Commenting after the announcement of the sale of CommInsure to AIA Australia (see: CommInsure to be Sold to AIA
), Pillemer said this misalignment has led to consumers becoming unwilling to recommend a life insurer to a friend, according to Net Promoter Score (NPS) data collected by Roy Morgan.
“The core problem is that most insurers are listed companies which place shareholder interests above the needs of their insured customers. Thus, there is a significant misalignment between shareholders’ and policyholders’ interests and because of this, many insurers aren’t well trusted and aren’t seen as making appropriate decisions,” Pillemer said.
“…most Australians would not recommend life insurance companies…given the perceived self-interest of these organisations…”
He added that as the number of life insurers becomes more concentrated improving consumer trust was the biggest challenge facing the life risk insurance sector and the use of NPS data, which indicates how likely consumers would be to recommend an insurance company, shows most Australian insurers have a negative NPS score
“This reflects the tarnished reputation of the industry and also that insurance is a grudge purchase,” Pillemer said, adding these views had been strengthened by perception the largest life insurers have unfairly rejected claims.
“The fact is, most Australians would not recommend life insurance companies and their policies to a friend given the perceived self-interest of these organisations,” he said.
Pillemer recommended life insurers adopt the use of NPS as an objective measure of an insurer’s reputation and to address the recovery of trust and reputation.
September 26, 2017