Sparked by a headline in the US noting that Life Insurance is the cheapest it has ever been I made a couple of quick checks here.
Life insurance, for most ages, is at an all time low in terms of price, right now, in New Zealand. This seems to be a subject of no great import at a time when the airwaves are filled with news of corruption and scandal.
In marketing terms this is what we mean by a low involvement product. In layman's parlance, the price for a financial service for which consumer pay a billion dollars a year is at its lowest and nobody cares.
Okay, not nobody - you and I care. But as near as damn it - nobody outside the industry cares. What can we learn from this?
People sometimes talk about price sensitivity as if there were perfect information for all consumers. This is not the case. In fact most purchasers of life insurance have very limited information - although it is not hard to obtain. Then there are those who might buy cover if they knew how cheap it actually is - but don't, because they do not think about the product. It comes back to low involvement.
The challenge for insurers is twofold.
1) As the product is a low involvement one, companies may not be getting full value from the low position of their rates.
2) The lack of sensitivity of the consumers to prices is because of a lack of information and a lack of interest. It is the job of sales and marketing to raise interest and provide information (amongst other things) and that is why the game is mainly about distribution at present, with pricing secondary to that.