Sean Hanlon, Executive Director: Sales & Distribution at BrightRock, reflects on the year that was, and how the life insurance’s trajectory towards needs-matched cover looks set to continue into 2022.
The events of 2021 made it a challenging year for all industries, and life insurance was no different. But they also represented a huge opportunity for our sector to deliver on its promises and show our value. As life insurers, we promise to step in and assist financially when the breadwinner in a family isn’t able to provide for the people that they love. And this year has really shone a spotlight on this responsibility and made this promise real to both insurers and our clients. From a consumer perspective, the pandemic increased the value that people attached to insurance and changed their perception of what we can offer. The Association for Savings and Investment South Africa (ASISA) reports that more people bought insurance policies in 2021 than in 2020 and fewer policies lapsed. People became more acutely aware of the fragility of life and health and turned to insurance for peace of mind.
Also, according to ASISA, from January to June 2021 the industry paid out R315.4 billion in claims and benefits – an increase of 36% when compared to the same period of 2020. And we’re really proud, as BrightRock, to have been part of helping South Africans financially when they needed it the most.
The impact of the pandemic for BrightRock
While consumers were looking for insurance more than ever before, they were also a lot more conscious of their financial circumstances, especially during the hard lockdown, and needed to make smarter choices on how and where to spend their money. Therefore, they wanted insurance that was efficiently priced and structured so that they could get the best cover for their premium Rand.
For us at BrightRock, this is exactly the reason that we designed and created needs-matched insurance – to ensure that clients get the most efficiently priced insurance, perfectly to tailored to their needs and changing as those needs change. The pandemic has catalysed the accelerated adoption of our needs-matched cover approach in an unprecedented way. New clients recognised the value and efficiency of our needs-matched insurance and the fact that they were able to get more cover for the same premium they were currently paying with other insurers.
Our approach to initiating policies was also appealing to potential clients during the various lockdowns. We had already been engineering digital and paperless solutions for our clients before the pandemic, such as WhatsApp acceptance of cover and online capture capabilities. As this was the only way that clients could get life insurance applications submitted during the lockdown, we were the obvious choice.
When it came to the claims stage, it also became evident to clients and financial advisors that BrightRock pays out claims that other providers would not, as well as pay out more than our competitors. We have countless examples of claimants over the years who’ve benefitted from taking life insurance that was designed to have as few reasons as possible not to payout. Also, having the world’s first temporary, permanent disability and death cover where claimants and beneficiaries could decide at the point where the claim is approved if they want a lump-sum or recurring pay-out, gave our clients the added flexibility to make decisions about their claim payment, taking into account their financial circumstances at the time.
According to a recent NMG SA Risk Market Monitors, if you compare the three months in Q2 2019, to Q2 2020 and Q2 2021, BrightRock was the only insurer that grew year on year over this period. Most insurers in our market segment lost ground, making BrightRock quite the outlier during this time. We believe that BrightRock’s growth has been due to the fact that we have been able to provide clients, potential clients, and financial advisors with what they need most from their insurance during an unprecedented time.
What we expect in 2022
The pandemic has put the spotlight on the quality of cover and the value of insurance and has also made people more focused on understanding exactly what they’re buying.
As a result, we do expect to see more adoption of needs-matched insurance generally in the South African market, by financial advisers, clients, as well as competitor insurers. We have always believed that needs-matched cover was the next step in the life insurance industry, and the circumstances of the pandemic have short circuited the adoption of needs-matched insurance and the time it will take to reach a critical mass.
In 2022, we believe that the market will be forced to add features and benefits and make product changes aligned with needs-matched thinking to keep up with clients’ demands for value. People are increasingly going to be demanding quality, efficiency and transparency from the insurers that they trust with their financial future.
The pandemic has set the foundation for a savvier consumer, and we as an industry need to ensure that we continue to focus on offering value, certainty and innovative solutions to meet their needs.