Globally, businesses and consumers are recovering from two years of the financial impact of pandemic-led fear. While many are no doubt still struggling with this new reality, the good news is that as a planet – and country – we are seeing an upswing. This increase in economic and business confidence is being seen locally in South Africa from a consumer perspective. For insurers this means a much better 2022 – even though the insurance sector weathered the proverbial storm reasonably well.
Improving Statistics
GDP locally grew by 4,9% by the end of 2021 with a positive outlook for the fourth quarter. Similarly, earlier in the year, Stats SA indicated that consumer spending had increased at a rate of 4.7% thanks predominantly to purchases in what they refer to as ‘miscellaneous goods and services’ – of which insurance-related products formed a notable contribution. This year has also kicked off strongly with positive economic recovery and so, while many insurers and advisers are concerned about the year ahead, the outlook certainly is much more positive that the year passed. Consumers however are still recovering and there is likely to be resistance and differing views to what people may see as non-essential items – of which insurance is often sadly one.
However, if we look at the stats from the beginning of Covid-19 , they speak for themselves. Excess mortality peaked more than two times higher than the first wave for example, with our mortality rates showing a 233% increase in deaths between July 2020 and September 2020, compared to the same period in 2019. While this massive influx is unlikely to be the case, the pandemic is not yet over and so life and funeral cover are certainly still very much needed.
As an industry we need to continue with education around the importance of long-term insurance – defining this for consumers and ensuring they know not only why it is important, but where to find trusted advice to make the best of their budgets and long-term financial plans.
How To Shift Mindsets and Remain Relevant
Insurance demand globally is expected to rise with an above trend premium growth at 7.4% – as opposed to 5.6% in 2021, so there is no doubt there is room for growth. The challenge for insurers today however is to cut through the clutter and gain a share of this growing market. To do this, it is not necessarily about convincing consumers or changing mindsets but rather creating value that is undeniable: empowering them to take their financial wellbeing into their own hands – making it easy, convenient, and giving them a solution that meets their unique needs. Technology forms a fundamental pillar for this.
The Digital Effect
In a global survey for the sector, there is an expected 13.7% increase in technology budgets within the industry where a focus on technologies such as Artificial Intelligence (AI), cloud, data privacy, robotic process automation and cyber security are amongst the leading investments cited for 2022. It is these exact technologies that turn the insurance sector into a much more agile industry and offer the consumer exactly what they are looking for: improved customer experiences and service, quicker claims turn around and ease of access to unique and tailored insurance products.
Essentially however, while technology plays a critical role in the shift towards retention and acquisition of policy holders, the human element cannot be forgotten and, in fact, is more critical today than perhaps a year ago. Consumers want to ensure that what they spend now will protect their financial future and want to ensure that they are putting their money in the right places.
The human element – having contact with someone to guide them and manage the process – provides this level of comfort. For example, a study in America indicated that 44% of investors use a human adviser when investing and so while technology is crucial to changing the experience and creating high levels of personalisation, the human element remains crucial to the mix.
The world has changed, insurance has changed but the needs of the consumer remain largely the same – quick, convenient and tailored insurance offerings underpinned by great service – and so as we move forward all efforts should be focused on this direction. With investment in the right technology platforms to support business growth, both insurers and advisers can meet this need and drive affinity for long-term insurance products. It’s a three-pronged approach – technology, education and value-adding offerings.