There is growing conservatism in Australia according to a study commissioned by Swiss Re which shows 20 to 40 year olds have become less willing to take risks over the past two years.
Whereas in 2009 Australians had the highest appetite for consumer and business risk in the Asia-Pacific region they now rank 3rd behind Japan and Hong Kong.
The survey – Risk Appetite and Insurance Asia-Pacific 2011 – covers 13,800 consumers aged 20 to 40 across 11 Asia-Pacific countries. It aims to identify any changes in consumer risk attitudes as compared to the results of the inaugural study conducted during the Global Financial Crisis in 2009, by using the Swiss Re Consumer Appetite for Risk Index (CAFRI) (Figure 1).
Neil Sprackling, Swiss Re’s Head of Life and Health Client Markets, Australia and New Zealand, said: “After the Global Financial Crisis and a string of natural catastrophes in the region, Australians aged 20 to 40 have become prudent across every risk aspect measured in this study, namely finance, career, health and lifestyle.”
For instance, the study finds that a large majority of respondents in Australia (66%) are concerned about their financial future, but only 41% have clear financial plans to follow through. This action gap has only marginally narrowed over the past two years (64% and 33% respectively in 2009).
Strong life/health protection needs
The study also reveals that 41% of respondents in Australia say their families would or might struggle financially in case of early death, major serious illness or disability, and the key reasons are inadequate savings/investments (87%) and inadequate insurance (58%).
56% plan to buy life/health insurance in the next 12 months.
Mr Sprackling said: “The good news for insurers is that 56% of respondents in Australia are planning to buy life/health insurance products in the next 12 months.”
However, the survey identified the major barriers to purchasing insurance – cost and the lack of available funds.
Despite the perception that life insurance is expensive, over half of the survey respondents were willing to pay at or even above the market price for a pure life insurance product.
Sprackling continued: “This perception gap in customers’ minds is an opportunity for the life insurance sector to reach out and provide greater clarity to consumers on the relative cost and value of pure life insurance.”
Internet most preferred in Australia
The survey also shows that the internet is most preferred by respondents in Australia for sourcing financial information (69%). Social media is not yet popular for getting financial information in Australia (9%).
Figure 1: CAFRI ranking and index values in 2011
Note: The higher the index value, the more willing consumers are to take risks, and vice versa.
Figure 2: Ranking of consumer risk attitudes in 2011
Note:1 being the highest ranking, denoting the market most willing to take risk overall and with respect to individual risk aspects.
Published September 2011
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