Clever marketing without all the facts

A media release on the 17th of July advised of a decision by the Australian Security and Investment Commission (ASIC) notifying a large corporation that their advertising of an insurance product was potentially misleading. An add running last year mostly on outdoor media and buses claimed Woolworths car insurance saved customers, on average, $240. It did have a disclaimer at the bottom of the add but really, when it blasts past you on a bus how are you supposed  to read it. After initially not commenting, Woolworths came out and said in response to ASIC's concerns, "we accept ASIC's feedback and will this into account when we run this sort of marketing in the future." And that's it!.........

It's interesting because for many years we've watched the way Insurance is sold in the media and it totally devalues or derails the entire purpose of having insurance correctly put together for your individual needs. In response to the Woolworths case some industry peers have come out and commented from the Insurance broker perspective. Andrew Fabar of MGA says, "Buying Insurance via Supermarket implies that the only consideration consumers make about the product is price." he goes on to say, "If you're buying from a supermarket you're probably not taking the time to read a 50 page product disclosure statement at the point of sale and no one is taking the time to tell consumers what the difference in cover is."

So we buy protection of our life, family and assets off a shelf like a bottle of Sauce.

We've commented on perception of Insurance in various blogs previously and this event from last week only highlights further the problem. Another case in recent weeks related to Funeral Cover and how it is sold in the media. It's important that when you look into this product you understand what the benefits payable are  and whether simply putting money in the bank is a better option. You can also now get funeral cover with a credit for your Power Bill!!

In a number of recent work groups and interviews we've commented on how Insurers are afraid to sell the benefit of their product to their consumers. It simply makes no sense. For as long as I can remember we've been sold a humorous story about how we should purchase insurance from a certain company. We even get suckered into the 'tension' between Rhonda and Katut before even knowing what the product can do. Why?? 

We sit back of an evening and watch some TV and it seems every break at the moment an 'actor' tells us about how 'Sarah saved $701.' Funny though that they leave it there. It's now up to you to figure how and why. We did an exercise on that insurer that makes these claims last week against our AIMS private Motor Policy wording. I wont go into every in and out but the results where alarming. 

Some of the basic differences was the basic excess was $900 compared to $500 dollars. The undisclosed driver excess was over $2,000 compared to Zero. Also when looking at key benefits the sub limits were often lower by half what you would get on our AIMS policy. In this one example we ran we also came out $150 less on premium by the way. So this client not only gets higher benefits and more manageable excesses but a lower premium.

With a number of the direct insurers it's what they are not telling you that you need to be cautious of. When the QLD floods were on a few years back a number of insurers were under the microscope for alleged unclear policy conditions and not openly disclosing cover. We wont go too deeply into this but suffice to say 2 years on and we are still seeing the same style of advertising from the same insurers! So it's fair to say that nothing has been learned. 

We applaud GIO who appear to be taking an angle showing what Insurance does for the community in their recent run of commercials. It at least goes into "product" and at no stage touches on "price." We would love to see every Insurance commercial not use words like "save," "price", "Less," "Lower," or " Cheap." Another supermarket giant 'Drives prices down!' Even on your insurance. Having tested their product we know that again cheap is often not cheerful and comes with lower benefits. 

Remembering that with Insurance it is only tested when something happens. Why find out then that your insurance payout is potentially thousands less or worse still does not cover you at all. Some policies have limits on how far you drive your car. Have you then turned around and asked them what happens if we go beyond that 'short distance to work.' Or what if on a particular day my car was not parked in my garage.

Do a Google search on 'cheap insurance'and see what comes up. When the first word you see is Budget alarm bells should be ringing. You've then got a 100% online insurance company. Meaning there is no one to talk to about what is best for you. A predetermined set of formulas will advise on how to best protect yourself. You've also got a comparison site that is actually run by a company who IS one of these direct insurers. 

As our earlier example showed you often don't need to compromise cover to get a competitive premium. There are so many factors go into insurance trying to analyse them in a 30 second commercial is nigh on impossible. So why go for the 'cheap' angle? Why not sell the benefits. If paying maybe $100 more to get thousand more in benefits and the comfort of knowing your policy will respond, i'd do it every day of the week.

As Insurance agents we 100% represent you in insurance dealings, NOT Insurance companies. We also have used our buying power to negotiate industry leading policy wordings that include benefits that are tailored to your needs. Try to look beyond the marketing and consider what would I do if I had a fire at my home? Will that premium saving translate into a positive result in rebuilding our home and life. Consider the Policy Disclosure statement of any Insurance product you may purchase and ask as many questions as you need until satisfied that you are getting the product you need. Likewise talk to a broker or adviser who is trained and licensed under the Corporations Act to give you advice on Insurance products.

** Information provided within this blog is of a general nature and no individuals personal circumstance has been taken into consideration. Please read the relevant PDS and ensure the policy meets your needs. Examples provided were for internal comparison purposes only based on a 33 year old male client driving an 8 year old hatchback living in postcode 2040.