As the world nears two years of living through the Covid-19 pandemic, significant shifts have taken place in terms of what people are insuring. They are also discovering new risks that they were not previously exposed to, or certainly not as aware of as they are now.
“Aspects such as increased digitisation, cyber risks and identity fraud have come up strongly, driving behaviour has changed completely and people are driving their vehicles for much longer and delaying new car purchases. Pet adoptions have soared as more people work from home and spend more time with their pets. Healthcare has also received focused attention – both in terms of cost of care and having access to quality healthcare in a crisis,” explains Carl Moodley, chief underwriting & claims officer at GENRIC Insurance Company Limited.
“Given the changing nature of our behaviour and personal risk, the demand for niche insurance solutions has consistently grown month on month as consumers seek certainty of protection against very specific exposures. GENRIC has seen this trend across various lines of business, notably in areas such as gap cover, mechanical warranty and service and maintenance motor covers, cybercrime and medical emergency services. While cost-containment has been a big drive for many consumers, there is also a greater appreciation of the need for risk protection and avoiding any hard financial knocks of an uninsured peril occurring, especially when finances are already strained,” adds Carl.
“The growing complexity and inter-related nature of risks is also seeing a return to professional broker advice and guidance. As consumers find themselves in increasingly volatile times, and uncertain of how to balance costs versus potential risks, many consumers wanted to avoid the pitfalls inherent with a D-I-Y approach to their risk. The old adage of ‘you don’t know what you don’t know’ rang true for many people who sought out professional advice – notably on the healthcare funding front,” he says.
GENRIC Insurance Company unpacks some of the key trends and shifts in personal risk that it has noted over the last year, and what this means for insurance and risk planning in 2022.
- Gap insurance becomes non-negotiable as members buy down on medical schemes: As consumers and employers increasingly buy down on medical scheme benefits due to financial pressures, gap insurance becomes even more crucial to cover potential in-hospital tariff shortfalls on treatment, which occurs when specialists charge more than the rate at which medical schemes pay. This is particularly prevalent on lower benefit options. Without gap cover, the patient would be responsible for any shortfall from their own pocket.
- Migration to health insurance – GENRIC has seen a sharp uptick in health insurance applications as many consumers – and even employer groups – find themselves unable to afford the high costs of medical scheme benefits, but don’t want to lose access to quality private healthcare when they need it most. The benefit of health insurance is that it provides a range of options on cover from basic primary care only options, hospital only and combined in-and-out-of-hospital benefits and is cheaper than medical scheme benefits because it does not cover prescribed minimum benefits. Instead, medical insurance specifies its benefits and pays out a fixed rand amount up to a defined sum in the policy.
- Mechanical warranty and service and maintenance insurance in demand as cars are driven for longer: Millions of South Africans are choosing to drive their vehicles for much longer and are delaying new vehicle purchases, which exposes them to the risks of ‘out of manufacturer warranty’ breakdowns. In such circumstances, a mechanical warranty insurance policy covers the repair of your car due to mechanical failures or breakdown once it falls outside of its factory warranty period. Following a similar trend that comes with driving vehicles for longer, demand for service and maintenance insurance. Instead of having to pay for the vehicle service in one large, upfront lump sum, this cover provides for a much smaller, more affordable monthly payment which will go towards the cost of the car service. As cost pressures mount, vehicle owners are looking to rather pay a few hundred rand per month versus a large sum of a few thousand rand, especially if it’s a major service.
- Increased digital adoption sees need for personal cyber protection: As e-commerce and reliance on digital banking and transactional platforms grows, cyber or online risks have soared. ‘Card-not-present’ (CNP) fraud on South African-issued credit cards remains the leading contributor to gross fraud losses in the country, accounting for 79.5% of all losses, while the country has seen an increase of more than 100% in mobile banking application fraud, according to an Accenture report. It’s one of the key reasons why personal cyber risk insurance is now as important as home, vehicle and life insurance in one’s personal financial planning portfolio.
- Mobility patterns have changed: Remote working and learning, which is already becoming an established trend, means people are driving their vehicles much less. Less time on the road also means much lower risk for accidents and theft. The integration of vehicle telematics will be increasingly important in insurance solutions that aim to reduce insurance premiums based on reduced mileage and better driving behaviour. You can expect to see a big shift to insurance solutions with a ‘pay as you go’ component as consumers drive a lot less and thus expect to pay less for their reduced risk.
- Pet adoptions soared during the pandemic: While relationships and marriages have taken strain during the various lockdown levels and increased time spent at home, other relationships have thrived. People have spent more time with their pets than ever before, and pet adoptions have gone up too. This has driven new demand for pet insurance – pet owners want the reassurance that if things do go wrong and their pet gets sick or injured, they’ll never have to decide between their finances and Fido’s health and wellbeing.
- Crime is on the rise: As the economy falters and more people find themselves unemployed and desperate, the crime rate is increasing. Taking extra safety and security measures at home and on the road is essential, as is checking that insurance covers are in place for all potential scenarios. Insurance solutions that add extra layers of protection, telematics and private response to emergency situations are increasingly in demand.
“Consumers have been rattled by the ongoing pandemic uncertainty, and there is now a greater appreciation of just how unpredictable and far-reaching risk can be. As a result, consumers want absolute certainty that they are covered for specific risks – whether that be a car breakdown, an unexpected hospitalisation or a sick pet. As personal circumstances continue to change and evolve, the guidance and advice of a professional broker will prove invaluable in structuring an insurance and risk management strategy that’s fit for purpose,” concludes Carl.