Insurers need to create products for the ‘digital world’

Research by the Council of Australian Life Insurers (CALI) has revealed a 5 per cent decline in life insurance uptake among 18 to 34-year-olds driven, in part, by the high cost of living and inaccessible financial advice.

On top of this, research from the Association of Superannuation Funds of Australia (ASFA) released in mid-2024 found that the same age cohort was increasingly relying on social media for financial advice.

Speaking on a panel at the inaugural CALI conference last week, Acenda’s northern underwriting manager for NSW and Queensland, Darren Leonard, said with this in mind, the industry needed to shift its approach to increase engagement with the next generation of working Australians.

“Gen Z and Gen Alpha are far more likely to build trust with online influencers than a brand. Unsurprisingly, some advisers are now getting referrals from podcasters, and this is a huge area of opportunity," Leonard said.

“It’s not just about being able to buy a product online – we need to design our products to meet the needs of the digital world.

To meet demand for digital capabilities, insurers have begun offering more digital wellness offerings. For Acenda, this came in the form of VIVO, a “health, wellness and recovery program” that provides customers with support services without making a claim.

“Customers can access nutrition and fitness services and support for mental health, among other things. They can go online, request a consultation, have video calls with an expert, devise a plan and then have further follow-ups,” Leonard said.

“We are looking at how we can make Vivo even more accessible for customers, and we are also exploring technology to simplify the underwriting process so we can speed up decisions and ultimately make life insurance more accessible for more people."

One of the biggest challenges for Australian insurers is the sheer lack of financial advisers, particularly in the risk space, with Leonard noting the 2023 Adviser Ratings Life Insurance Study revealed there are only around 150 ‘pure risk’ advisers in the country at the time.

With younger Australians more likely to go without financial advice due to the high cost, Leonard said that “Acenda is supportive of the government’s advice reforms” as they are primarily aimed at helping more Australians access affordable advice.

“It’s important that all Australians, including young Australians, can get access to advice to make the right decisions,” Leonard said.

"Young people don’t see the value of life insurance and the importance of taking it up early in life, especially when they are dealing with cost-of-living pressures.”

Late last year, research commissioned by CALI found that Australians are more likely to insure their possessions than themselves, with around eight in 10 (79 per cent) people having car insurance, while just a third (34 per cent) had life insurance.

In response, Leonard said: “What happens when they have an accident in that car and can’t work for a period of time?”

“Who’s going to look after them when they can’t earn an income? Who’s going to pay the mortgage or the rent and put food on the table?” he asked.

“A life insurance policy is an investment in their biggest asset, which is their earning potential. It gives them protection when things go wrong so they can continue to take life on.”