The current environment is highlighting the things we hold dear. We are being drawn to areas of our life where there is certainty that give us a feeling of control, at a time when we seemingly have little of it.
Insurance falls into this bucket, providing a dependable source of income when circumstances change and a financial future when there seems none.
For many Australians, their only source of insurance cover is via their superannuation fund and we are hearing from superannuation funds that members are contacting them, keen to know what insurance protection they have, particularly where a member’s work pattern may have been impacted.
Engagement levels and indeed reliance on superannuation have never been so high.
Sustaining this sense of value is something the insurance industry has been working on and which will be thrust into the spotlight over the next few years.
Opportunity to shine
While there is so much uncertainty in today’s world, there are many reasons for members to feel certain about their insurance.
In the case of Zurich, that acquired OnePath in 2019, the knowledge that such a provider is a well-managed Swiss company with more than 140-years’ experience in life insurance, counts.
Reassurances, such as the ability for insurers to adapt to the new challenges that have arisen in these unusual times, count. For example, Zurich’s recent move to ensure life policies do not have a pandemic exclusion, so a claim resulting from the COVID-19 virus will be assessed in the same way as other injuries and illnesses, falls into this category.
Then there is the list of successful claims – more than 93 per cent of claims are paid.
However, despite this certainty, the insurance industry still struggles with demonstrating its value. And this is a fact I attribute to the unusual commodity that is insurance.
Defining insurance and its value
You might have heard me talk about this with my ‘parcel’ analogy, at the ASFA Spotlight on Insurance event earlier this year.
A parcel you’ve purchased arrives at your house.
You don’t open it, because you have been told to just put it in the corner and not to touch it. While you feel good that you have bought it, you have no further contact with the parcel.
You’ve been told when you plug it in, it will work. So you just wait for the time to plug it in, half hoping you never need to but glad that you’ve got it.
Meanwhile another house in the street has opened their parcel and it worked.
The parcel is of course insurance. A dependable commodity but surrounded by much uncertainty. But this is changing.
Uncertainty now in the spotlight
Overcoming this uncertainty is the big challenge for our industry, yet in an environment where change prevails, does insurance actually look more certain?
Members are looking for reassurance. Insurance plays a vital role in the context of these conversations, particularly when you consider the growth component of many superannuation portfolios has taken a hit of around 30 per cent.
Our value as insurers is under the spotlight now more than ever. With more than three million Australians applying for early release of some of their superannuation savings, superannuation as a commodity has changed. For the first time, super is more accessible than ever before and at an earlier stage in life.
This no doubt impacts the future course of superannuation savings in Australia. However for the first time, more members will now know their superannuation balance, how they are invested and how much they contribute. They will be eye-balling the ‘parcel’ and opening it up.
For the insurance industry, I believe it will also gain associated exposure and sunlight.
A new path ahead
I believe insurance will also experience a change in perception as a result of this crisis. Mostly because it comes at a time when—as an industry—we are working to be better, to communicate and to demonstrate value, and to provide a more ‘living’ commodity to consumers.
But also because the behavioural science that sits behind our actions and values are currently being honed to focus on certainty.
Value is not a concept that can just be communicated. It must be shown, and there is no better way to prove its value than to use it. This crisis is taking members as close as we can to using insurance without doing so. Members are switched on to what matters to them and to protecting their futures and are asking questions and growing their knowledge of what they have.
For the superannuation community, even if members have not applied for early release of their funds, they will want to stay close to their superannuation funds as a trusted source of financial stability and information. The insurance industry will be sitting alongside the superannuation industry in this unprecedented time.
