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2020 Vision
Shift the Narrative

Willis Re International chairman urges the industry to create stories tailored to its customers about the importance of buying insurance protection.
  • Meg Green
  • December 2019
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RECOVERY STORY: The insurance and reinsurance industry played a vital role in rebuilding Christchurch, New Zealand, after a 2011 earthquake caused NZ$16.7 billion in insured losses. New Zealand’s recovery story illustrates the value of insurance.

 

A large portion of the world's risks will remain uninsured unless insurers and reinsurers better demonstrate the protection and restoration their products can provide, said James Vickers, chairman of Willis Re International. Vickers spoke with AMBestTV at the Global Insurance Forum, held in Singapore.

Vickers said society as a whole doesn't acknowledge how important insurance and reinsurance were in rebuilding New Zealand's economy after the 2011 Christchurch temblor. As of January 2015, insured losses totaled NZ$16.7 billion, according to Munich Re. “They do not understand just how much money the insurance and reinsurance industry put into the New Zealand economy and what would have been the effect to the New Zealand economy had there not been a global reinsurance industry prepared to help.”

Following is an edited transcript of the interview. 

What does the insurance industry need to do to close the protection gap?

The challenge for the insurance industry is distribution. It's how to sell more insurance product to people who are not buying at the moment.

The insurance industry is doing a decent job in terms of managing capital, raising capital and product design. Yet even in the most developed markets, we've seen in some recent major catastrophes there's still huge underinsurance, people just not buying the product at all. We then translate that down into emerging and developing markets, the situation is obviously far worse.

We have to ask what it is about insurance. Why are people not interested in buying? The insurance product is sold rather than bought. We have to ask some very fundamental questions about that.

Yes, there's a huge amount of talk these days, very encouraging, about different forms of distribution, the rise of mobile telephones which is reaching swathes of population that never had access to this before.

James Vickers Willis Re International

There has to be a fundamental shift in the way that the industry portrays itself to society as a whole and the way that the value of insurance is portrayed.

James Vickers
Willis Re International


But even once we find ourselves partnered up with the right providers and maybe producing product appropriately pitched at different sectors of society, we still face the problem: How do we persuade people that they should buy even a product with a very small premium, but it's still a chunk, a big chunk of their disposable income? Why should they invest that?

Half of the problem has to do with human behavior. Insurance protects downside risk, the nasty things that can happen to you in life, not the good things.

Of course, people don't want to think about the nasty things, they blank it out of their minds. If something horrible happens, they think, “Well, I'll try and deal with it then.” In many cases, if it's a large natural catastrophe, a pandemic event, the government steps in and provides some sort of support. All of that acts as a dampening effect.

There has to be a fundamental shift in the way that the industry portrays itself to society as a whole and the way that the value of insurance is portrayed.

If you look at most countries, you look at most particularly personal lines of insurance, it's seldom priced. It's not sold on value. Very rarely will policy terms and conditions be discussed. It's you can get cheaper car insurance or motor insurance here.

We have to shift that narrative. The way to do it is actually to start talking about stories—individuals, communities, businesses where something unpleasant happened—and the insurance industry was able to step in and help and provide both financial help, and in other cases, more than financial help, to restore people to the position they were before.

Obviously, those stories have to be very tailored to the individual sector, the country, the culture that we're talking about, but that shift needs to happen.

Yes, of course there can be some pushing through other channels, particularly banks, other forms of finance. People talk a lot about embedding insurance product. That may help a little bit, but I still worry about that.

If the insurance product is embedded, people don't understand they're buying insurance. They think they're buying a fridge, and they've forgotten or they ignore the fact that within that they've actually got an insurance product which will replace it if it breaks down.

This is the big challenge for the industry and requires a paradigm shift in how we present ourselves to society as a whole.

How do you do that shift? How do you change the stories? Do you see that as a promotion, as a commercial?

It has to be a lot more than that. Just a few promotions and commercials doesn't really work. It has to be a concerted campaign over many, many years.

The image that the insurance industry has is not great. We're not seen as being particularly helpful. We're seen as an industry that takes in money and then when a claim happens, we are regularly paying out. We have to change that.

You're not going to change people's attitudes easily and quickly, but by consistently over time telling stories about how communities have been restored and individuals' lives, and families have been able to carry on. Over time I think that will change. I'll give you an example on a macro level.

All of us in the insurance industry know that the New Zealand economy was basically rebuilt by the global insurance and reinsurance industry after the terrible earthquakes. We know that, society as a whole does not understand that.

They do not understand just how much money the insurance and reinsurance industry put into the New Zealand economy and what would have been the effect to the New Zealand economy had there not been a global reinsurance industry prepared to help.

That's a very simple story. Of course, there are others we should talk about, about the individual, the breadwinner in the family who fell ill, and their family is on a subsistence level and they would face total destitution if there wasn't some form of even modest insurance policy to help the family tide over that period.

It's a whole series of interconnected stories. We need to be quite clever about tailoring those stories correctly in different countries and different cultures and tailor it to different sectors of society that we're trying to reach.

 

 


Meg Green is a senior associate editor with AMBestTV. She can be reached at meg.green@ambest.com.


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