One of the realities of the COVID-19 pandemic is the fact that it has made people realise the importance of having adequate life, disability, and funeral cover in place. And with clients considered the most disruptive force in the insurance industry, insurers would do well to ensure they provide innovative retail products that meet the expectations of increasingly digital-savvy customers, says Annalie Terblanche, head of product at SilverBridge.
COVID-19 has been referred to as the agent for change in the way the life insurance sector operates, challenging the status quo for insurers and becoming more responsive to client needs. When the country commenced its lockdown at the end of March, the immediate concern for insurers centred on protecting the health and safety of employees and distribution partners in the agent and broker community as they focused on maintaining business continuity.
“Part of this entailed putting in place interventions designed to deliver a comprehensive contactless environment between the insurer, its partners, and customers. This was not only limited to the corporate side, but also focused on modernising traditional practices when it came to retail customers. For those brokers reliant on face-to-face sales, the lockdown signified a period where growth opportunities would be impacted as meeting a client over coffee to discuss their insurance portfolio could not take place.
Because of this, attention shifted to an increase in demand for digital distribution. According to a recent news article, insurers who have given trading updates for April and May reported significant sales declines. And while there has been a growing increase in consumer awareness regarding the importance of insurance during these challenging times, insurers must be able to provide a digital experience to mitigate the risk of a lack of face-to-face engagements,” says Terblanche.
Furthermore, the demand for online life insurance products is also expected to increase. Its ease of access and quick turnaround times from application and policy management perspectives make it an ideal solution for people concerned that they might not have adequate (or any at all) cover during these uncertain times. By better leveraging their digital distribution capabilities, insurers will be well-positioned to effectively do so. This crisis will likely prove to be a catalyst for not only product simplification, but digitally-assisted ways of engaging with customers and servicing their needs.
“In India for example, even though new business premiums declined by 32% in March due to COVID-19, life insurance sales using online channels increased by 20% in the same month. This trend is one that is likely to be reflected around the globe. Central to insurers being able to respond to these changing customer expectations for the availability of more digital channels, it has become critical to modernise insurance systems and digitalise processes. Without either of these in place, an insurer will be limited to almost exclusively traditional sales opportunities significantly impacting on its growth potential,” she says.
The road ahead for life insurers might be difficult to predict, research suggests that there may be a number of long-term positive benefits for the sector. This will not only give impetus for the increased demand in life insurance but will also see attention turn to retirement policies. This can at least partly be attributed to the ‘taste’ of unplanned retirement the lockdown has given some people. The significant impact on income, limited mobility and access to goods, and isolation might just be the spur required to rethink how an individual’s retirement annuity is structured or managed.
“Ultimately, those insurers who facilitate a digital customer journey using digitally enabled go-to-market models, will be the ones that are best positioned for growth in the current and post-lockdown world. Through these digitalisation and modernisation efforts, the insurer can help grow trust between itself, its partners, and customers in more user-friendly ways with the ability to provide best-in-class solutions delivering value through online means,” Terblanche concludes.