The life insurance industry has failed to convince Australian consumers to buy any cover, says AIA Australia Head of Adviser Services Pina Sciarrone.

“We have failed as an industry as we haven’t convinced the Australian public that life insurance is really important,” she told an Association of Financial Advisers roadshow in Melbourne last week.

“We haven’t sold the value of life insurance and the value of advisers.”

Ms Sciarrone was referring to Coredata research commissioned by the AFA and sponsored by AIA that found 43% of people without life insurance rated home and contents as the most important form of insurance.

Only 5% rated life insurance as important and they put comprehensive car insurance (41%) and medical insurance (28%) ahead.

Even those consumers who have life insurance rated home and contents insurance (44%) as the most important form of cover, with only 18% rating life insurance top.

“As a nation and an industry we still have a lot of work to do to address underinsurance,” Ms Sciarrone said.

“There is a clear need to better educate consumers on risk.”

Although Australia has the eighth-highest GDP per capita in the world, in terms of life insurance premium per capita we are 18th^, with an average premium of only $US1525 ($1379) per person.

The top country for premium per capita is Japan with $US33,632 ($30,431) per person. Australia’s premium as a percentage of per capita GDP is 3.3% compared to Japan’s 8.1%.

The survey found those who have life insurance believe five times income is adequate cover. Actuaries Rice Warner recently recommended 10 times income.

“We are not engaging enough with consumers and we need to help them better identify the risk and ways to deal with it,” Ms Sciarrone said.

“Life companies and advisers can do a better job of selling the value of insurance.”

She says the industry must make clients “life insurance advocates” to encourage more people to take out cover.

The industry also needs to overcome the perception that life insurance companies don’t pay claims. According to The Risk Store, the life insurance industry paid $3.5 billion in claims in 2010.

“Advisers need to put claims stories on websites and in newsletters telling prospective clients about what we do when things go