The novel coronavirus outbreak has presented the life and health insurance industry with numerous challenges, from transitioning to remote working to adapting established processes to meet demands of the “new normal.”
As insurers play a crucial role in the response to and recovery from the crisis, are they facing yet another challenge: a potential reputational risk?
RGA recently conducted a survey across eight markets in the Asia region, where the virus struck first, to learn more about consumers’ perception of the insurance industry’s response to the crisis so far. The results were revealing:
Key Survey Findings
More than 8,000 consumers took part in the survey that consisted of two questions:
- How has COVID-19 changed your perception of the life and health insurance industry? (multiple-select)
- What is the most important factor that prompts purchase of life and health insurance products? (single-select)
Overall, the results provide good news for insurers. Many of the consumers surveyed (34%) felt more positive about the life and health insurance industry based on insurers’ response to the pandemic. In addition, the crisis drove an increased awareness of personal insurance needs (28%) and the importance of life and health cover (35%), further improving consumer perception in the region. Fewer than two in five respondents (18%) reported an unchanged perception of life and health products. Compared with the positive feedback, a much smaller percentage responded that recent experiences with insurers had left them with a more negative view. Disappointment in current product coverage (8%), lack of new product solutions (6%), and lack of confidence in insurers’ handling of future crises (5%) were the reasons most commonly cited for declining perception ratings.
The survey revealed compelling market variations, with the majority of consumers from emerging markets such as India, Philippines, and Vietnam feeling more positive about the industry. Customers in Indonesia, Malaysia, and Thailand reported rising perceptions of insurers, while one in three consumers (33%) in Hong Kong and Singapore expressed no change, despite efforts in these markets to enhance product features and customer experiences in response to the crisis.
It will become increasingly important to develop products that meet consumers’ expectations in a post-COVID-19 world. When asked to identify the most important factors in prompting product purchases, more than 70% of consumers indicated that innovative and flexible features will play a much bigger role in the decision-making process than considerations such as payment terms, value-added services, and customer engagement. Results from emerging markets indicate a coverage gap, with the majority of local consumers looking for new product features.
Implications for the Life and Health Insurance Industry
This is not the first time Asia has had to deal with a pandemic or epidemic, with Severe Acute Respiratory Syndrome (SARS), H1N1, and Middle East Respiratory Syndrome (MERS) occurring in the 2000s. While the exact impact of COVID-19 is yet to unfold, these past events may offer some insights on what the region might expect this time. With both SARS and MERS, the region saw the compound annual growth rate (CAGR) in life and health insurance premiums more than double in the year following the pandemics, suggesting that increased demand for protection products could potentially follow the COVID-19 pandemic as well. With this in mind, the industry should begin preparing now to meet consumers' future needs.
Furthermore, results of the RGA survey present some strategic direction for insurers in Asia – from focusing on and investing in new solutions to meet customers’ needs, to capitalizing on positive sentiment towards the industry and greater awareness of the importance of insurance. Insurers now have an opportunity and a responsibility to build and maintain their role as a trusted partner during trying times.
The clear demand for new features highlights the importance of continued product innovation: Sustainable product features that offer protection through different life stages and events will be of significant value in post-COVID-19 Asia. Flexibility without complexity is a critical solution design principle that will resonate with consumers, including how and when they choose the cover and benefits and how they issue payment. When looking at the protection gap in emerging markets in the region, the combination of affordable and attractive benefits could be a winning strategy.
To learn how RGA can help you achieve your product development goals, contact us.