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Let's reframe under-insurance debate

One of my favourite Larson cartoons is the one about what dogs hear when we talk to them.

Friday, April 19th 2013, 11:06AM 1 Comment

by Philip Macalister

I can’t help think about it every time I hear someone in the life insurance world utter the phrase “under-insurance”.

Now don’t get me wrong, under-insurance is a serious issue and one that needs considerable thought.

However, if we as an industry want to engage with consumers and law-makers on the topic let’s find a new name.

At the moment the whole issue appears, to the public anyway, as being just one industry group trying to talk up their books and sell more life insurance policies.

Framed in that perspective there is little chance the issue will get serious traction.

Oddly enough the insurance world has had this issue before. For years people like the Health Funds Association has argued for tax breaks on health insurance. The, quite logical argument, being that if more people bought health cover and used the private sector then some pressure would be taken off the over-burdened public health system.

Unfortunately this campaign has never gained traction with the politicians, even though it make sense.The life insurance sector should take note of what’s happened here and analyse why the campaign hasn’t worked, otherwise they risk the same thing happening with “under-insurance”.

The other issue around life insurance is how it is sold. I’ve spoken with lots of people about this and the general view is that the areas where this is growth is in the direct, online market and with banks.

The former is still a small part of overall sales but is growing, particularly as more and more companies enter the market.

It’s hard to get numbers on bank-initiated sales, but the view is these have grown.

The third, and largest, part of the distribution equation is advisers. I have no doubt the large majority of advisers are doing a good job here. But in this under-insurance discussion the issue of how this channel grows and churn will come under the spotlight.

One thing which is welcomed is David Whyte's zeal to step into the debate and really try to drive it along. He should be congratulated for this initiative and supported.

You can find out more at

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Comments from our readers

On 24 April 2013 at 9:57 am david whyte said:
Thanks for the plug Phil - and I couldn't agree more about the framework for the debate being reconstituted. Whether industry stakeholders like it or not, the term 'insurance' - and all the other jargonese that goes with it - is just not inspiring enough to engage the wider public's attention.
In this instance, the effectiveness of the communication exercise, lies with the industry.
My meager attempt to re-address the lack of adequate financial protection via the Campaign is at least a start to bring awareness of the need for organised financial security to a wider audience. But as a 'post-corporate', I don't have the resources on my own to make the desired impact, so any input, support, ideas, and/or initiatives aimed at promoting the cause, will be most welcome.
Raising funds to promote the Campaign is an important aspect of elevating the profile and presence of the Campaign - donation details on the website as per your excellent article.
As a subject of interest and relevance, are there any conferences, seminars, or symposiums looking for a presentation to stir the attendees? I'm happy to make myself available at no charge on behalf of the Campaign. Not often you get a free offer from a Scotsman, so conference organisers - get in touch via the Campaign website or

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