Psychology of
Selling Risk
Tom Cincotta
State Manager Vic Tas
CommInsure
What can
we build for
the customer
based on their
expressed
needs?
Basic Needs
The need for
self-actualisation
Fulfilment
The need
for esteem
Ego
The need for
affection and
belonging
The need
for security
Biological
needs
Abraham Maslow - A Theory of Human Motivation (1943)
Love
Safety
Physiological
Buyer Purchase Behaviour
Need
recognition
Information
search
Evaluation of
alternatives
Purchase
decision
Post
purchase
behaviour
Buyer Purchase Behaviour
SEE
HEAR
DO
Visual
Audio
Kinaesthetic
HEART
HEAD
GUT/SOUL
Emotional - feeling
Analytical - facts & figures
Somatic - trust
How
people
learn
How people
make
purchasing
decisions
What do customers want?
Somatic decision making
ENGAGE
EXAMINE
EXPLORE
+
“They listened
and truly
understood me”
“They clarified
my need”
“They provided
guidance”
Top 10 things people want
Love
Connection
Fun
Peace
What we spend time chasing!
Money
Fame
Sex
Recognition
Freedom
Power
Security
Responsibility
Growth
Self-Expression
Adventure
To Contribute
Achievement
Big House
New Car
Swimming Pool
What people REALLY want…
Good
health
Assist/help
family
Maintain standard
of living
Life expectancy in Australia
MALES
FEMALES
AGE
1901-1910
2006-2008
1901-1910
2006-2008
BIRTH
55.2
78.9
58.8
83.6
30
66.5
80.3
69.3
84.5
65
76.3
83.6
77.9
86.6
85
88.7
90.9
89.2
92
Life expectancy in Australia
COUNTRY
Iceland
Hong Kong
Japan
Switzerland
Australia
UK
France
China
Vanuatu
World Average
South Africa
Swaziland
MALES
80.2
79.4
79.0
79.0
78.9
77.2
77.1
71.3
68.3
65.0
48.8
39.8
COUNTRY
Japan
Hong Kong
Switzerland
Australia
France
Iceland
UK
China
Vanuatu
World Average
South Africa
Swaziland
FEMALES
86.1
85.1
84.2
83.6
84.1
83.3
81.6
74.8
72.1
69.5
49.7
39.4
Product Design… some thoughts
Clients think in terms
of ‘debt’ and ‘income’!
Does any insurance
company ever have
a client ‘to age 99’
for a term life policy?
Do insurance
companies only want
customers for a short
period of time?
Does any insurance
company want a
customer ‘from the
cradle to the grave?’
Will customers
rediscover annuities?
Will customers
rediscover insurance
bonds?
What do
different
customer
segments
prefer?
Battle of the sexes
WOMEN WANT:
Listener
People person
MEN WANT:
Licensed planner
Proven track record
Trustworthy
Acumen
Sincerity
Certified
Supportive
Understanding
Large company
Experience
Marriage
In 2009,
there were
120,118
registered
marriages
Source: ABS - Marriages & Divorces, Australia (3310.0)
Average age
Groom:
Bride:
31.5yrs
29.2yrs
Divorce
1 in 5
Today
marriages end in divorce
within
10yrs
Today’s divorce rate
is estimated as
high as
48%
1 in 3
More than
marriages end
within
20yrs
Median age for divorce
Men:
Bride:
Source: Australian Demographic Statistics (3101.0); Divorces, Australia (3307.0.55.001); Marriages & Divorces, Australia (3310.0)
44.4yrs
39.2yrs
Impact of Divorce
1970
2010
40% of
48% of
20% divorce
33% divorce
50% of
marriages
ended in divorce
marriages
ended in divorce
within 10yrs
within 20yrs
marriages will
end in divorce
FOR WOMEN
2015
FOR MEN
Normally sole parents
Normally childless
household
Disposable income
falls more sharply
Living standards
decline after divorce
Less likely to
accumulate wealth
after divorce
Income decreases,
but increases after
‘composition’
Mortgage
Will you be leaving your family as 2nd heir?
?
Birth / Adoption of Child
In 2009 there were 295,700 births
registered in Australia
Median age of all birth mothers in 2009 was
30.6yrs, 3.3yrs older than mothers in
1985 (27.3yrs)
Median age of all fathers in 2009 was
33.0yrs, 2.9yrs older than fathers in
1985 (30.1yrs)
Women aged 30-34yrs continued to have
highest fertility rate of all women
Source: ABS (3301.0) - Births, Australia, 2009
Cost of Children…
$500,000+ $
$
$
$
$
$
$
$
Dependent Children at Home
Age 50-54
52.1%
Age 55-59
32.1%
Age 60-64
20.3%
Age 65-69
12.8%
Footloose & Family Free
CHARACTERISTICS
18 -29 years old
No dependants
Saving for next best thing
Expensive social lifestyle
Invincible – “It won’t
happen to me!”
Approximately 27%
of population
Young, single
and starting out
Leading lifestyles
CHARACTERISTICS
30+ years old – Single or Double
Income No Kids (DINK)
Wealth accumulators
Large disposable income
Control & security
Health and appearance is important
Approximately 15% of population
Family room
CHARACTERISTICS
25 - 45 years old
Raising young family –
Time poor – Need experts!
70% need savings to survive
40% run out of money in 1 month
Focus from individual to family
Approximately 18% of the population
Family Fun
CHARACTERISTICS
35 - 55 years old
Focus on health
Income provides lifestyle
of entire family
Parents spend more time
away from children
Reduced debt levels
Focus on retirement
Approximately 13% of population
Established families
with older children
Family Fun
CHARACTERISTICS
Caring for aging parent
Challenges of ‘boomerang children’
Adult children at university or working
25% of children under 35
live with parents
“KIPPERS” – Kids In Parents’ Pockets
Eroding Retirement savings
Empty Nesters
CHARACTERISTICS
55+ years old
Focus on retirement savings
Protect current assets
Reduced debt levels – most have
paid off mortgage
Focus on health
Indulge themselves & family
Approximately 13% of population
Retirees
Biggest Fear for 99% of all Baby Boomers:
Not enough MONEY in Retirement!
Man at work vs. Capital at work
Savings vs. Insurance
- Income
- Debt
- Retirement
Retirees prior to age 65
- 41% due to illness or injury
Product Design… some thoughts
Insurance companies need informed customers
Current product design encourages lapses
Engage clients via their preferred method
Understand the trade-off regarding
Convenience vs. Price
Is there a “one size fits all” policy?
Is there a “one size fits all” distribution method?
How will insurance companies educate customers
so that they may make informed decisions?
Can we
really
price for
anything?
Product Design
There is no
uninsurable
risk…
if the customer
is willing to pay
the premium!
Product Design
CLAIMS &
LAPSES
PRICING
BENEFITS &
FEATURES
EXCLUSIONS
UNDERWRITING
Life Cover
DIRECT INSURANCE
TYPICAL
LIMITATIONS
RETAIL INSURANCE
$1.5 million – 16 to 45
$1 million – 46 to 55
$500,000 – 56 to 65
No limit
•
Funeral Benefit - $15,000
•
Funeral Benefit - $30,000
•
TPD must be “bundled”
with life
•
TPD may be stand alone
or bundled
•
Total travel advisory
exclusion at time of claim
•
May nominate a business,
individual or trust
•
Cannot nominate a
business as policy owner
•
Level or stepped premiums
•
No level premium option
TPD Cover
DIRECT INSURANCE
TYPICAL
LIMITATIONS
RETAIL INSURANCE
$1.5 million – 16 to 45
$1 million – 46 to 55
$500,000 – 55 to 59
Nil – 60+
Maximum benefit of $5 million
•
•
•
•
•
•
•
3 month claim qualification
Total exclusion for “motor
sports”
Must be “bundled” with life
Normally only “any” occupation
Cannot nominate a business
as policy owner
No level premium option
•
•
•
•
•
•
Loss of limbs and sight
Partial payments
Early payment for serious TPD
(3 month qualification waived)
May be stand alone or bundled
“Any” or “Own” occupation
May nominate a business,
individual or trust
Level or stepped premiums
Trauma Cover
TYPICAL
LIMITATIONS
DIRECT INSURANCE
RETAIL INSURANCE
Lesser of $500,000,
or 50% of Life Cover benefit.
Maximum benefit of $2 million
•
•
•
•
•
•
Only 4 conditions - Heart
Attack, Cancer, Stroke and
Coronary Artery Bypass
Serious Injury Option that
includes: Paralysis, Blindness,
Deafness, Loss of 2 Limbs
(due to accidental injury)
Pre-existing condition clause
Cannot nominate a business
as policy owner
No level premium option
•
40+ conditions
Level or Stepped premiums
Income Protection Cover
DIRECT INSURANCE
$3,000 to $10,000 per month
TYPICAL
LIMITATIONS
•
•
•
•
•
•
•
Covers “accidental injury” only.
Waiting period - 30 or 90 days
Indemnity
Payable for either 6, 12 or 24
months
Must be totally disabled for
entire waiting period
No partial disability payments
Second claim not paid for
same or related cause
RETAIL INSURANCE
Maximum benefit =
$30,000/month
•
•
•
•
•
•
•
•
Payable up to age 65
Agreed or Indemnity
Level or Stepped premiums
Super continuance
Medical professionals benefit
Rehabilitation Benefit
Waiver of premium
(unemployed, maternity)
Waiver of waiting period for
specific conditions
Child Cover
DIRECT INSURANCE
TYPICAL
LIMITATIONS
RETAIL INSURANCE
$20,000 to $50,000
Maximum benefit of $250,000
•
•
•
•
•
Accidental Death, Paralysis,
Blindness, Deafness, Loss of
use of 2 limbs, Encephalitis,
Meningitis, Major Head
Trauma
Excludes any congenital
condition
3 month qualification period
on all benefits
No level premium option
•
•
38 Conditions
3 month qualification period
only on Heart Attack, Cancer,
Stroke, & Coronary Artery
procedures
Level premium only
Premium Comparison
Male Non-Smoker
AGE
30
35
40
45
50
93%
109%
138%
145%
134%
177%
194%
188%
174%
136%
OnePath - EasyProtect Life
93%
95%
100%
106%
103%
ClearView - Life Insurance
185%
195%
195%
189%
174%
Medibank - Life Insurance
132%
135%
139%
130%
127%
Citibank - Pure Life
165%
178%
194%
181%
172%
Suncorp - Life Protect
140%
151%
166%
155%
149%
MLC - Essential Life
155%
152%
150%
150%
137%
Virgin Life - Tailored Life Insuracne
214%
211%
199%
180%
161%
Priceline - Priceline Protects
228%
255%
257%
256%
225%
AIA Australia - Life Cover - & Crisis Recovery & TPD
101%
96%
93%
97%
96%
AMP Life - Flexible Life Time Prot - Crisis Cover Standard & TPD
100%
103%
103%
104%
106%
TPD
Asteron Life - Life Cover
104%
104%
99%
102%
117%
$500,000
AXA - Life Insurance Plan - Trauma
105%
104%
102%
102%
105%
97%
102%
98%
104%
103%
CommInsure - Total Care Plan
100%
100%
100%
100%
100%
TRAUMA
MLC Insurance - Life Cover Insurance - Plus TPD extension of CI
104%
104%
106%
108%
108%
$50,000
Macquarie Life - FutureWise Life
99%
99%
103%
104%
108%
OnePath - OneCare - Comprehensive
97%
99%
102%
106%
111%
TAL - Life Insurance - Critical Illness Standard TPD
93%
94%
94%
97%
107%
Zurich Australia - Protection Plus - & Basic Trauma
96%
96%
96%
96%
97%
GE Money - Life Protect
HCF - Smart Term
DEATH
$500,000
BT - Term Life - Living Insurance TPD
Premium Comparison
Female Non-Smoker
AGE
30
35
40
45
50
75%
79%
121%
138%
139%
130%
155%
187%
178%
136%
OnePath - EasyProtect Life
91%
90%
95%
103%
109%
ClearView - Life Insurance
162%
196%
189%
204%
178%
Medibank - Life Insurance
135%
149%
138%
130%
121%
Citibank - Pure Life
199%
227%
223%
214%
195%
Suncorp - Life Protect
168%
193%
190%
184%
168%
MLC - Essential Life
108%
102%
152%
172%
144%
Virgin Life - Tailored Life Insuracne
245%
232%
204%
202%
171%
Priceline - Priceline Protects
146%
200%
239%
230%
199%
89%
96%
95%
94%
93%
AMP Life - Flexible Life Time Prot - Crisis Cover Standard & TPD
104%
110%
107%
112%
106%
TPD
Asteron Life - Life Cover
103%
99%
96%
99%
109%
$500,000
AXA - Life Insurance Plan - Trauma
104%
104%
103%
102%
100%
91%
95%
100%
103%
99%
CommInsure - Total Care Plan
100%
100%
100%
100%
100%
TRAUMA
MLC Insurance - Life Cover Insurance - Plus TPD extension of CI
108%
111%
108%
110%
106%
$50,000
Macquarie Life - FutureWise Life
103%
104%
103%
104%
101%
OnePath - OneCare - Comprehensive
97%
96%
100%
105%
108%
TAL - Life Insurance - Critical Illness Standard TPD
92%
94%
93%
97%
104%
Zurich Australia - Protection Plus - & Basic Trauma
97%
98%
98%
94%
94%
GE Money - Life Protect
HCF - Smart Term
DEATH
$500,000
AIA Australia - Life Cover - & Crisis Recovery & TPD
BT - Term Life - Living Insurance TPD
Product design
GROUP
INSURANCE
Fewer stand
alone policies
FBT & ETP
Super funds
demanding
Legislation dictates
policy design in Super
More features
Lower premiums
Will see standardisation
Death & TPD cover –
minimum sums insured
TPD – move to “true”
any occupation
Income Protection –
indemnity only
Trauma – Prohibited
from 1 July 2014
Summary
Summary
Blurring of
products
between
Direct,
Retail &
Group
Multiple
methods of
distribution &
engagement
Need
“whole
of life”
concept
of client
Education
is vital!
Psychology of
Selling Risk
Tom Cincotta
State Manager Vic Tas
CommInsure