Consumer interest in risk insurance could dwindle as markets recover post the onset of the global financial crisis, Asteron general manager Jordan Hawke has said.
"Initially the belief was that the spike in risk sales was driven by more planners moving into the risk space in order to create alternative income streams as practice revenues suffered," Hawke told InvestorDaily.
"However as time went on, we realised that while that might have been the intention of some planners the leading driver of risk insurance sales was a lack of consumer confidence.
"Consumers saw frailty in the investments markets during the economic downturn, so there was a flight to risk in order to protect their assets and their income."
Whatever the drivers were, Hawke said the downturn was a good opportunity to address the underinsurance problem, with many Australians finally starting to take note.
"With the end of the global financial crisis now signalled, however, risk insurance sales could potentially slow as consumer confidence in investment markets grows and clients see less importance in taking out protection," Hawke said.
"As has been the case over a number of market cycles, the focus on risk could taper off as investor confidence is regained.
"This behaviour is an unusual phenomenon and counterintuitive as regardless of markets bouncing back, there is always a need for risk insurance, particularly now as debt levels in many instances remain unchanged."
Hawke said while currently risk advisers were writing as much if not more risk insurance than before, it was important they retain client momentum and awareness of the importance of insurance.
