Post COVID-19 ERA: CHANGES IN CONSUMER TRENDS IN INSURANCE SECTOR IN COVID-19
COVID-19 has brought a wave of uncertainty in the economy. With the different unlock phases, the country is gradually preparing itself to get back on its feet. The significant growth potential is foreseeable for insurance with the overall penetration as Individuals, governments and businesses are actively taking steps to protect themselves, their families, their citizens and their employees. Insurers are responding to these changing needs with respect to industrial insurance and personal insurance.
Industrial Insurance sector
Insurance is also impacted by the industry sectors it supports and hence industrial production, healthcare indices, and employment indices will also have an impact on its growth and recovery prospects.
Industrial sector relies on the performance of other industries and businesses such as automobiles, travel, hotel, infrastructure etc. Since these sectors have individually been hit by COVID-19 in the terms of employment, production, healthcare and in other ways, this significantly puts an impact on how consumers are interacting with insurance schemes.
Delay in Purchases
As businesses around the world are familiarising themselves to the new reality, the insurance industry finds itself in a slightly different position than the rest. On the one hand, the companies are expected to witness fewer sales due to consumers delaying large purchases, insurance being one of those.
More coverage insurance
The travel and hospitality industry is slowly trying to get back on its feet. After facing the catastrophic effects of the pandemic, customers are looking for policies that will offer more coverage for some of the impacts of a future pandemic, such as travel warnings and CDC alerts.
The travel insurance providers are proposing to create more products regarding domestic travel, some including coverage for trip cancellations and low medical benefits as well.
Consumer trend shift- individual customers
In India, the penetration of Insurance was 3.69% but after COVID-19 increase the penetration of Insurance sector is expected due to the changed consumer trends in India. People are now interested to avail all the facilities while sitting at their homes.
From tax-saving standpoint to the protection purpose
Insurance is likely to become more embedded in consumer lifestyles than ever before, marking a significant shift from insurance being purchased for mere compliance or tax-saving standpoint to the core purpose of protection that it serves, said Shanai Ghosh, Executive Director and CEO, Edelweiss General Insurance.
Reduced Risk Appetite
Consumers have a lower appetite for risks than they had before. Consequently, it is likely that they are more interested in protection than they were before. Insurance plays an important role to provide a feeling of protection and peace of mind to the customers.
Corona virus has driven awareness amongst people regarding the significance of protective investment, to avoid the uncertainty and to harbour themselves and their loved ones. The importance of an insurance is shifting from only covering risk when there is damage, to rendering preventive services as a substantial part of the offering.
Active Participation by Customers:
Health Trackers and platforms provide actionable information and insights that users can act upon. This allows a much more active role for customers within insurance products and services, leading to more equality in the relationship with insurers. This is a fundamental shift in the relationship and a great new perspective on innovation.
Trend Shift in Insurance Industry
Increase in the amount of term plans
There is a surge in the amount of term plans. The pure life cover is likely to see a renewed interest, and since that is largely an online market, it should see a boost in demand.
Digital Adoption & User-Centric Digital Distribution Channels
People are more interested to buy insurance virtually and this has led to the use of digital signatures and maintaining digital documents. Introduction of easy methods to get insurance policy also made it easier for people who are not used to technology. It has enabled policyholders to pay the premium using digital methods and avail other services as well. Hence consumers may witness the emergence of a user-centric digital distribution channel.
With the work from home and remote operations, there is an increasing focus on cybersecurity and protection requirements which will present the non-life insurance companies opportunities to innovate and expand their product offerings.
The economic downturn and resulting thriftiness has increased the demand for insurance solutions and price propositions that are simple, transparent and cost-efficient.
There is already a surge in sales of Life insurances and Health insurances due to health awareness. According to a report by the PwC, private health insurance schemes cover about 18% in the urban areas and only 14% in the rural areas. As per the report, around 30–40% surge in the number of enquiries about health insurance is expected.
Insurance schemes that cover COVID-19
Insurance companies also are trying to attract customers by launching insurance schemes that cover COVID-19. As per the swissre report, 63% of the customers said to have discovered new features such as COVID-19 testing and unlimited hospital cover.
Post COVID-19, there may be a surge in buying of travel insurances since people may resume their delayed travel plans post COVID-19. which may jump further as the purchasing capacity of people increases.
Innovation in Vehicle Insurance
Especially when people use their vehicle less, there will be an increase in the demand for simple solutions that reflect actual usage. Why to pay a flat rate for a vehicle that most of the week won’t leave your front porch? It could lead to usage-based car insurance to finally become mainstream.
The emerging trends post COVID crisis will be far-reaching. Pandemics can be short-lived, but the economic impact is expected to have long-term impact. Simple digital products, online services, more connected and agile offerings have become essential for continued growth. In future, quicker adoption of new technologies and a bigger role for insurtechs will enable the acceleration of digital transformation and innovation.