Apathy reigns when it comes to personal insurance in Australia with life insurance and protection against trauma, disability and loss of income not ranking in importance.
New research at Griffith University shows poor knowledge about personal insurance products and an underlying lack of trust in the insurance industry are at the heart of this attitude which leaves Australia out of kilter with other OECD powerhouses like the United States, United Kingdom and Germany.
“Australia is a first-world nation but is not behaving like a first-world nation (when it comes to insurance),” says Griffith Business School researcher, Tania Driver, who is investigating why Australians choose to take out personal insurance or not.
Ms Driver has interviewed 30 financial planners and 40 residents of Queensland’s southeast corner to gain a broader picture of the attitudes informing decisions around insurance policies. This preliminary study has provided the framework for an extensive online survey now underway.
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Three-quarters of the people interviewed said they regarded personal insurance as optional cover, whereas general insurance – covering cars, houses and home contents – was seen as a necessity.
Personal insurance is not valued by many Australians, the study showed, with many of the opinion that government agencies would provide for them in the event of illness or loss of employment.
“People think they are not likely to have any serious medical conditions; and even if this happens they believe they will have workers’ compensation and sick leave paid to them.”
Lack of knowledge
Ms Driver’s study revealed a lack of knowledge about insurance products across the social spectrum. A follow-up survey of 1000 Australian residents will dig deeper, as Ms Drivers attempts to establish the personal, cultural and behavioural factors influencing decisions around insurance policies.
“It’s a topic that affects every family in Australia,” she says.
Tania Driver moved to the Gold Coast in 2004 and completed a Master of Banking and Finance at Griffith Business School. She worked in industry as a financial planner before returning to Griffith to start a PhD.
“The survey questions test people’s experience and knowledge of insurance products. Have you insurance? Have you ever made an insurance claim? Have you failed to renew your insurance? What are your impressions of insurance companies and how they treat their clients?
“My interview findings showed people do not trust insurance companies and this is the result of negative stories in the media about insurance companies denying claims. Clearly, insurance companies also have to change their approach and generating a more awareness around insurance payouts will be important.
“People see general insurance as more important, possibly because of a perceived ability to make claims on these policies more often than on personal insurance policies.”