Consumers’ have responded to the COVID-19 by acting to protect themselves and their families:
Insurance relies heavily on data sharing, which, insurers, have not made full use of yet. This presents the potential for significant disruption in the sector.
Consumers are interested in insurance because they are looking for protection and focused on savings.
The awareness of the need for health and life insurance has increased, especially in markets where public provision is more limited.
Trust in the insurance sector is actually higher than pre-COVID-19. Auto and home rebates may well have played into this, as well as the psychological association with protection and empathy that consumers are searching for.
However, as time goes on and more claims are made, the issue of eligibility due to COVID-19 risks trust. Insurers will need to invest in earning consumer trust longer-term. One route is to personalize the conversation and talk in terms of long-term prevention and care, adapting the insurance ‘package’ to reflect an individual’s circumstances and attitude to risk.
This is evident in some markets, where there is a big emphasis on personal relationships via agents. But even here, there is a push to get to know customers better to drive growth. Brand purpose is likely to be a significant factor in purchase decisions, especially in Asia where sector growth is expected to be highest. Could this be the era where insurance is bought, not just sold?
There is a massive opportunity — it is possible to create an insurance company that is trusted, and is digitized. The company that wins that race will likely dominate the market.
In insurance, consumer demand has forced the issue of digital transformation. But here, there is more ground to catch up, perhaps decades.
Digital has been hampered by insurers having multiple legacy platforms which are costly and time consuming to knit together. Large insurers have therefore been looking to fintech brands for inspiration and in some cases for acquisition.
Digitization creates an opportunity to reduce cost by reducing reliance on agents and creating personal relationships direct with customers. This is most likely in Asian markets, where there is significant opportunity for growth.
Investment in customer analytics enables everything from online prospecting to better customer segmentation to advanced techniques in data-driven underwriting. In parallel, regulators and insurers have adapted, including reducing the need for ‘wet signatures’ where face-to-face contact is not possible.
All these actions open up the sector to new customer segments at a time where consumers are looking to protect themselves.
These systems may well need to be built from scratch… even globally, very few have ever taken a legacy system to a truly digitized system.
Progressive organizations are those that are moving forward quickly to transform. The digital transformation is inevitable. Speed and pace will separate the winners from the losers in this race.
Spending more time at home has had an impact on the types of insurance that consumers are buying. Auto, home, travel and pet have all seen a boost in purchasing due to changes in consumer behaviors. Insurers and regulators have adapted quickly to enable agents to talk with customers remotely and fulfil tasks online that could previously only have been done face-to-face e.g. medical exams for life or health insurance. COVID-19 has forced change, which opens the door for lobbying and long-term change in channel strategy in the future.
We may be starting to see a decrease in the average age for first-time buyers of life insurance, before their peak earning years, in response to COVID-19.
A lot of organizations have moved quickly to enable agents to have conversations with customers remotely. Even regulators have responded, increasing the types of policies that can be approved without a wet signature. This is a great opportunity to permanently change industry requirements in the ‘new normal’.