Consumers do not trust life insurers to pay claims, according to a new report from the Association of Financial Advisers and BT.

“Public perceptions of the insurance industry are overwhelmingly characterised by a lack of trust,” it says. “This is driven by a belief that insurance products lack transparency, a view that insurance companies are too focused on the dollar and the adversarial attitude of insurance companies towards paying claims that is a legacy of the past.”

The report draws on research by the Beddoes Institute, which held in-depth qualitative interviews with 10 insured people aged 32 to 46 from Australia’s eastern-seaboard states.

It says there is also a “significant” lack of understanding about life insurance products.

“The underinsurance problem in Australia is undoubtedly complex and multifaceted, with the lack of trust of the insurance industry being a significant contributing factor.

“This, combined with an entrenched belief that ‘it won’t happen to me’ and poor awareness and understanding of products, means consumers ‘devalue’ personal insurance, which underpins the low uptake of cover.”

For a full analysis of the report, see Life+Health insuranceNEWS.com.au on Wednesday.