Tech innovation drives insurance trends as another challenging year looms for consumers
Berniece Hieckmann, Head of Metropolitan GetUp
The buzzwords for the past two years have been future-forward with all-encompassing terms like ‘digital transformation’, ‘AI’ and ‘blockchain’, but 2023 brings with it a sobering reality. With a tough economic outlook, the pressure is now on for insurers to deliver more value than ever. Now, combine this with the unprecedented lingering impact of the pandemic, you find yourself with a hotbed of opportunity for innovation and change in the insurance industry. Berniece Hieckmann, Head of Metropolitan GetUp, explores trends that could impact insurance in 2023.
1. Expensive data must fall
The high cost of data has been a source of friction for digital innovation in the industry. In a country where there are more cellphones than people, digital solutions would seem to be the natural evolution of the industry. But, when you consider how expensive data is in South Africa, even in comparison to other African countries, it makes it difficult to interact with clients on their phones. A recent study revealed that 1GB of data costs, on average, R39 in South Africa compared to R10 in Ghana, which has the cheapest data in Africa. There is a long way to go in closing that gap, but new entrants in the connectivity arena are putting pressure on existing providers to offer better value. “Community and connectivity are at the centre of South African culture and companies that understand and leverage this responsibly can compound their growth in 2023,” says Hieckmann.
2. More virtual self-help
Consumers have become more digitally savvy, which leaves room for simpler, faster, and money-saving digital solutions. However, this will not eliminate on-demand support, which makes sense when it comes to largely intangible products such as insurance. By connecting with on-demand support online, clients can eliminate store visits, save travel costs, and avoid queues. To make this work at scale, insurers need to simplify their solutions, make them intuitive, and expand digital and virtual channels to pass back value to consumers.
“Our insights have shown a significant behavioural shift in the way that consumers search, quote, compare, and buy products through digital channels. A key takeaway is that clients want to be in control with the option of human intervention only if needed,” explains Hieckmann.
3. Consumers understand the value of their data
The enactment of POPIA in 2022 and the subsequent barrage of communication from brands on the safety of user data sparked awareness among consumers about the value of their personal data. There is also a deeper understanding of cyber risks, which can function as a barrier for transacting online. It’s paramount that clients know that their data is safe and used only for its intended purpose.
Industries that use consumer data to deliver services, drive greater efficiencies, improve risks, and enable product innovation, require access to a large pool of data. There is a great opportunity here to provide reciprocal value to clients in terms of improved experience and tailored products as part of a fair exchange. Over time, this will become an industry standard. There is increased pressure on businesses to respect data privacy and consent – when clients opt out, it must be respected and honoured at all levels. Empowered consumers are tough and will make their voices heard.
4. Insurance everywhere
The lines between industries are becoming distinctly blurred. Banks are insurers, insurers are banks, even retailers and telecommunication companies are insurers. As industries diversify, it is important that consumers make informed choices on exactly what they are buying and from whom. Diversification has positive implications for consumers, but it should not come at the cost of quality and long-standing expertise – especially when buying a product where you will only really know if it was a suitable choice when someone passes away.
As insurance becomes widely available through diversification, a rise in more bundled and integrated product offerings will follow. “The double-edged sword of this innovation is that clients may have the convenience of a single interface, but at the cost of not truly understanding what they are covered for and potentially being under-insured,’ explains Hieckmann.
5. Flexibility is what matters
Economists forecast that inflation will remain above 7% well into 2023. For consumers, this means that their salaries will not go as far as it used to and therefore, they will be even more discerning about their expenditure. Hieckmann points out that “Insurance is a top priority for many people, but when things get tough, people may consider cutting their insurance premiums. This could be devastating as it is often the time when clients need their protection most. So, the industry needs to innovate with this in mind.”
Based on this scenario, Hieckmann explains that there is traction in the right direction. “The team at Metropolitan GetUp focused on finding solutions for clients to survive the economic onslaught. “As an example, our flexible payment solutions mean that clients can pay any amount they can afford in a specific month, have options to get loved ones to also contribute to the premium, and have the latitude to pay at any time of the month,” says Hieckmann.
While the coming year’s forecast includes challenges, the insurance industry’s post-pandemic bounce-back is a testament to its resilience. With consumers eager for more digital transformation, simplicity and flexibility that puts them in the driving seat but trust that there will always be support at every step in their interactions with a business, those that innovate and iterate most efficiently will emerge as the long-term leaders.