COVID-19 is having a “big impact” on financial vulnerability according to data gathered by Suncorp New Zealand, with over a quarter of New Zealanders reporting as ‘financially vulnerable’ in its weekly consumer survey - however, most customers have only cut on their financial protection costs as an “absolute last resort.”
Executive manager consumer insights and culture Claire Sutton says that according to its data, 26% of New Zealanders are still reporting as financially vulnerable. The impact is substantially bigger on business owners, who are facing significant challenges to their livelihoods as New Zealand continues to move through alert levels.
Despite this, she says that insurance plans covering mortgages, health, life and business have been far from the first thing to go.
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“The effects of COVID-19 and the government-lockdown represented an unprecedented time for New Zealand, and in order to support our customers as best we could we wanted to make sure we understood the impact it was having in real time,” Sutton explained.
“We implemented a weekly consumer sentiment tracker to give us an understanding of how New Zealanders were feeling and the impact of COVID-19 on their behaviour, their needs and their expectations of large companies such as ours.”
“The results showed that COVID-19 is having a big impact on financial vulnerability,” she continued.
“On average around 26% of New Zealanders continue to report as financially vulnerable compared to 18% prior to the first lockdown. The impact on business owners is even bigger, with 39% of business owners reporting that they are now struggling to make ends meet in their personal lives, compared with 21% pre-COVID.”
Sutton says the results clearly indicated a strong need for consumer support, but that New Zealanders have generally been trying hard to keep their insurance in place. According to Suncorp’s results, customers have generally only looked at cancelling cover when there was no other option, and are making use of hardship funds such as the $10 million provided by Vero.
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“This showed us that we needed to find ways to support those consumers, and to make use of the work we had been doing to support those experiencing vulnerability,” Sutton said.
“The research has shown that in times of financial hardship, New Zealanders are thinking about their finances and how this will impact their ability to hold on to their insurance. In general consumers are reporting that they would be trying hard to keep their insurance in place and might be more likely to shop around, but a lot reported that they would only cancel their cover if they had to as an absolute last resort to save money.”
“This is one of the reasons that we implemented a hardship fund,” she concluded.
“Vero has made up to $10 million available to help customers who are experiencing a reduced income due to COVID-19 to keep their insurance in place.
“For personal insurance customers this is usually in the form of short-term premium waivers that don’t need to be repaid and for business customers it’s often in the form of discounts or payment options.”