Almost exactly a year ago, South Africa closed down as the coronavirus struck. Many thought it would be a quick three-week lockdown, and then business as usual. How wrong we all were. In many ways, the world will never be the same again.
And yet, amidst the mayhem, there were lessons to be learned. The pandemic gave us the opportunity to pause and think about our business, our clients, and their changing demands. Here are 8 lessons the insurance sector has learned as we look forward to the next normal.
1. Everybody wants to protect themselves from risk
Covid-19 shook us to our core and made us question how prepared we really are for a crisis. As millions of South Africans re-evaluated their finances, their risks and their lives, we’ve seen a growing realisation that insurance, so long seen as a grudge purchase, is critical to cushioning life’s unexpected blows.
2. We need new products for new times
When lockdown started, millions of South Africans stopped driving to work. Many continue to work from home. With car usage down 30%, clients simply don’t want to pay full insurance premiums for assets that are standing idle for most of the time. It sparked a boom in usage-based insurance, including King Price’s chilli, which bases premiums on the number of kilometres that clients drive per month. And there are more changes to come.
3. The future belongs to the machines
There’s no doubt that the insurance industry is ripe for some serious disruption, and data-driven tech is providing the impetus. For insurers, the ability to analyse data better provides the ability to determine risk to a point of near-perfection. This essentially results in more accurate and fair premiums,, which means lower-risk clients will pay less for insurance. Clients demand it – and insurers that don’t have the data capabilities will fall behind.
4. Consumers are the real drivers of change
Tech is the enabler, but clients are the real disruptors. They want simple products tailored to their needs, a slick engagement experience, and the ability to interact on the platform of their choice. Probably the single biggest trend that tech has unlocked in the global insurance industry is the fact that insurers can now compete on the basis of a differentiated customer experience. Technologies like AI, user-friendly apps and chatbots are driving a range of digital-first, human-friendly services that are tailored to the exact needs of the client.
5. We’re seeing a renewed focus on culture
After an initial honeymoon period, businesses and employees alike are struggling to adapt to the new world of WFH (working from home). Right now, it’s critical for insurers to show their clients and staff that they’re more important than ever, 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. We’re seeing a greater focus than ever on company culture that’s empowering and enabling.
6. Organic growth will only take you so far
To call the local short term insurance market ‘highly competitive’ is an understatement. While tech is making it easier for more South Africans to access insurance, the market remains cut-throat, with the same clients often changing their insurer for a few Rands less on their monthly premium. There are certainly ways to stand out in this market, but for insurers to grow, it’s important to be open to acquisitions and alliances that can take the business forward, whether locally – like King Price’s acquisition of Stangen – or abroad.
7. ‘Digital-first’ drives opportunity
At King Price, one of our founding principles was that a ‘digital-first’ business model would be fundamental to unlocking new value. As we see a greater focus on factors like personalised premiums and usage-based coverage, we’re certain to see more alliances and greater collaboration between traditional insurance and InsureTech firms. The traditional company provides the footprint, the market knowledge and the client base; the InsureTech provides the tech that drives new insurance models and revenue streams, higher profitability, improved customer experience and reduced operational costs.
8. Time to reaffirm our purpose
As insurers, we exist to protect people, businesses, and communities from unexpected risks. In volatile times, it’s more important than ever to remember our purpose. At King Price, our company is driven by our vision: Lower premiums: Higher purpose. Our vision in action sees us #MakingADifference and changing people’s lives. Today’s consumers seek out companies and brands that align with their values. The products and services they purchase are expressions of their moral values as much as financial decisions are.
I’ve always said that you should never let a good crisis go to waste. We’re in the middle of one of the greatest crises of our lifetimes – and the lessons we’re learning could just set us up for the next decade. We can’t afford to waste this opportunity.
Article credit https://www.fanews.co.za/article/short-term-insurance/15/general/1217/insurance-8-lessons-from-12-months-of-mayhem/31530