Life insurance, a pandemic, and managing disruption
Covid-19 needs to be the disrupter that makes life insurers challenge the status quo and the ‘grudge purchase’ tag
In the past few weeks history has seemingly moved past us all. At no stage did we anticipate that a single moment in our time that would so significantly shift our focus as a society (or even as organisations) and leave us debating where we fit in this so called “new normal”.
In fact, we could go as far to say that not since World War 2 has the entire planet been focused on exactly the same disruptive event.
It got me thinking. About two years ago, I stated that if the life insurance sector did not adapt to the changes to the world around it, then it faced the real risk of going the way of the dinosaur. Many would argue that Covid-19 is the proverbial meteor, and that it’s probably too late for change. But this could not be further from the truth.
While it is easy to fall into the doomsday camp during this pandemic, we should instead be focusing on where we can adapt and evolve to better enhance the much-needed journey for change the sector needs.
At its core, the life insurance sector is (and will always be) about managing disruption.
Think about it: death, illness and disability are disruptions we try to anticipate and provide for. Even in the premium segment of the market, the need to plan for severe illness, to provide for the future needs of family members or even to offer liquidity in estate planning remains the bedrock of the value the sector provides for clients.
Innovation isn’t about courage anymore, it’s about urgency
The risk of a dinosaur-defining moment is not this pandemic. It is rather the inability to adapt away from legacy ways of doing things or even in the failure to anticipate and deliver on client needs.
Recent research shows that clients are the single most disruptive force in the insurance industry. They want insurers who offer them a frictionless service experience across the board: more apps, integrations and ecosystems; less e-mail, paperwork and product pushing.
This kind of research should feel somewhat obvious in 2020. But acknowledging it and acting on it are very different. Innovation isn’t about courage anymore, it’s about urgency. Are you able to get clients onboard swiftly without requiring a medical test for underwriting because you already have enough data analytics to assess their premium? Can you make the process faster, more efficient and more engaging so the experience feels personal and one of a kind?
This is why a pandemic such as Covid-19 matters for the life sector. Not responding with the right spirit is what the meteor actually looks like. This is our responsibility — and, quite frankly, our duty.
When disruption happens at an unprecedented scale (and the whole world feels like it’s on lockdown), life insurers that matter will innovate ahead of the curve in meeting the changing needs of clients. They won’t do what the sector has always done and merely demonstrate the ability to provide financial security. This only embeds the “grudge factor” of life insurance.
Covid-19 is not the industry’s meteor moment — if anything, it is a change-agent for the way the life insurance sector operates. Covid-19 is a challenge to our status quo that drives us forward — not reaction and panic that takes us backwards.
So while the Covid-19 pandemic continues to cause spikes in mortality, illness and unemployment, and creates inherent uncertainty, there is an argument to be made about the value of life insurance as clients have a heightened level of awareness around their mortality. Now more than ever, life insurers must prove themselves as a valuable asset and not a grudge purchase.
Now is the time to challenge the status quo again. So while the lower end of the market might not change much during this time and direct-to-consumer insurers will outlast the pandemic because they’ve stuck to their purpose, high-end life insurance companies are best positioned to combine their strong client relationships with investments in technology-led engagement to offer clients the experience they now require.
If anything, many of the brands that are best equipped to handle the current disruption are themselves disrupter brands. Where we are getting better is through a focus on gold-standard products, facilitated by seamless digital and technological solutions to support real-time customer experience for clients, and a relentless focus on relationship and service.
The times may have changed, but the fundamentals of providing fit-for-purpose and fit-for-the-future life insurance remains.
• Goemans is CEO of Investec Life.
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