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Wednesday, August 17, 2022

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Covid-19 pandemic underlines importance of life insurance

Published Nov 27, 2021


By Laurence Hillman

Uncertainty around the pandemic, and whether it will become endemic or not, is a reality, one that continues to impact the country and its commerce sector. South Africa was already in a recession prior to Covid; the country was grappling with pre-existing vulnerabilities in our economy, and the recent riots did not help. Additionally, the strict lockdown protocols, which limited economic activity, together with the effects of ongoing loadshedding, have put our economy under further pressure.

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Covid recovery

We have already seen that there is a correlation between economic activity and vaccination rates in advanced economies, with higher vaccination rates resulting in significantly higher economic activity. As a result, getting our country vaccinated is critical in recovering economically. The longer it takes to vaccinate our population, the longer our economic recovery time. Given SA’s low vaccination rates, a fourth wave will likely prolong GDP and job market recovery.

All of this means that consumers will be financially impacted and there will be a direct impact on affordability of policies, like life insurance, which may result in further lapses across the industry.

The latest South African Medical Research Council stats show that excess mortality deaths since the start of the pandemic are at 271 311, which is three times more than the reported Covid deaths (as of November 13). As a result, a lack of life insurance could be disastrous for families.

With only 35% of the SA adult population fully vaccinated, we unfortunately will face an increase in mortality, and, the impact of Long Covid could place further pressure on the population from an illness and dread disease perspective. This means that life insurance must be considered – but affordability and value is key. Consumers know they need cover, they want cover, but they need to prioritise it over other non-essentials (especially in a pandemic) to provide for their family if something happens. And yes, life cover is a means of providing for income replacement, but unless it is offered with flexibility and added value, it will continue to be viewed as a grudge purchase.

We know that consumers want to transact and interact with providers on their channel of choice when they want a quick resolution or payment to meet their needs. However, they also want their provider to have the correct context to their situation, their policies, and their health history to help them make informed decisions – decisions that matter and are valuable to their families and financial future. Consumers do not merely want transactional service. And this means embracing digital.

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The digital advantage

Technologies like robotic process automation, artificial intelligence and digital underwriting have made it possible to deliver value quicker and with the flexibility of choice that consumer’s needs. However, insurance providers need to go further and provide even more options for consumers and deliver faster claim and process turnaround times to build trust.

We believe that drivers into 2022 will not only include offering product flexibility on any channel of their choice but using technology to build personalised underwriting by delivering health data and credit data integration to support their health and financial management.

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But flexibility doesn’t just mean interacting when consumers want to, or tailoring products to meet their needs. It means giving them alternative options to things like their monthly payments (other than debit orders), offering them flexibility to pay their monthly premiums through retail stores or scan to pay, as well as online and digital payment options. It means offering digital wearables that use technology to help improve clients’ lifestyles, like monitoring their heart rates, activity levels, sleep, and vital signs, and it means delivering digital programmes to improve their own financial literacy.

Looking after the living

As products and services become more commoditised, customers want value and they will look to partner with providers that offer this – quickly, efficiently, and conveniently. And while technology is driving this opportunity, affordability and value will always remain a key cornerstone to client purchasing decisions.

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Given the pandemic, consumers should look at which companies understand them, are sustainable, have the best track record in claim payment, are highly rated for customer service, and those that are digitally driven. Look to those you can trust – and those that offer their policies at the core of what they do – with the flexibility and value you want.

Laurence Hillman is CEO of 1Life