Cost of living crisis and insurers
The cost-of-living crisis is having a huge impact on the majority of households around the world with food, petrol, and energy bills all rising in price. People are reducing their expenditures, shopping for cheaper brands, and drawing on savings to make ends meet.
In the U.S. a survey by Breeze (an insurance services company) found that 88% of consumers have cut spending as a result of inflation. Other figures are 73% of U.S. households have cut back on restaurants/takeout, 63% on consumer spending, 62% on social spending, 57% on groceries, 54% on vacations, 44% on gas, and 35% on debt payments.
In the U.K., one insurer’s April survey of the effect of the cost-of-living increases found that one in seven, or 13%, of those with extra living costs said they are struggling to pay for heating, and 10% are finding it difficult to pay for food. Another insurers’ survey found that people were worried about the long-term impact of cost-of-living increases. It found that two thirds of U.K. adults (the equivalent of 33 million people) worry that rising inflation will have an impact on their future plans.
In Canada,the EY Future Consumer Index Survey found that the rising cost of goods and services is impacting more than half of Canadians' ability to purchase goods. While this inevitably impacts lower-income earners the most (81%), the survey reveals that middle-income earners (50%) and high-income earners (35%) are also being squeezed.
One of the first things people do is cut down on everything but essentials. For many, that means cutting down on insurance cover by cancelling or moving to a cheaper policy. Pet insurance was the most common type of policy dropped, followed by home building and contents insurance, gadget insurance, and then life insurance.
So, how are insurers responding to this cost-of-living situation. Insurers continue to donate funds and provide support to communities. For example, Humana Healthy Horizons invested $4.6 million to support community organizations in Ohio, and Aetna Better Health recently donated to five community partners in Kansas.
Insurers can also be flexible with their policies, and it is important to explore ways in which they can help. Below are some of the ways insurers are helping people navigate their way through this crisis.
Life Insurance
Life insurers now offer customers more flexibility and customization with their life insurance plans. In Asia, life insurers are beginning to offer policies that cover same sex couples, recognizing diversity in families and the need to make sure their policies are inclusive to all.
Life insurers also offer flexibility in times of crisis, perhaps making it possible for customers to reduce their coverage or take a break from premium payments without it affecting their policy status. In Asia, customers are moving towards purchasing term life products rather than Whole Life. Prudential in Hong Kong offers customers premium refund promotions and supermarket coupons when they share these offers with family and friends. The vouchers can also be used to buy life insurance for their families.
Life insures can also offer a break in premium payment. One life insurer in the U.K. allows a break in premiums if the policy has been inforce for a year, and if the customer has a good premium payment history. The payment break is only offered for a month at a time, for up to three months.
Another insurer, AIG, takes a second approach, offering customers a premium holiday for a specific period. Companies may also reduce premiums together with a reduction in the amount of coverage. In this case, the insurer allows a customer to reduce coverage for up to six months; while the value of cover is reduced, this does not allow for a complete break from payments. In this scenario, a customer can return coverage to what it was with no further underwriting required, and no back payment of premiums. This insurer also provides access to 24/7 health and well-being support services.
Employee benefits
In challenging economic times, it is a good idea to review what employee benefits your employer might offer to help you navigate your way through.
Many employers offer enrolment in these benefit programs twice a year. One relevant benefit offering potential savings could be a cycle-to-work program offering employees savings on their commute while promoting a healthier lifestyle. A similar benefit could be a commuting loan allowing employees to buy an annual rail, bus, and tram pass and then paying the loan back in instalments throughout the year, making it a little easier on the wallet. A new benefit to emerge is an electric car benefit program that reduces the cost of buying an electric car by paying monthly with tax benefits.
Making group medical insurance available for smaller employers can also help. Blue is offering group health for small businesses with as few as three employees, and with no medical underwriting required.
Mental health is also a concern as consumers have been stressed first by the pandemic, and now by cost-of-living increases. Insurers continue to refine their offerings and provide employee benefit packages that include access to apps such as Headspace and to direct employees to CBT services. The more traditional Employee Assistance Programmes (EAPs) are also available where employees have access to support services such as confidential counselling and money management help.
An insurer in Australia offers the ‘Ask a Mental Health Clinician’ service where mental health questions can be submitted confidentially and responded to within 24 hours. Similarly, a large insurer in the States through a partnership with Empathy now offers an award-winning platform to their employer clients in need of support after the loss of a loved one.
Health Insurance
Health insurers continue to offer rewards and cashback to customers who attempt to lead a healthier and more fit life. The activities can be as simple as taking a short walk each day, exercising, meditating at home or in the office, or simply getting a night of restful sleep.
YuLife in the U.K. offers the ability to earn Yucoins which can be redeemed for vouchers. Wellx in the UAE is a platform that rewards individuals on the completion of health and lifestyle goals. StepSetGo in India offers customers cashback on their fitness activities, with customers earning back their premiums by completing step-based challenges.
Insurers are also partnering with platforms and insurtechs to further refine their value-added services. Many of these rewards and vouchers can now be used to purchase groceries and pay electricity. In South Africa PaymeNow has added a health insurer to its value-added services offering.
Customers can now purchase airtime, data, electricity, and grocery vouchers via the app. The app also allows the purchase of vouchers towards high-quality, primary healthcare services in the private healthcare sector.
Discovery, a major health insurer, has introduced the Healthy Baby benefit which is now available to Vitality members. This benefit makes shopping for babies, toddlers, and children more affordable. It offers 25% cashback on nappies, barrier cream, and wet wipes, as well as for premium items such as prams, cots, and booster seats.
In Australia Vivo Incentive offers eligible customers a lifetime discount of 7.5 percent on their annual premiums for lump sum covers including Life, TPD, and critical illness, if their BMI falls within a specified range.
The Ness Wellness App allows consumers to earn points for the spending they're already doing on their health. Eventually, all "healthy actions" – from fitness activity to physician visits – will be rewarded. These points can be redeemed for offers at wellness brands such as Sweetgreen, Thrive Market, and Barry’s Bootcamp.
P&C Insurers
With the price of fuel rising and people being concerned if they can afford to run their car, insurers are coming up with alternative propositions such as pay-as-you-go car insurance. An example in the U.K. is the Aviva Journey app. It is designed to help safe drivers significantly lower their premiums. The app is downloadable to a smartphone and customers signing up immediately qualify for a 10% savings on their auto insurance.
Financial Wellness and Retirement Ready
The cost-of-living crisis also impacts those workers contemplating retirement. For many, inflation has delayed their plans. An insurer’s recent survey on Retirement Security in the U.S. found that the biggest concerns are maintaining a healthy lifestyle, enduring market losses, outliving savings, and meeting daily expenses.
In the U.K., insurers can lobby parliament to urge ministers to consider allowing early access to their pensions for the under 55s facing acute financial hardship.
Insurers already offer resources for financial wellness in retirement, of course. A recent example is FutureFIT Wellness Check, an interactive assessment tool to help retirement plan participants take action for their financial future. In the U.K,. a large insurer has launched the third season of its award-winning “Rewirement” podcast, which aims to give listeners the knowledge, understanding, and confidence to navigate the big financial decisions they face throughout their lifetime. In Malaysia, the Total Wealth Solution ecosystem is designed to support Malaysians at every stage of their lives, through the pillars of “Plan Well, Live Well and Protect Well.” This is to empower them to inculcate healthy financial habits and make sound financial investments that will fulfil their long-term savings goals.
Insurers’ offers now include access to financial education and tips to maximise financial opportunities and overcome financial problems. Many of these platforms provide a framework and guidance to support financial goals of budgeting, pensions, and investments. Insurers have designed apps to help people with their retirement planning, and will also provide articles with tips on how to deal with rising prices and inflation.
Rather than considering insurers as the enemy, the idea is to reach out to customers and consumers in times like these to show how insurance helps. Insurers don’t want to lose existing customers if they can avoid it, and will continue to be flexible by offering breaks in premiums, lowering the cost of cover, and providing rewards and incentives for customers to lead longer and healthier lives.