The company’s head of wealth management Michael Hutton said that the take-up of insurance products could be hindered by labelling, which investors may not understand.
“It’s all very well for the financial services industry to come up with a new description, or coin phrases that are meaningful within the industry, but if investors don’t understand what it means, or it suggests negative connotations to them, this is clearly going to affect their decision,” Mr Hutton said.
“For example, the development of the term ‘risk products’ to replace the name ‘insurance’ may make sense to those in financial services, but if it confuses people. It is counter-productive.
“With most Australians under-insured, steps should be taken to make insurance more accessible and understandable, not potentially seen as ‘risky’.”
Mr Hutton said that changes in labelling might make sense for those in the industry but can have unintended connotations for consumers.
He said in the case of insurance, the term 'risk' could be another barrier to the take-up of additional products needed for adequate coverage.
“In investment terms, ‘risk’ is normally used to describe volatile investments such as shares,” Mr Hutton continued.
Mr Hutton said that it is important that the industry looks to increase awareness of cover, rather than contributing to the under-insurance problem.
“Every working Australian should consider at least three insurance products – life, loss of earnings and trauma,” Mr Hutton said. "Other considerations flow from this, such as how much cover is adequate, where is it needed and why
“However, if some-one has already been put off by the word ‘risk’, they might not be listening anymore.”
