The necessity of income protection (IP) has been communicated well through the advice channel, but the insurance industry itself needs to collectively lift its game, according to insurance providers.
"There's still a challenge that we have in positioning the need for IP and it's not an independent financial adviser thing, it's a community awareness issue," BT national life insurance product manager Scott Moffitt told InvestorDaily.
"There are a lot of people with the view that the government will protect them or someone else will look after them.
"So how does the industry position IP versus workers' compensation, social security and national disability schemes?"
Real-life examples to illustrate the potential loss to people were a positive way of pitching IP to the public as it needed to be better publicised, Moffitt said.
"There's not an awareness of IP and discussions in offices or building sites are always around workers' compensation, primarily because it's mandated protection and written as part of the employment," he said.
"There are alternative ways in which the industry can promote IP and maybe that needs to be [discussed] more through the employers and to try to push the obligation through small businesses or larger employer groups to promote the need."
The true cost of IP needed to be addressed as the public still perceived IP as expensive and unaffordable, he said.
Asteron Life executive general manager Jordan Hawke said the education piece around the role of insurance needed to occur on a community level.
"The underinsurance issue in Australia just doesn't seem to be going away," Hawke said.
"It's about consumer education, demystifying the benefits of IP, the definitions and what it actually pays.
"Once we do that and start telling the stories of insurance and the benefits of having it, then people will actually buy it once they get to that point [of understanding]."
According to Rice Warner research, people without adequate IP cover cost the government $74 million a year, he said.
"This is a major issue, which the government obviously recognises as a massive cost, so if people knew IP was tax and cost effective, that would relieve the burden on the community," he said.
The media attention around dodgy or unpaid claims practices has also contributed to the negative public perception of insurance.
"What we're trying to get out there to advisers and to the public is that we do pay claims," AMP head of product on-sale John Ashton said.
"I think it's in excess of 96 or 97 per cent of claims that are paid.
"We really need to push that message out there around the perception of claims and that there aren't issues in that space anymore."
The challenge would be how to better communicate those numbers to the public, Ashton said.
ANZ Wealth head of product, marketing and reinsurance Gerard Kerr said the industry had to continue to promote the number of people who had benefited and how much had been spent in terms of the claims the industry paid.
"That's not going to be easy; you can't just do one campaign and that's it," Kerr said.
"Getting there is a journey, but we will get there slowly but surely."
AIA chief distribution and marketing officer Damien Mu said while the government lent its support to the life insurance industry, it could use public announcements akin to drink driving campaigns to promote greater awareness.
