Sean Hanlon, Executive Director and co-founder of needs-matched life insurer BrightRock
A recent study by McKinsey entitled “Beyond COVID-19: Charting the road to recovery for South African insurers” posits that life insurance will be the worst insurance subsector affected by the aftershocks of the pandemic.
The report goes on to predict that gross written premium will potentially contract by 18%, due to poor returns, reduced customer demand, declining disposable income, and disrupted distribution. Because life insurance is seen by many consumers as a discretionary purchase, the McKinsey study also foresees that new business could fall by 25 percent as consumer spending comes under pressure, and renewal premiums could decrease by 12 percent.
The future is digital
Our experience at BrightRock over the past year does offer some hope, however. 2020 was a year that galvanised innovation and a new perspective in the insurance industry and a move towards digital became critical for the survival of our sector. At BrightRock, we were able to initiate policies for hundreds of new clients using WhatsApp, digital signatures for counter-offer letters, video conferencing for client
consultations and tele-underwriting. We also implemented underwriting concessions where consumers were able to get life insurance cover without needing to undergo medicals.
As a result of this rapid move to a paperless system, BrightRock saw a 4% increase in new business sales during the second quarter of 2020 versus the same period of 2019 compared to an average market reduction of 38%. We’ve also had record new business months since July, once the hard lockdown was lifted – pointing to an increased interest and appreciation among consumers for the value of insurance.
Using available technologies such as AI, intelligent automation, the Internet of Things and big data technologies should definitely be a priority for the life insurance industry in 2021 and beyond. These digital tools will allow us to better support our clients as they will enable us to significantly streamline and enhance processes such as underwriting, the handling of claims, fraud management and interactions with our clients. The use of technology is where the industry is going, and we are fully embracing this opportunity.
Yet personalisation remains key People often believe that technology alienates because it treats people as data rather than individuals. While that does have some element of truth, one of the reasons why most of us love technological innovation is that it customises its services for us – think streaming services and food delivery apps, for example.
But people still want a friendly face while technology is making their lives easier. While we don’t need someone to help us with what takeaways to choose on a Friday night (although sometimes those decisions take longer than they need to!), individuals want the personal touch when it comes to navigating the life insurance landscape.
Now more than ever, people are thinking about life policies and taking out these policies has become even more of an emotional undertaking. Clients are looking for reassurance and advice that speaks to their personal needs and worries – an aggregator or online insurance application cannot do this.
As financial advisers, your business has always been heavily reliant on personal relationships and your ability to establish and maintain these relationships. Over the past year, you have had to adapt to the limitations forced upon us by COVID-19 and approach clients differently in order to help these relationships thrive. Technology has now become the best tool to facilitate connection with our clients.
With BrightRock’s offering which allows advisers to meet clients’ individual needs, we believe we’re able to showcase and enable financial advice. The independent financial adviser is, ultimately, the best aggregator and the most sophisticated technology available to clients. As financial advisers, you are uniquely qualified to find the perfect fit for your clients’ risk cover needs. This is important work, especially in an uncertain environment.
In conclusion then, while we agree with the McKinsey report that our industry is likely to face many challenges in the year, we at BrightRock believe that 2021 will also be a year of positive developments in the life insurance space. 2020 catapulted us into uncomfortable, unfamiliar territory where we were forced to change our old, outdated habits to more updated, client-centric ones.
2021 will be the year that we continue to upend the traditional business model for our sector and make more progress in not only developing unique solutions for our clients but also doing business with them in a way that is more agile, secure, connected, and digitally enabled.