Two in five customers are not familiar with the details of their insurance policies, according to the latest study by AIA Singapore as it announced today (19 August) an initiative to help customers better understand their insurance policies, improve their financial literacy in a continued bid to bridge the nation’s protection gap.
Through this initiative, the organisation aims to encourage more Singaporeans to attain adequate protection, it said.
Alarmingly, a recent study commissioned by AIA Singapore found that over 2 in 5 customers are not familiar with the details of their insurance policies.
The survey also found that the majority of customers are most likely to selectively read their policy documents. Accordingly, customers’ top three reasons for skimming or not reading their policy documents are — that the information is difficult to understand, lack of time for a more thorough read, and ease of tapping into their insurance representatives for advice.
Irma Hadikusuma, chief marketing and proposition officer of AIA Singapore said: “Minimising jargon in our policy documents and simplifying them will enable everyone to better understand what their policies cover and don’t cover, allowing them to identify their protection gaps.
“Enhancing financial literacy and holistic wellness can go a long way with clear communication, and we hope this initiative serves as an effective step in that direction.”
AIA Singapore’s initiative is set against the backdrop of significant protection gaps in the country. There exists a 74% gap in critical illness protection and 21% gap in mortality protection, according to the 2022 Protection Gap Study by the Life Insurance Association, Singapore.
While young adults aged 20 to 24 and fresh graduates face significant protection gaps, external research shows that they have an interest in purchasing insurance but lack the necessary knowledge to make informed decisions.
Moreover, the survey found that the use of simple and plain English enables most consumers to feel more confident about purchasing insurance policies on their own.
“Compared to more matured generations, younger consumers tend to be more active online. In fact, our study[5] found that over half of them are likely to explore digital touchpoints to expand their knowledge about insurance.”
“Alongside our efforts to continuously enhance the skills and competencies of our insurance representatives, this initiative serves as an avenue for us to enable our customers to proactively protect themselves against financial uncertainties — especially amid rising costs of living and healthcare”, Irma added.
AIA Singapore’s commitment to enabling customers to better understand their insurance policies, will be implemented through a multi-phased approach, starting with AIA HealthShield Gold Max (AIA HSG) policy materials. Customers with AIA HSG plans will be informed progressively from 27 July 2024.
