It may come as a blow to Australian life insurers that pride
themselves on setting the highest ethical standards, but
unfortunately few Australian consumers trust them. This unpleasant
reality was revealed by Australian internet-based insurance broker
Lifebroker in
its latest Life Insurance Report.
According to Lifebroker, 67% of
consumers surveyed for the report said they believe insurers will
use loopholes to avoid payouts. Contributing further to a lack of
trust consumers feel toward life insurance products and those that
sell them, a further 58% incorrectly believe premiums for life
insurance products are much higher than car and home insurance.
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A particular area Lifebroker
believes insurers are failing to improve their image in is by not
emphasising how much the industry pays out in claims. According to
the Australian Prudential Regulation Authority, the life insurance
industry paid A$3.9bn ($3.6bn) in death and disability claims in
the 12 months to March 2010.
However, ignorance among Australian
consumers extends far beyond perceived poor claims settlement.
Among other serious misconceptions uncovered by Lifebroker are:
Given this widespread ignorance it
is perhaps not surprising that actuarial firm Rice Warner Actuaries
estimates that over 95% of Australian families do not have adequate
long-term insurance cover. The total level of underinsurance is a
mammoth A$1.37trn, estimates the firm.
