Gauging Consumer Reactions in Insurance This Year
Here’s how consumer expectations will shape the insurance industry in 2021.
In a year, a lot has changed in the insurance industry. And as 2021 stands, the economic fallout of the COVID-19 pandemic has radically shifted consumer expectations and compelled companies to virtualize their insurer operations to drive operational efficiency.
Now consumers are changing the way they view, buy, and assess insurance. But, while most industry leaders in insurance adapted to this change quickly, some companies faced many fundamental issues while generating profits this year.
A global survey by Deloitte’s Center for Financial Services found that insurers have to put in extra work, despite adapting to the impact of the Coronavirus outbreak. And one of the primary tasks should be to gauge consumer reactions to fast-track growth and profitability.
How has consumer behavior changed going into 2021?
Health, safety, and financial security are essential to consumers during the COVID-19 period. While consumer needs, habits, and expectations vary, insurance is essential to consumer well-being.
During COVID-19, most companies shifted to digital platforms, and the digital transformation was, then, underway. This situation presented with it numerous cybersecurity issues for companies due to the drive towards digital transformation.
However, companies encouraged employees to work from home and conduct all their routine tasks. In a sense, cybersecurity had a crucial role in the working and personal lives of consumers.
A person’s residence became their school, office, favorite store, and much more. Thus, consumers needed better cybersecurity measures to secure their home network from possible data breaches.
This tremendous change in consumer reactions had insurers working extra hard to satisfy customers.
More than half of American consumers, that were surveyed by Accenture, said that insurers provided them with the support they needed to tide the Coronavirus outbreak. But…
18% of global consumers said that their insurer did not effectively communicate a plausible pandemic response.
How do insurance industry leaders respond to the pandemic?
48% of 200 respondents, mostly insurance executives, agreed that the pandemic pinpointed some long-standing industry issues.
Issues such as legacy hardware, practices required constant addressing.
An article by McKinsey & Company from 2010 described life insurance as a “long-tail business.”
It sums up the nature of the insurance business. What’s more, decades can elapse from the time a policy gets sold to the time a claim gets settled. Here are three points that still trouble the industry still:
1. The policy administration costs increase when the number of active accounts, which handle the costs of servicing expired policies, starts to reduce.
2. Servicing legacy books requires immense processing costs and dedicated IT support.
3. The complexity of legacy systems can account for 75% of the underlying IT costs associated with servicing existing insurance policies.
Insurers hoped the pandemic would bring general awareness to mortality products, but consumers did not seem motivated at all to buy life insurance. Therefore, it is apparent that a communication gap exists.
Insurers need to look at what their consumers want by spreading awareness. When they gain a clearer understanding of how consumers’ lives will change, they can match their expectations with their insurance products.