Insurers should look at providing simpler products that could be cheaper for consumers who face reduced household income due to Covid-19’s impact on the economy.
That’s the view of Lee-Ann du Toit, a Partner in the Actuarial and Insurance Services team at Deloitte in Wellington, who says in a company blog post that insurers should explore how they can support both customers and businesses to ensure that people remain covered.
“During lockdown, people were quick to adapt to working remotely with an increased reliance on technology,” says du Toit in her commentary.
“This could serve as a guide for how policyholders will interact with insurers in the future and provide a focus for innovation in products to be structured for a digital platform.
…there may be a transition to simpler, scaled-down products being offered digitally…
“As insurers adapt to a new way of connecting with customers, there may be a transition to simpler, scaled-down products being offered digitally compared with those that currently dominate the market.”
Du Toit says simpler products are likely to be cheaper and may be sufficient to meet the needs of customers who are struggling and facing the prospect of losing their insurance cover altogether.
“No doubt the insurance landscape is changing,” she says. “But this is an opportunity to change for the better. In order to achieve this, the industry must focus, above all else, on the needs of the customer.”
Du Toit also says the insurance industry should support those in need and emphasise the importance of how insurance can help in a crisis.
“We have already seen a number of insurers refund premiums in recognition of the reduction in claims during the lockdown and the financial hardship that policyholders are facing,” she says.
“We expect to see insurers paying increased claims relating to mental health and income protection as a result of job losses and increased anxiety levels. But what more can be done?”
Du Toit says general education on the usefulness and appropriateness of insurance can assist households in their financial planning and help improve the public perception of insurers.
She also cautions there may be a reduction in employer-provided insurance as businesses look to cut expenses.
“This could exacerbate the issue of underinsurance in New Zealand as people lose access to the protection that they have previously relied on,” she says.