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Insurers need to offer customers more

01 April 2021 Myra Knoesen

The Insurance Institute of Gauteng (IIG) recently hosted an IIG webinar, on the industry outlook for 2021, giving insights into both the local and global landscapes.

The global and local outlook

Jaco Van Der Merwe, Director at Deloitte said, “In formulating a view on the outlook for the industry (global and local), scenario development and planning becomes an indispensable tool.” 

“It is not so much about what will happen, but rather about what could happen. Insurers must prepare for the future… respond, recover and thrive. Scenario planning is key to understanding the future,” he added. 

Acceleration and deceleration

“Covid-19 may accelerate or decelerate certain industry trends. In terms of acceleration, social distancing has already driven further adoption of contactless technologies and digital experiences. More new businesses launched will likely be digital or -native, further accelerating emerging technologies. Many organisations have already adjusted to working remotely through virtual communication and collaboration channels and are unlikely to revert entirely. The consumer will expect safety and precautionary measures from both brands and governments driving the need for enhanced surveillance policies and technologies among employers and governments, which may pose potential privacy concerns. Rising activism among consumers and employees could drive an increased focus on corporate purpose. Value chain disruption is likely to lead to an increase in creative partnerships, which may in turn cause organisations to further invest in developing the mindset and agility to collaborate across sectors in the ecosystem. Cost management will be a critical priority to ensure business continuity based on cash flow requirements, to manage lower margins and revenues during a downturn,” said Van Der Merwe. 

“In terms of deceleration, the rising health and hygiene concerns and increased virtual work may reduce demand for shared services, as well as physical co-working spaces. While urbanisation has been growing steadily, social distancing amid rising fears of contagion may reduce the likelihood of people living and working in crowded cities. Based on likely government restrictions, the movement of people and goods across national borders could decrease,” added Van Der Merwe. 

Four driving insurance trends 

“Industry trends are informed by changing consumer trends. Consumers are financially strained, so as insurers we need to offer customers more when they have less to spend,” he said. 

“Perceived value is crucial to attract new business and retain existing clients. Rewards, incentivisation and flexible solutions with varying terms will be the differentiators. In terms of a saturated and highly disrupted market, do not fear the disruption but rather embrace it. M&A opportunities will present themselves where large traditional players are likely to partner with innovative tech players to capitalise on new and disruptive tech capabilities. There is also a risk of limited avenues for growth. New markets, smart partnerships and smart products are the solution. The growing middle class, underpenetrated lower-income market and an aging population present attractive demographics yet to be fully penetrated,” added Van Der Merwe. 

The four driving insurance trends, according to Van Der Merwe, are: 

  1. Digitisation: the use of contactless technologies and digital experiences, as well as emerging technologies e.g., analytics & sensing;
  2. Consumers trading down: seeking lower-cost options to curb non-essential spend (most consumers regard insurance as non-essential);
  3. Market opportunities for growth through innovative, disruptive tech-players. M&A activity seems a likely avenue for growth; and
  4. Increased use of automation: remote assessment, claims approvals, fraud detection, robo-advisers. 

Opportunities for the industry

“There are opportunities for the industry such as, for example, the ability to dynamically alter benefit offerings to be more in line with changing consumer needs and desires. The successful insurers are those than can respond swiftly through product tailoring, curb lapses and churn, and support continued new business growth on profitable terms. There is also the opportunity to partner with nimble tech-savvy players and proactively capitalise on new and disruptive ways of providing insurance. And lastly, there is the ability to adapt and become more than just a risk “protector”: insurers who can offer additional services and lifestyle partners to actively reduce risk, become preferred providers and see increased customer loyalty,” concluded Van Der Merwe. 

Writer’s Thoughts:
As Van Der Merwe said, scenario development and planning is an indispensable tool. Insurers must prepare for the future… respond, recover and thrive. Do you agree? Please comment below, interact with us on Twitter at @fanews_online or email me - [email protected].


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