The FSC launched "Risking Everything" this morning
There is relatively little insurance consumer research done in New Zealand. Much of it is of a low quality. The Massey work on underinsurance, by messrs Matthews, Birks, and Naylor, commissioned by the FSC, and this new research, also commissioned by the FSC have to rate as perhaps two of the most important studies. About three years ago we had some really useful work done in income protection - also done under the auspices of the FSC.
But back to this work. In this case the research is entirely consumer focused, and draws on attitudes towards risk, and the extent of preparedness to face an event. It feels more relevant to me, as the answers to these questions are firmly rooted in the consumer's own perception, rather than concepts that the industry thinks about - like measuring under-insurance against our own models of what people 'should' have.
These are my personal highlights:
- "Those surveyed identified global risks, natural disasters, loss of income/increase of expenses and illness or death when they were asked to consider
types of risk. However, when thinking about these risks, 1 in 3 of those who identified them don’t tend to think about how these risks might affect
them and 43% of respondents often forget about them if they do." That rings true, when I think of the attitudes of people not in the industry
- "The risk of losing their income is not even considered by most New Zealanders." - Is that self-deception? Is that a purposeful decision because they are unaware that a solution exists?
- "Two-thirds of those surveyed thought that there was a moderate to high risk of major financial problems should a significant event happen such
as serious injury or being unable to work" - which is a powerful point of self-reflection. So, if you are brave enough to stand on the street and ask questions (as the film crew below did) then two-thirds of people will admit that they probably have a problem that needs solving. There's a need, and an openness.
- "I dislike having to think about these financial impacts" - now that's an honest response, who does like thinking about it?
- "Respondents aged 45-54 and those with a large family (three or more children at home) were less likely to think about financial risk" I bet that's just because they are so busy, but as the researchers found out, if you do ask, you get some good answers.
- There is also a lack of knowledge about what to do: "I’m not really sure how I should manage these potential impacts" or should I say, these people are all but asking for advice
- Winder financial planning issues are identified, with 40% knowing that they do not have the financial resources to manage for three months without their income.
- Yet with all that latent need, only 38% of respondents have an insurance policy, and only 8% looked into buying one in the last two years (this number excludes those that might have reviewed their cover.
There is a wealth of information. You can download the report from this Download Financial Services Council - Risking Everything - June 2019, the FSC's media release is Download FSCMediaRelease KiwisGambleonFinancialRiskFInalJune102019, and there are some cool vox pops below. Do check it out.