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Insurance innovation and distribution in a post-pandemic world

Since March 2020, the world has become an entirely different place.  We have radically changed the way we work, socialise, shop, transact and live.  Many of the consumer trends that were radically fast tracked as a result of the pandemic – notably digitisation – will be permanent fixtures. One of the industries that will be significantly impacted by this changing consumer dynamic is the short-term insurance sector. 

Carl Moodley – Chief Underwriting & Claims Officer; Stuart Forbes – Chief Risk and Compliance Officer and Eugene Olivier – Chief Information Officer at GENRIC Insurance Company, provided their insights on what they believe the key shapeshifting consumer trends will be in 2021 and beyond the pandemic that will see major shifts in insurance product and delivery innovation…

#1:  Customer Centricity will be the kingmaker 

Every aspect of the insurance journey must be designed with the customer in mind, from understanding their unique risk exposure and risk behaviour, the advice process, insurance distribution, claims management and ongoing policy administration. We are already seeing major drives into the integration of IoT, spatial mapping technology, sensor technology, telematics, advanced analytics and AI in the short-term insurance space to deliver more granular, individual risk profiles and behavioural-based insurance solutions and underwriting.  In so far as digitisation of insurance processes is concerned, online journeys must be designed with the total customer experience in mind. Insurers and brokers will need to understand the inherent ‘customer experience’ gaps that exist between online and offline customer journeys, and where experience gaps exist in a tactile engagement that may actually fall away in an online journey. 

#2: Consumer are more cost and value conscious than ever before

Consumers are scrutinising every aspect of their discretionary spending and insurance is top of the list.  Overly complex product designs and loyalty programmes that consumers inevitably end up paying for will be moot even beyond the pandemic crisis. Consumers will analyse the underlying value for money in every policy and risk programme, and additionally look for the added value in their insurance spend that saves them money, makes their life easier through personalisation and effectively transfers their risk without quibble come claims time. Insurers and brokers will need to invest in sophisticated data and analytics to ensure that both individual and commercial policy holders receive the individualised and appropriate response and risk ratings for their circumstances.  We can also expect to see more demand for and development of ‘usage-based’ insurance which provides customers with the ability to switch cover on and off at specific times for when they need it – this has been most prevalent in the motor insurance segment where the work-from-home trend has seen significantly curtailed travel needs, and hence left consumers questioning the cost of their cover given the reduced risk.

#3: Customers are better informed than before, which makes professional advice key 

While a recent customer satisfaction index on the short-term insurance sector, conducted by Consulta, showed that intermediated insurance customers have higher levels of satisfaction, it does not mean that the advice and distribution process is not ripe for disruption.  While insurance customers do want a more personalised experience and rely on the knowledge and market understanding of their brokers, they are also looking for more digital resources to be brought to the table that facilitate a greater level of self-sufficiency on an ongoing basis. They are actively researching the ins and outs of the insurance solutions on offer and are more empowered than before to make decisions. The insurance broker’s role will shift to one of guiding and facilitating a greater analysis of insurance solutions that fit their needs, on much higher levels of engagement than before.

#4:  Keep it smart and simple

It is interesting to note in a recent study – Customer Service Trends for 2021 – by Stella Connect – that while consumers may understand that these are trying times, it has not offered brands much relief in terms of customer expectations. The survey shows that 67% of polled consumers report having the same or less patience for a bad customer service experience since COVID-19 began. Complex systems and processes will simply see customers say goodbye a lot faster than before, so the importance of stress testing all platforms, systems and processes, and all the ‘experience moments’ along the way, cannot be emphasised enough. Ongoing refinement will be key and here sophisticated data and analytics and AI will be invaluable in identifying trends in CX that need addressing or further leveraging. 

It is also critical to note that while offering multichannel, AI-driven client self-service platforms is essential in providing scale and resolving simple queries to reduce volumes, they are not a replacement for the human touch. Brokers will continue to play a crucial role and interface with their policyholders, especially on more complex claims and queries, and here first-time resolution will be key.  AI and data analytics can help meet customer needs faster and more intuitively than ever before, while freeing up brokers to focus on more complex customer needs.

#5: Consumers are looking for niche solutions for specific exposures 

GENRIC’s own experience in the last ten months is that consumers are increasingly looking for niche insurance solutions to address very specific needs and unexpected cost exposures.  One such line is Mechanical Warranty insurance where policy retention and new uptake has remained high despite the tough economic environment. With an increasing number of older vehicles on the road, consumers delaying new car purchases as they consolidate their debt and also travel less with new remote working trends, this type of cover makes sense to protect policy holders against the unexpected and typically high financial cost of mechanical component failures no longer covered under service and manufacturer warranty plans. 

Personal cyber insurance is another growing area given our reliance on internet connectivity for virtually every aspect of our lives. We can expect to see protection for cyber risks becoming an essential personal financial planning tool in much the same way as household, motor and contents insurance is for physical risks. Niche insurance solutions that cater for specific risks and exposures are expected to grow as consumers increasingly look to only keep that which they need and which performs at claims time.           

#6:  The pandemic has thrust healthcare insurance in the spotlight – the pandemic has amplified the need for healthcare insurance as consumers realise the implications of a health crisis on finances. For many South Africans, the parlous state of public healthcare facilities is unpalatable, so securing their continued access to private healthcare is a priority.  GENRIC has seen significant pick-up in enquiries related to its Sirago gap cover, as well as affordable alternatives to medical scheme benefits such as its Wesmart health insurance solutions.  Where consumers are buying down on their existing medical scheme benefits due to financial distress, they are taking up gap cover insurance to protect them against potential medical scheme financial shortfalls. The pandemic will motivate people to reconsider not only their health insurance covers, but also the likes of critical illness, life and income protection cover.

#7:  Trust needs to be rebuilt

A big issue that has impacted the entire insurance sector is that of the fallout of business interruption claims during the pandemic. While these were limited to certain insurers and impacted commercial policyholders only, the highly publicised and sensitive nature of these claims has spilled over to all consumers.  There is significant work to be done to restore the reputational damage in terms of the expectations of clients versus what is covered in terms of their insurance contracts and policy wordings. Much of this comes back to the principle of smart and simple cover and removing overly complex layers, with clear policy wordings and well-defined terms and conditions.  

In as much as the last year has been tremendously challenging and will continue to be so for at least the medium term, there are also tremendous opportunities that exist with the pandemic’s fast tracking of virtually every industry into the 4th industrial revolution. The insurance and risk landscape is no different.  Risks and needs are evolving, and change brings inherent opportunity.  Insurers should look to add true client-centric value in a digitally differentiated world by building more resilient business models, developing new lines of coverage to meet evolving exposures in the market, and embracing the opportunities presented by technological disruption.

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