There can be little doubt that the past two years have been among the most challenging South African insurers have ever faced. The business closures and loss claims as a result of the hard lockdown in early 2020 came as a seismic shock. Since then, death claims have spiraled, quadrupling during the third wave of the pandemic.
By Greg Gatherer, account manager at Liferay Africa
It’s not as if there weren’t challenges prior to the pandemic either. The industry was already grappling with how it might have to reimagine itself in the wake of increased weather claims as a result of climate change. Additionally, traditional insurers are facing the threat of upstart insurtechs that are out to disrupt their business models.
In 2022, some of those challenges might fall by the wayside. Others, meanwhile, will only grow more stringent. That said, there will also be opportunities to open up new markets and find new ways of servicing their customers.
Here are some of the most significant of each.
Increased customer expectations, cybersecurity risk, and COVID waves
Even as vaccines become more effective and new medicines are released, COVID-19 will likely remain an issue for the insurance space. It’s likely that new COVID-19 variants and waves in 2022 will influence regional variations in hospitalizations, increase the need for booster shots and vaccines, and impact how people seek or delay healthcare.
Insurers will have to plan for that and find ways to rapidly adapt to any new waves or variants that emerge, especially when it comes to servicing their customers.
Another consequence of the pandemic and its associated lockdowns is that people have grown accustomed to great digital experiences. Increasingly, they expect insurers to match those experiences.
While South African insurance customers are, in general, more satisfied with their insurers than those in other countries are, that won’t last forever. As digital-first insurance startups come to the fore, traditional insurers will have to start offering products and services that they currently don’t. It’s also instructive that the industry’s net promoter score, a measure of how likely someone is to recommend a brand, sits at just above 41%, suggesting that there is definitely room for improvement. Ultimately, if insurers are to change that, they need to digitally transform their business so that customer interactions are no longer slow and frustrating, but rather, what they were intended to be: simple and helpful.
But direct customer interaction isn’t the only area where the insurance industry faces a digital challenge. Cybersecurity is a major issue too. After all, policyholders trust their insurers to protect what’s most important to them, including their data. But with more and more operations moving online and cybercriminals more sophisticated than ever, cybersecurity has never been a bigger risk for insurers. It’s also worth noting that any insurer that falls victim to a breach won’t just face significant costs (the average cost of a breach in South Africa today is R46-million), but also reputational damage. It’s critical, therefore, that insurers work on their cybersecurity efforts in 2022.
Opportunity for innovation
While insurers will have to deal with a fair amount of uncertainty in 2022, their current state of flux also allows for a great deal of innovation. By embracing digital transformation, insurers can break down the different silos within their organisations, gain valuable insights into their customers, and ultimately provide them with great experiences. It will also allow them to look at new, innovative products and services that further enhance their ability to service their customers.
Insurance customers have faced incredible amounts of uncertainty over the past two years. If they can demonstrate that they understand their customers’ needs and anticipate changing circumstances, they only stand to gain when it comes to loyalty and recommendations.
Beyond a grudge purchase
Traditionally insurance has been viewed as something of a grudge purchase. It’s something that we all need, but we don’t like the fact that we do. A fresh approach that centres customer experiences and which focuses on always being useful and helpful can change that.
The insurers that understand this and effectively implement the steps needed to make it work stand to see serious gains in 2022.