4 trends driving short-term insurance

ARTICLE BY

SHARE THIS POST

By Ian Sibiya, King Price Insurance, Spokesperson 

 

Here are the four big trends we can expect from the industry in 2021, and, not surprisingly, they’re all largely driven by the pandemic. 

Last year came in like a wrecking ball. In February, we were still planning our Easter long weekends. Barely a month later, we were in hard lockdown. The Year of the Coronavirus caused havoc in economies, businesses, and the lives of people, across the world. Like most industries, the short-term insurance industry had to adapt quickly to the new reality.

 

Usage-based insurance takes off

Usage-based insurance is probably the hottest trend in the global insurance industry right now. In the US, companies like the San Francisco-based Metromile offer pay-per-mile insurance and a driving app, while Slice is growing market share in the US and Canada for a range of pay-as-you-use short-term insurance products. 

In South Africa, a growing number of companies are bringing usage-based products to market, including King Price’s chilli, which was launched during lockdown, and bases premiums on the number of kilometres that clients drive per month, as well as the value of their cars and their personal risk profiles. 

With car usage in South Africa down 30% since the pandemic struck, clients simply don’t want to pay full insurance premiums for assets that are standing idle for most of the time. We’re now seeing usage-based insurance extending into areas like agriculture as well, where farmers only pay when they use their expensive machinery. Where will it pop up next? Watch this space.

 

The rise of the machines

We’ve been talking about technology being the biggest disruptor in the insurance industry for some time now. This trend is only going to grow exponentially in 2021 as insurers look to digitally transform their operations for a socially distanced world.

At King Price, we often say we’re a technology company that just happens to sell insurance. The game-changer has been AI and data analysis, which is transforming our claims and underwriting processes. Where AI used to be prohibitively expensive, it can now integrate multiple disconnected sources of data within a company and make sense of what’s useful and what’s not – in a very cost-effective manner. 

Going forward, AI will allow insurers to provide an even smoother customer experience, with personalised interactions based on client data, while they will increasingly be able to customise cover for specific items and events. It will also be quicker and easier to settle and pay claims following an accident, while decreasing the likelihood of fraud.

 

A realisation that insurance is essential

Most people engage in basic risk management every day without even thinking twice about it: We drive responsibly, we lock our houses and our cars, we keep our wallets and mobile phones safe. But Covid-19 shook us to our core and made us question how prepared we are for a crisis.

In insurance terms, risk is the chance that something unexpected can happen and cause loss of or damage to valuable property and belongings, or injury to someone. Impacted by Covid, people are re-evaluating their finances and their lives, and we’re seeing a greater need from consumers to know exactly what their own risks are, how they can reduce the likelihood of these risks occurring, and how they can reduce the impact if they do occur. 

It’s not going to result in a sudden boom in insurance policies. But we are seeing a more considered approach to insurance – and in a country where only 3 out of every 10 cars on the road are insured, that’s a huge positive for everyone. 

 

A renewed focus on culture 

For many South African companies, the Covid-19 outbreak was their first real experience of remote working. At first, everybody loved it: They got to avoid their daily commute and work in their pyjamas. Then reality set in, as businesses and employees alike struggled to adapt to the new world of WFH (working from home).

One of the challenges is that, while it’s relatively easy to keep remote teams on track work-wise, it’s harder to keep your organisational culture alive when everyone’s suddenly no longer together under one roof. Culture is the one thing that sets you apart from everybody else in the industry – and it’s particularly important, as 2021 seems like it won’t be much different to 2020 in terms of working remotely and Covid-anxiety. 

Right now, it’s critical for insurers to show their clients that they’re the top priority, and to go the extra mile for them. This can only happen in a business with a strong culture that’s based on purpose and values. In 2021, we’ll see a greater focus than ever on company culture, and how to bring that to life.

Subscriber Terms and Conditions

  1. APPLICATION OF TERMS
    • These terms and conditions (“Subscriber Terms”) apply to the subscription by any qualifying member of the South African Underwriting Managers Association NPC (“SAUMA”) to the services and benefits offered by FIA Services (Pty) Ltd (“FIA Services”) under the SAUMA affiliation arrangement (“Subscription”).

  2. NATURE OF SUBSCRIPTION
    • A Subscription under this arrangement:
      • does not constitute membership of FIA NPC;
      • does not confer any voting rights or governance participation in FIA NPC; and
      • is governed solely by the contractual relationship between the Subscriber and FIA Services.

  1. ELIGIBILITY
    • To qualify for the Subscription, the applicant must, at the time of application, be a current paid-up member of SAUMA.
    • FIA Services will verify the applicant’s SAUMA membership status with SAUMA prior to activation, and may re-verify such status periodically.
    • If a Subscriber ceases to be a paid-up member of SAUMA, the Subscription will correspondingly be terminated.
    • Applicants are required to authorise FIA Services to confirm their SAUMA membership status with SAUMA as part of the application process.

  1. SERVICES
    • The Subscription entitles the Subscriber to the following benefits:
      • Complimentary access to the FIA CPD Platform;
      • Complimentary access to the FIA Insight Magazine (digital edition);
      • Advertising opportunities on FIA platforms at a discounted rate of 15% (fifteen percent) off the prevailing published rates; and
      • Invitations to attend FIA Technical Webinars annually.
    • FIA Services reserves the right to update, vary or substitute the Services from time to time, provided that the overall value and nature of the benefits remain materially the same.

  1. FEES AND PAYMENT
    • The monthly subscription fee is R260.00 (two hundred and sixty rand) for up to seven registered individuals (Key Individuals and Representatives), and R36.00 (thirty-six rand) per additional registered individual thereafter, excluding VAT.
    • The Subscriber shall provide FIA Services with the required details of each individual to be registered under the Subscription for the purposes of activation and billing.
    • All fees are exclusive of VAT, which shall be charged at the prevailing statutory rate.
    • Subscription fees are reviewed annually in March and may be adjusted with effect from 1 April.
    • Any changes to the Subscription, including but not limited to the number of Representatives and Key Individuals registered under the Subscription, may only be effected once annually during the annual review period in March of each year, with such changes taking effect from 1 April.
    • Subscription fees shall be billed monthly in arrears, unless the Subscriber elects an annual billing cycle at the time of application.
    • The Subscriber shall ensure that all billing information (including contact details, authorised signatories and bank account details) is kept accurate and up to date.
    • Non-payment of subscription fees may result in suspension of access to the Services until such fees are brought up to date.
    • The Subscriber acknowledges and agrees that all subscription fees payable under these Subscriber Terms may be collected by way of debit order, which shall be processed by the holding company, FIA NPC (The Financial Intermediary Association of South Africa), on behalf of FIA Services. Payment to FIA NPC shall be deemed to constitute valid and sufficient discharge of the Subscriber’s payment obligations to FIA Services under these Subscriber Terms.

  1. ONBOARDING
    • Onboarding will be conducted as a Subscription with FIA Services under the SAUMA affiliation arrangement.
    • Onboarding will not confer FIA NPC membership status or any associated rights.
    • Onboarding is conditional on confirmation of the Subscriber’s current SAUMA membership at the time of application

  1. DATA PROTECTION
    • FIA Services will process all personal information in accordance with the Protection of Personal Information Act 4 of 2013 (POPIA) as set out in our POPIA policies.
    • By subscribing, the Subscriber authorises FIA Services to confirm their SAUMA membership status with SAUMA and to process personal information for the purposes of fulfilling the Subscription.

  1. TERMINATION
    • The Subscriber may terminate the Subscription by giving FIA Services one calendar month’s written notice.
    • FIA Services may terminate the Subscription on one calendar month’s written notice, or immediately if the Subscriber breaches these Subscriber Terms and fails to remedy such breach within 14 (fourteen) days of receiving written notice.
    • Termination of the SAUMA–FIA Services affiliation agreement shall not automatically terminate these Subscriber Terms.
    • Termination by the Subscriber shall not relieve the Subscriber of liability for any subscription fees accrued up to the effective date of termination.
    • FIA Services may suspend or terminate the Subscription with immediate effect in the event of non-payment of fees by the Subscriber.

  1. GENERAL
    • These Subscriber Terms are governed by the laws of the Republic of South Africa.
    • Any disputes arising under these Subscriber Terms shall be dealt with in accordance with the dispute resolution provisions contained in the FIA NPC membership terms and conditions, as modified to reflect that the contractual relationship is with FIA Services.
    • Any notices required under these Subscriber Terms may be validly delivered by email to the addresses provided in the Subscriber’s application form, and such notices shall be deemed received on the day of transmission if sent during business hours.
    • The Subscriber may not assign, cede or transfer any of its rights or obligations under these Subscriber Terms without the prior written consent of FIA Services.
    • No variation of these Subscriber Terms shall be of any force or effect unless reduced to writing and signed by both FIA Services and the Subscriber.