Pandemic drums up life insurance demand amongst Australia's wealthy

But it has also crippled away at HNWs trust on insurance providers.

‘Panic’ buying extends to life insurance products in Australia as the number of Australians concerned about COVID-19 is on the rise again. However, the pandemic is serving as a double-edged sword, with trust in insurance providers having deteriorated, says GlobalData, a leading data and analytics company.

Demand for life insurance products amongst high-net-worth (HNW) Australian investors has increased because of the COVID-19 pandemic, a survey by data and analytics firm GlobalData found.

Survey results amongst wealth managers in the country show that 88% of respondents reported increased demand for life insurance products as a result of the COVID-19 pandemic. This is the highest proportion amongst the 19 markets surveyed by GlobalData.

The pandemic is the primary reason cited for driving this demand.

“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,” noted Heike van den Hoevel, senior wealth management analyst at GlobalData.

More than six in 10 (61.5%) Australians believes that the pandemic situation will get worse over the next month, according to a separate COVID-19 tracker survey by GlobalData. This compares to only 28.7%, who expected the situation to deteriorate at the beginning of May.

Further, 83% of Australians expressed that they were ‘quite concerned’ or ‘extremely concerned’ about the outbreak of COVID-19, as of 5 August. Another 12.1% were ‘slightly concerned’, leaving a mere 5% who voiced no concerns.

This negative sentiment will continue to support the demand for life insurance products.

But loss of trust could serve as a barrier for growth amongst providers, with 96% of wealth managers in Australia noting that customers have lost confidence in the life insurance industry as a result of the COVID-19 pandemic, according to van den Hoevel.

“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. This means now is clearly the time for wealth managers to review their life insurance proposition,” he concluded.

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