Inside Money: Life online to challenge advisers

Consumers are more willing to buy insurance themselves. Photo / Thinkstock

The conventional wisdom states that life insurance is sold, not bought. But a recent survey produced by accountancy mega-firm Ernst & Young (E&Y) indicates that consumers are becoming more willing to take on some of the buying duties themselves.

Picking the brains of 24,000 consumers (including 1,000 Australians but sadly no NZ residents) in seven regions the E&Y 'Global Consumer Insurance Survey 2012' concludes the internet will shake-up the insurance business much as it has in other retail sectors.

"While the level of actual insurance purchase over the internet remains low in many countries, its use varies considerably between countries in the survey," the report says. "In every case we found that customers intend to do more research using the internet, even if they ultimately rely on conventional channels for purchase."

The E&Y study says the internet poses more of an immediate challenge to general insurers (house, car, boat, etc) but online shopping is steadily encroaching into the life insurance business too.

However, the complexity of life insurance products (compared to general insurance) is a major hurdle for online shoppers to overcome, whatever their level of internet-comfort may be.

"Customers would actually prefer [life insurance] products to be simpler and more transparent, making it easier for them to make an informed choice," the survey says. "A minority of the customers, mainly in developed countries, would prefer making purchases completely independently without using an adviser."

But the E&Y report says even the majority who still want a human to handle their life insurance transactions might expect some cut-price service.

"This has implications for the role of insurance intermediaries - if customers are doing more research themselves and taking more responsibility for the product choice, what is the value-added of the intermediary and what should they be remunerated for?"