Life insurance has joined the ranks of toilet paper, hand sanitiser, and pasta as items which have been subject to panic buying during the COVID pandemic.
Data and analytics company GlobalData has found that panic buying now extends to life insurance products in Australia as the number of Australians concerned about COVID-19 is on the rise. However, trust in insurance providers remains low.
GlobalData’s 2020 Global Wealth Managers Survey showed that COVID-19 is driving demand for life insurance products among Australian high-net-worth (HNW) investors.
Survey results found that 88% of wealth managers reported increased demand for life insurance products as a result of the COVID-19 pandemic – the highest proportion among the 19 countries surveyed.
Heike van den Hoevel, Senior Wealth Management Analyst at GlobalData, says: “Panic buying does not end with food. In the face of growing concerns surrounding infections, Australian HNW investors are looking for ways to care for their families.”
Data from GlobalData’s COVID-19 Tracker Survey found that 83% of Australians were “quite concerned” or “extremely concerned” about the outbreak of COVID-19, as of 5 August. Another 12.1% were “slightly concerned”, leaving just 5% who voiced no concerns.
In addition, 61.5% of Australians believed that the COVID-19 situation will get “a bit” or “a lot worse” over the next month. This compares to only 28.7%, who expected the situation to deteriorate at the beginning of May.
Ms van den Hoevel added: “This negative sentiment will continue to support the demand for life insurance products. Roughly half of the wealth managers GlobalData surveyed expect demand to continue to rise over the coming year while virtually none expected demand to fall. However, the lack of trust in insurance providers continues to have a significant effect on the provider selection. The crisis has been a double-edged sword – COVID-19 is driving demand but has also had a negative impact on the insurance providers’ image.”
According to GlobalData’s proprietary data, 96% of wealth managers agree that customers have lost confidence in the life insurance industry as a result of the COVID-19 pandemic.
“This is a worrying statistic – the reputation of insurers has taken a battering amidst COVID-19 and HNW investors will be more likely to buy insurance products via a third party they already have a well-established relationship and trust,” explained Ms van den Hoevel. “This means now is clearly the time for wealth managers to review their life insurance proposition.”