Upskill: how to help customers experiencing financial hardship

Vol 48 Issue 1

In short

• Insurers have an ethical and regulatory obligation to assist customers facing financial hardship and vulnerability.
• Support can include offering premium waivers and access to high-care teams in the case of vulnerable customers.
• Adhering to strict compliance rules must be part of insurers’ response.

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Soaring living costs, stubbornly high inflation and rising threats such as family violence are a triple-whammy taking a toll on communities and forcing insurers to consider how they can respond to help customers in vulnerable situations.

According to recent Real Insurance research, about seven in 10 Australian households are dealing with financial stress.

While specific insurance-industry figures are difficult to obtain, Allianz reports rising levels of customer financial stress in Australia.

“Our frontline teams are noticing an increase in customers experiencing financial hardship,” says an Allianz spokesperson.

“In the past 12 months, the Allianz High Care teams have seen a 30% rise in those facing vulnerabilities, such as family violence and complex mental health conditions, and a 20% increase of those same customers experiencing financial distress.”

In New Zealand, AA Insurance chief product and marketing officer Shaun Rees confirms that tight household budgets are making it challenging for some customers to pay their premiums.

“Our focus is firmly to be here for our customers when they need us,” says Rees. “Pricing risk responsibly is key to this, and we regularly review the different factors that make up customer premiums to ensure they are an accurate reflection of the risk we take on.”

In such an environment, Rees says many New Zealand households are weighing up their insurance options and “shopping around”. “More customers are looking for ways to reduce their insurance costs, without impacting insurability.”

How can insurers respond?

Rees says AA Insurance’s starting point is to talk to customers about cover that suits their needs and budgets. For example, flexible excess options are available on policies.

“We work with customers to make sure their excess is manageable should they need to make a claim and explain how a higher excess may be a disadvantage in the case of a smaller claim,” he says.

AA Insurance also offers monthly or fortnightly payment options, which can help customers avoid large lump-sum payments.

“Providing customers with flexibility is key. For instance, we can offset fortnightly direct-debit payments on alternate weeks for customers with multiple policies,” says Rees.

At Allianz, policy health checks are an important means of optimising insurance coverage.

“We enable premiums to be paid monthly without extra charges and provide the option to increase customers’ excess to reduce premiums,” says the spokesperson.

“Additionally, we can offer the flexibility to pay excess in instalments and can arrange agreed lump-sum payments for recoveries.”

Accessing wider support services

Allianz also refers customers to community services such as the National Debt Helpline, Financial Counselling Australia and UnitingCare, all of which have specialised teams to assist customers as they seek to regain financial stability.

For those experiencing vulnerabilities such as family violence or complex mental health issues, Allianz has additional measures in place.

“In these cases, customers may be referred to the Allianz High Care team, who can offer additional support through premium waivers or discounts, putting premiums on hold for up to 60 days, waiving excess fees and placing recoveries on hold,” says the spokesperson.

AA Insurance notes that in some cases, financial hardship can be addressed by customers engaging a financial planner or getting budgeting support.

To assist customers facing tough times, AA Insurance is conducting a trial with a dedicated financial support service that specialises in helping New Zealanders improve their financial status.

Focusing on compliance obligations

In addition to their own insurance policy efforts, Australian and New Zealand insurers are subject to rigorous compliance rules to ensure they treat customers with respect and compassion, especially those facing vulnerability and financial hardship.

In Australia, those rules are outlined in the General Insurance Code of Practice.

A spokesperson for the General Insurance Code Governance Committee notes that the Code sets out “clear obligations” for insurers to support customers experiencing financial hardship.

“These include obligations for communication with customers, flexible payment options, waivers in certain circumstances and access to assistance for debt.

"The provisions help ensure that customers can retain essential cover where possible, while managing financial difficulties.”

The spokesperson says the committee closely monitors compliance with Code obligations and expects insurers to provide “meaningful support to customers in financial hardship, particularly in the current environment of rising costs”.

In terms of support for vulnerable customers, the Code states that insurers must recognise that such vulnerability can arise from factors such as age, disability, language barriers or financial distress.

In response, there is a requirement for insurers to have information on their websites about the types of support that may be available, as well as a policy to support people affected by family violence and mental health issues.

In New Zealand, the Fair Insurance Code sets minimum service standards for insurance companies, while the Financial Markets Authority (FMA) provides guidelines for dealing with customers experiencing vulnerability.

The FMA notes that financial services firms “need to embed the fair treatment of vulnerable customers in policies and processes throughout the whole customer journey”.

Addressing the poverty premium

The UK has experienced an extended cost-of-living crisis, starting back in 2021. In January 2025, global insights company TransUnion reported that one in five UK adults (11 million people) considered themselves financially vulnerable.

Over the last four years, the UK’s Financial Conduct Authority (FCA) has monitored the finance and insurance sector’s response to the crisis.

The regulator introduced the Consumer Duty in 2023, which requires companies to deliver good outcomes for all their customers — including vulnerable customers.

One area the FCA identified that can provide broader relief is revisiting the ‘poverty premium’ imposed on insurance customers who pay for their policies monthly.

Annual insurance premiums are typically better value than monthly premiums, reflecting the additional risk insurers are taking on. However, the result is that the most financially vulnerable customers, who cannot afford to pay annually, pay more for their insurance.

In January 2024, the FCA head of insurance, Matt Brewis, described the situation as “a tax on the poor”.

In response, many UK insurers reviewed their monthly premium costings and adjusted their pricing structures.

In April 2025, Consumer Intelligence data revealed the pricing reviews had saved UK car and home insurance customers more than £100 million (about A$209 million) over the past 12 months.

Tailoring support to diverse needs

Best-case support for customers will vary, depending on specific insurance products and personal circumstances. Allianz’s support responses are tailored to a customer’s specific needs.

For example, if a customer experiencing vulnerabilities has a motor claim in progress and does not have a hire car included in their cover, Allianz may provide a car if the customer needs to make hospital visits, or it could offer taxi vouchers so the person can make it to work.

“Additionally, if a customer is identified as experiencing other issues such as family violence or mental health challenges, they may be referred to Allianz’s High Care team,” says the Allianz spokesperson, who adds that customers will be assigned a case manager to guide them.

AA Insurance offers different levels of cover on its car and contents products to give customers the option to adjust their insurance while maintaining essential insurance cover.

Rees adds that it is important for customers to regularly review their cover.

“Removing benefits that are optional, such as rental car cover, excess-free glass cover or excess-free eyewear or hearing aid cover could help customers save on their insurance,” he says.

Communicating with customers

Most insurers are committed to investing in better customer experiences. In AA Insurance’s case, Rees says the insurer’s teams are constantly conveying three key messages to customers:

1. Talk to your insurance provider. It may be able to adjust cover to better suit your budget.

2. Check, check, check. Do not set and forget insurance. Your circumstances might change, and that could affect your insurance needs.

3. Review your cover amount. Doing so regularly can ensure you have adequate protection, without paying for more than you need.

The other crucial message that all insurers should get across to customers is to not ditch insurance.

“Insurance can be a key building block of financial wellbeing and crucial part of protecting the things that matter most to you,” says Rees.

“It’s important for customers to consider the financial impacts of reducing or cancelling their cover if the unthinkable happens, and how they might be able to retain insurance cover so they’re not out of pocket if they experience a large loss.”

Approaches in South-East Asia

1. AIA Thailand – Flexible Premium Payments and Premium Holidays

AIA Thailand has implemented customer-centric initiatives to support policyholders during times of financial difficulty, especially during the COVID-19 pandemic.

The company introduced premium grace period extensions and premium holiday options for eligible life insurance policyholders.

These measures allowed customers to temporarily suspend premium payments without policy cancellation, giving them breathing room while maintaining coverage.

AIA also promoted the use of digital self-service tools to make it easier for customers to manage policies during financial stress.

Source: AIA Thailand press releases and COVID-19 customer support updates (2020–2022)

2. Prudential Indonesia – Cha-Ching Financial Literacy and Flexible Health Plans

While primarily aimed at long-term resilience, Prudential Indonesia supports financially vulnerable customers through its Cha-Ching financial literacy program for families and children, helping build stronger financial habits.

Additionally, Prudential offers modular and affordable health insurance products, which allow customers to adjust coverage based on their budget, reducing financial pressure during hardship.

During the pandemic, they also provided extended payment relief and simplified claims processes for affected customers.

Source: Prudential Indonesia CSR reports and COVID-19 response measures https://www.prudential.co.id/export/sites/prudential-id/id/.galleries/pdf/brochure/Laporan-Keberlanjutan-Prudential-Indonesia-2023.pdf

Writer Insight

“Most insurers’ websites feature a message promising to put customers first. Now is the time to walk the talk. With many people facing cost-of-living pressures, future-thinking and empathetic insurers should be taking steps, from offering payment waivers to policy health checks, to help customers who are cash-poor. The payoff for insurers is knowing that they are living up to their charter, as well as winning the trust of customers who, hopefully, will stay loyal for years to come.”