New Emerging Life & Pension Customers Post COVID-19
The dramatic and rapid appearance of COVID-19 saw a reversal in the growth of the Life and Pensions market globally during 2020, with global premium income destined to shrink by .8%. During 2019, the industry experienced a so called “Golden Year” with year on year growth reaching 4.4%, as per the Allianz Global Insurance Report 2020. If not for the pandemic, this growth would have surely continued.
2021 however, is set to see a re-emergence of growth anticipated by the same Allianz report which is suggesting growth of 5.6% during 2021 (albeit from a lower baseline). But this resumption of growth will perhaps be with a slightly renewed focus on the insurance products that will lead the recovery. Products with interest in solutions that cover risk, not just life, but health, income replacement and critical illness…and maybe new and innovative coverages as well. These new products may pay out on the emergence of an “outbreak” infecting more than a set number of persons per 1000 within a defined perimeter, for example.
The continuation of COVID-19 even with vaccination, will still have a psychological impact on young persons that have not considered the need to partake of insurances before. They will likely have made their own analysis of what they would have needed had they known what was coming their way.
This is a complete turnaround from their previous view, especially in emerging markets, that insurance may not be that necessary. But now having seen that debilitating Illness and even death from illness are a stark reality, insurance seems much more of a necessity. Interestingly, the COVID-19 bounce back involves a pivot to the emerging young markets in Asia, where there is a bigger new market to be won, or lost.
There is already evidence of this new interest from the “This is MONEY.co.uk” financial website, in November 2020 drawing our attention to the fact that the comparison site Active Quote have revealed a 400 per cent rise in the number of under-25s looking to take out income protection insurance as compared to last year. Additionally, enquiries from customers aged 20 and under also rose five-fold in over the same period.
Similarly, Google reports indicated a dramatic rise in the phrase “life insurance” in searches over recent months.
These younger people will not be that familiar with the experience of receiving direct advice, and perhaps associate said advice with an unpleasant and lengthy process. Life Insurance being bought rather than sold being the time-honoured phrase.
Making pure protection insurance easier to buy for this emerging new demographic is therefore the thing that will enable insurers to attract these new market entrants in 2021 and beyond. Simplifying the buying experience and giving the new consumer generation what they want will need to be technology enabled and aligned more effectively than before.
But be forewarned; that insurers distributing protection from their website will have to find an effective and clear way of ensuring that these new and inexperienced purchasers of risk benefits are made aware of what they are and are not covered for by their new policy.
Younger insureds will not be familiar with exclusions, benefit restrictions, special clauses and deferment periods. The need for an element of education and awareness, potentially leading the purchaser to at least a basic level of advice, leading to more involved advice, even F2F if it becomes appropriate, must be included in the “ease of purchase” process.
A differentiator will therefore be in the realm of including algorithms in the distribution portal that identify and lead a novice purchaser down a sensible path beyond just buying risk at risk (the second “risk” word here being the risk of buying without being made fully aware of what they are actually buying).
Through the lens of the pandemic buying pure protection insurance, more than ever before, is not simply a rate driven decision. Ease of purchase with responsible guided awareness, leading to advice as necessary is the way forward if these new entrants are to be well served and not alienated by their first insurance experience and help them understand as they continue to invest in pension schemes and life insurance.