On the 18th of June, YuLife co-founder Jonathan Roomer joined hosts Sarah Kocianski and Nigel Walsh on the 11:FS Insurtech podcast, along with guest Colleen Wells of Sapiens, to discuss the impact the current pandemic has had on the life insurance market, including the public’s propensity to buy, shifting priorities and how technology and digitisation are key identifiers in helping insurance businesses to best serve their customers.
Here are some of the key takeaways from the podcast.
Has the pandemic affected our propensity to buy life insurance?
Sarah began the episode with some harrowing statistics about the current state of the life insurance market: “As of the 27th April this year, 8.5 million people in the UK are currently without life insurance. Across the pond, almost 40% of Americans will leave their families in financial distress when they die.”
When asked what life insurance entails and what it covers, Jonathan began by explaining that, “life insurance, at the highest level, is as ‘simple’ as receiving money when you die. I think that one of the reasons why those statistics are so grim has to do with fear. People naturally fear what they don't understand. It’s also a subject people don't want to talk about; we all think that we're going to live forever, even with the pandemic, so people ignore it.”
Jonathan continued by touching on other reasons why people might not have taken out life insurance before: “There’s an interesting model that we follow within our product and it's called the BJ Fogg behaviour model. In behaviour, for any action to happen, people have to do three things or have three motivations. It needs to be accessible, it needs to be easy to do and there needs to be a trigger.
“If you look at those three things, people are generally not motivated to buy insurance because they fear it, and there isn’t much accessibility; it's not always easy to do because there's a lot of questions, some of which are medically complicated and you may have to go for medical. Finally, the main triggers are usually things like buying a house or having a child. So, if you need all three of those things, the motivation is low; it's not perceived to be easy and there aren’t frequent triggers.”
Colleen added with the question: “When do you want to approach the topic and when is the right time to start thinking about and acting on life insurance? I think that's going to change, I see consumers thinking about it more and more, especially given the pandemic and COVID-19. I think the industry has a lot of responsibility to come along and hopefully help educate people and make it easier to obtain and earlier in people's lives before those things happen.”
Will COVID-19 cause an increase in people taking out life insurance policies?
Colleen shared that Sapiens surveyed one thousand consumers and the results reflect that COVID-19 has brought mortality to the forefront of people’s minds. “One of the interesting things we found was that customers were willing to cut back on every financial expense they had, with the exception of insurance.
“There’s a huge opportunity for the life insurance industry. Those who had been directly impacted by the pandemic were two and a half times more likely to increase their insurance coverage or to obtain new coverage.”
Jonathan said that there has been an increased interest in “income protection, which is a policy that pays out based on your salary or a fixed amount monthly to replace an income while you're incapacitated. It's not death-based cover, it's an illness-based cover. Income protection is a product that is becoming a lot more prominent recently, given things like furloughs and job losses.
“The value of it has become a lot more clear these days. Having an income replacement product that gives you protection against what you actually would have been earning is definitely becoming a much more sought after.”
Looking at insurance as risk mitigation, not compensation.
Jonathan shared that “life insurance moves incredibly slowly. A shift we’ve seen is that insurance shouldn't be about compensation, but risk mitigation. That means you shouldn't only be there at the end when somebody needs you, you need to be there to help them along the way.
“You can bring your own risk down, and from a life insurance perspective, that means to help people learn to live better, to live for longer. So one of the things we've seen is that one or two of the bigger insurers are now trying to play catch up within the COVID area and offer support services, whether it be access to a virtual GP or mental health services to help them cope with what's going on at the moment. I think that that's a trend that will accelerate and their insurance gives them the tools to be healthy to prevent the worst.”
Colleen added that “there's a value to added services. The product you have is life insurance and you hope you don't have to touch it. But that means you forget about the policy and you lose touch with your insurance provider. The sort of things you were suggesting there actually gives you as an insurer more regular touch points with your customers as well. In this, they feel a little bit better because it sounds like you're looking out for me or what you really do care.”
Providing life insurance for COVID-19 and beyond
Digitisation, effective use of technology and giving customers more touchpoints with which to interact with providers is key for success during the pandemic and into the ‘New Normal.’
Listen to the podcast here.
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