What you need to know about your insurance cover in a rapidly changing world

The insurance landscape, and consumer needs, are evolving rapidly – which means the industry needs to become more transparent for insurers and customers alike to provide the best cover and support, especially in times of financial constraint.

“Even as customers come to expect and demand this, it’s critical for you to take care to evaluate and ensure you have the right cover in place for what’s important to you,” says Rudolf Britz, Chief Actuary at Momentum Short-term Insurance cluster.

Almost overnight in March, our lives changed. Our work and home lives largely became intertwined, and socialising with loved ones turned into video calls. It wasn’t only our work and social lives that felt the seismic shift. The type of products and services that we wanted and needed also changed. Nowhere was this more evident than insurance.

“Everything changed significantly and more quickly than anyone thought, with working from home becoming more prevalent and this changing the nature of risks materially – people have been commuting and travelling less – so products should reflect that,” says Britz. “This is why we have introduced a limited mileage product, for example.”

More than just the daily commute has changed, though, and people need to ensure that working from home doesn’t open them up to other risks. This includes work hardware, such as a laptop or desktop computer, not being covered by home insurance, or the risk of liability if someone meets with clients at their home office and there is an accident.

These are just some of many new emerging risks, but these will change the way people view and buy insurance in future. This means there will be several factors to consider when it comes to your insurance:

o Growing automation means more products will use AI and analytics, and change the nature of disclosure as more    information is made publicly available. Critical to remember is that these products are opt-in and make use of information that you consent to giving. “As an example, the Safe Dayz feature on the Momentum App – which measures movement and safety on the road – is opt-in, and the telematics from the app to measure driving behaviour and track movement can be used to reward and pass on benefits to drivers,” says Britz. “It’s important for you to know where information being used to determine your risk is coming from, but also to know that these solutions are not ‘big brother watching’, and you can opt out.”
o Even as automation drives change, disclosure is still essential. Be upfront and transparent with your insurer about what you need covered, and its value. “Always ensure that you specify easily movable consumer goods such as laptops and mobile phones to guarantee that you have cover,” says Britz. “It’s important to make sure you have sufficient cover for what is important to you, particularly as cost sensitivity rises for increasingly cash-strapped consumers impacted by the pandemic. Your insurance can help if you are clear upfront.”
o As cost sensitivity and price pressure increases, you can reduce cover where there isn’t a desperate need. This includes cover such as car hire on your vehicle insurance policy – these days, options such as car ride or rideshare apps are easily available and affordable, so there isn’t a desperate need for cover like this anymore.
o But always make sure you have cover for the items most important to you. “Think carefully about the things you cannot do without – such as your car or house – and insure them accordingly. Also have a back-up plan in case something happens. You can’t insure things with sentimental value properly – you can replace physical items, but not the sentimental value, so take that into account,” Britz says.
o Don’t underinsure. Underinsurance is a massive problem in the market, especially when it comes to property. “The value the property is insured for should be the cost to rebuild, but it is common practice to use the purchase price. In South Africa, it’s still cheaper to buy than build, so you need to bear that in mind when insuring your property,” says Britz. “It is different on the content side, and intentional underinsurance can be valid – when it comes to varsity textbooks that you may still have, for example, but wouldn’t replace in case an accident happens. But you need to be upfront and make this disclosure to your insurer upfront.”