Just in time for COVID-19, a cluster of bold local disruptors is leveraging data analysis and Artificial Intelligence (AI) to price insurance more competitively and offer greater flexibility and convenience to consumers.
While it may be tempting to dismiss these apps and websites as a fad, you’d be better off taking the time to appreciate their very real financial benefits…for both consumers and advisers.
COVID-19 has prompted many South Africans to cancel their insurance policies. As a financial professional, you know this is a potentially disastrous move. But a client who’s dealing with a dramatic reduction in income doesn’t need your lectures…They need a practical alternative that will save them money while still keeping the really important stuff covered.
“A seismic, tech-driven shift”
A May 2020 report entitled Global Insurtech Market – Growth, Trends, and Forecast notes that the Global Insurtech Market revenue will jump from $5.48 billion in 2019 to more than $10 billion by 2025. Another research house predicts that the Insurtech industry will experience year-on-year-growth of 41% between 2019 and 2023.
Like it or not, notes McKinsey & Company, “the insurance industry is on the verge of a seismic, tech-driven shift.” A shift that has just been supercharged by a post-COVID world that is much more price-sensitive and far more open to tech-based solutions. The flood of innovative insurance products has made it possible for consumers to save money by quickly changing and customizing their insurance.
Have your cake…and eat it
If you’re worried about how you can reconcile the obvious logic of this approach with your very real need to pay your own bills…don’t! The really good news is that the DIY revolution does not cut brokers out of the deal. Most Insurtechs offer attractive partner programs which not only pay a commission to advisers but also reward consumers with cash back.
While many big insurers are incorporating aspects of technology into their offerings, most of the biggest innovations are coming from native Insurtechs which truly put the power in the hands of the consumer. In practice, this could mean being able to choose which home items to insure (yes to the UHD flatscreen, no to the redundant DVD player) or having the ability to switch cover ‘on’ every time you take your mountain bike out of the garage and ‘off’ when you get back home.
Insurtechs aren’t just more flexible and affordable; they’re also far more user friendly. Clients can sign up for a policy on their smartphones in under five minutes and make tweaks to cover in a matter of seconds. Insurtechs have also made use of video testimonials to drastically simplify the claims process. “We can manage other aspects of our lives on our phones,” says Jaclyn Prior of Santam-backed JaSure. “Why should insurance be any different?”
Meet the game-changers
In South Africa, Insurtech names to watch out for include Simply Financial Services (life, disability and funeral cover), Nobuntu (employee funeral cover and community-based pension savings) and JaSure which carved a niche for itself in on-demand (you choose when to activate/deactivate cover) insurance for portable possessions like bicycles, cameras and cellphones. JaSure has recently widened its scope to include home items and word on the street is that they’re not stopping there…
The new home items cover is especially popular among “renters who do not typically have home contents insurance,” says Prior. But the ability to pick and choose what items to insure has also been embraced by homeowners who are now more price-sensitive than ever. “Leaving some of your less cherished belongings off the schedule will save you money,” says Prior, “While ensuring that the things you love and need the most are covered.”
Which brings us to the crux of the matter. While most readers should by now be convinced that the new wave of Insurtechs does have something to offer them, those of you who are still inclined to dismiss it as a fad should be reminded that Fintech has barely been around a decade and is expected to be worth $309 billion by 2022.
Why swim against the tide when you could ride the wave?