Coordination is key for insurance consumers

By Dan Costello, CEO of AIA Life Korea

How do we create an environment where consumers receive the best information and the best options when they make insurance and investment decisions? There are three institutions that can help.

First, we need a strong, informed government regulatory and tax framework designed to encourage people to purchase their own private insurance policies. These private policies supplement government social programs and provide consumers with greater financial security. Globally, we see governments straining under the weight of the increasing cost of broad social programs - some of which are unsustainable.

Cutbacks in these benefits are inevitable. For this reason, regulation and tax policy that provide financial incentives to purchase long term Life, Medical and Retirement Savings insurances benefit both the consumer and the government.

Second, we need a strong insurance industry with professional advisors who can help translate consumers’ individual insurance protection and investment needs into real solutions for their financial security.

When consumers receive bad advice, and make the wrong choice, they often drop their Life insurance or investment contract after a couple of years. Stopping a contract very early costs the consumer (and the insurance company) significant losses.

By contrast, an insurance contract that truly solves a consumer’s real problem will stand the test of time and be a very good deal for the consumer for 10, 20 or 30 years. Good advice from a professional who has a long term career in the insurance industry is the key to giving consumers exactly what they need, and that’s the best long-term value.

To attract high-quality professionals, it’s important that we don’t restrict the earnings potential for insurance advisors. This is in the best interests of the consumer. Most people wouldn’t want to go to the “cheapest” heart surgeon, and, by the same token, they shouldn’t trust their financial health to the “cheapest” advisor.

Finally, it’s important that a vibrant press shine a light on the real issues that consumers face. Recent examples include the press’s focus on cancer incidence rates and the insurance needed to cope with the expenses for care.

In addition, we need to highlight the gap between the insurance protection people have and the protection they really need. For life, medical and retirement savings, people are very under insured, and it’s important that the press continue to help increase awareness of this fact.

If government, the industry and the press work together to encourage consumers to consider the right long-term insurance for their true needs, consumers are the winners.