn't referenced. That's what politicians do.
Here's some actual research:
"While two thirds of consumers (64 percent) still prefer to buy life insurance from an insurance or financial professional, that number is down from 1996, when 8 in 10 (80 percent) preferred to buy the product face-to-face. Today, more than one in four adults (26 percent) prefer to purchase life insurance direct via the Internet, mail or over the phone."
Taken from this annual American survey organised by a non-profit, pro life insurance organisation. http://www.lifehappens.org/life-insurance-purchasing-habits-changing-as-one-in-four-consumers-now-prefer-to-buy-direct/
@ Ron Flood
That 'bought not sold' this is true, but less so today that 10 years ago. But this "crap" that people turn to their workmates or family to find out who to talk to; isn't that exactly what Shipley was on about? IF they knew where to go, they would! And increasingly they are going online/direct.