The life industry is failing to build “lasting relationships” with customers, with nearly 40% saying they rarely hear from their insurers after purchase, according to a Capgemini report. 

The report is based on a survey of 6175 respondents globally, including 425 in Australia. 

About 41% of Australian respondents say they were rarely or never contacted after making a purchase; 76% say the only contact was for bills and renewals; 42% dump their policy within three years; and around half plan to use artificial intelligence to compare policies. 

Capgemini global head of life, annuity and benefits industry Samantha Chow says the Australian life insurance market is at an “important inflection” point. 

“The need for protection remains strong, but the industry is facing a relevance challenge as consumers struggle to understand how life insurance fits into their lives and the value it provides,” she told insuranceNEWS.com.au. 

Ms Chow says the Australia findings are concerning but unfortunately not surprising. 

“Life insurance has traditionally had too little interaction between purchase and claim, and that post-sale silence makes it difficult for consumers to continually understand and appreciate the value of their coverage,” Ms Chow said. 

“The biggest risk for the industry is not that consumers no longer need protection; it is that they stop seeing traditional life insurance as relevant to their lives.” 

Ms Chow urges the industry to review its customer engagement approach. 

“That means simplifying products and language, using data and AI to better understand changing customer needs, and delivering relevant education and guidance before, during and long after the initial purchase,” she said. 

“The opportunity is to shift from simply selling a policy to building a lifelong protection relationship … one that combines relevant products, education and transparency, trusted human advice and intelligent technology.” 

The joint report with the Life Insurance Marketing and Research Association says the industry is facing a “relevance” challenge. 

About 47% surveyed globally are considering purchasing a life insurance policy, yet more than 40% of those feel confused, uncertain, or unconvinced with the information they find. 

“For the life insurance sector today, the primary challenge is not a lack of demand, but rather consumer misperceptions about cost, product relevance, and even specific features,” the report said.  

“These shortcomings directly correlate to policy lapse rates and early cancellations, with potentially severe financial consequences for life insurers. 

“Among customers who discontinue their policies, nearly half do so within three years of purchase, long before insurers can recover their acquisition costs or build lasting relationships.”