The coronavirus pandemic has put the insurance industry in the middle of the battle. It’s clear more than ever how an insurance company plays a crucial role in ensuring financial security when a health crisis hits. Good thing, the industry is more than prepared for this uncertainty—after all, it is a part of the insurance providers’ selling proposition.
On other matters, individual policyholders suffer because of the crisis, expecting their insurance companies to live up to their promises, claims, and duties to them. Unsurprisingly, an insurance company fields call regarding how to obtain insurance products and which insurance products to purchase, how to continue to pay for insurance products, how employment interruption may affect a policy, and how to increase coverage.
All these signals a transition in the buying behaviors of insurance products. Indeed, a change of perception about insurance generally occurred almost overnight. Here are some of these changes.
The financial security needs of most households heightened.
How COVID-19 would affect the future is a concern nowadays. The financial setbacks impact emergency, college, and retirement funds. Savings have been exhausted. As such, families are switching to products that offer cash value and annuity despite the overall weaker growth rates due to the economic slowdown but hope that the economy will recover now that the government is relaxing restrictions. These elements are fundamental to building assets and preserving wealth.
Consumers are more likely to buy more yet affordable insurance products.
A PwC survey revealed that about 15% of consumers would want to buy life insurance. This is anticipated considering the impact of the pandemic. That’s despite job security concerns, from losing a job to reduced hours, which also means diminished salary. Naturally, price becomes a significant concern for insurance shoppers who want affordable premiums.
Consumers want more comprehensive coverage options.
Underwriting conditions are a consideration nowadays as well. Potential policyholders are looking for reasonably priced insurance products with the broadest coverage options possible. This is especially true for life insurance products, wherein unexpected health conditions should be included in critical illness coverage.
Consumers are becoming more abreast of the changes.
They work their way to understand the insurance market more in-depth. The initiative to learn more about market volatility is also enhanced by the pandemic. Policy enhancements are desirable more than ever. It would help to have bundles such as life and education coverage, for example, while reducing the risks and retaining cash value.
While at it, risk exposure diversification must be prioritized. This may help attract and educate a new—albeit more digitally savvy—generation of insurance policyholders. For instance, the young insurance market is looking for options that grow their hard-earned money in the fastest way possible.
Consumers expect more streamlined transactions
With staying at home comes the demand for more robust digital technologies. These make completing transactions convenient while minimizing the risks of contracting the virus that lives on paper currency for 29 days. Thereby, handling cash is seen as a threat that digital capabilities may minimize through a more flexible payment processing.
Consumers want more payment options.
At the onset, there are two primary payment options: over-the-counter and digital payment. The lack of flexibility of the first one is compensated by the wide range of options available for the second one. Websites, apps, payment kiosks or portals, or any contactless payment mechanisms are a welcome idea.
Payment options also mean alternative pricing models or deferred payment options, particularly for those facing economic disruptions. For these policyholders, price adjustments should be normalized so they can recuperate without surrendering their policies.
Yet another critical aspect of this is claims processing, which may take several days. If the process is automated, it would be easier for the policyholder to get hold of the lump sum payment, considering the increase in mortality claims. This aspect will be a huge differentiating factor in the years to come, post-pandemic.
These present a challenge for the insurance companies—to adopt strategies to accommodate new ways of thinking. While it means to operate the insurance company differently, it also means solving the potential and current policyholders’ pain points. With a focus on prospects, answering to these changing buying behaviors would also mean narrowing down the insurance protection gap that the pandemic revealed straightforwardly.