How has Covid-19 affected how people buy insurance?
Covid-19 has accelerated and reinforced the global shift towards buying insurance online – across ten major countries, face-to-face communications between insurers and customers dropped dramatically in 2020 while online and phone communications increased, according to Finaccord
The pandemic has clearly brought seismic changes throughout societies across the world, and the insurance industry has not been an exception. Finaccord has released a dedicated consumer study across ten key markets, revealing in detail how insurance buying has changed.
Key findings in the report show that in 2020, online and telephone interfaces took over from face-to-face communication with insurers. These changes varied substantially between countries, however, depending on both pre-pandemic interface use and the severity of lockdowns. In Australia, for example, face-to-face contact fell from 11 per cent of all communications with insurers to 7 per cent, while in Brazil it plummeted from 30 per cent to 5 per cent.
Customers are going to stick to online distribution channels
The report found that people expect to continue buying insurance online. In six of the ten countries, more than half of respondents expected to buy online in future more often than before 2020, rising as high as three quarters of Chinese respondents. Even in France, where respondents were least enthusiastic about buying online, the equivalent proportion was over a quarter.
At the same time, though, offline sales remain important: in seven countries, over 40 per cent of respondents had never bought insurance online and did not expect to do so more after 2020.
The pandemic has also spurred the use of technology within insurance policies. Lockdowns generated a major shift towards telematics insurance among younger drivers: on average 12 per cent of drivers in the 18-34 age range switched to a telematics policy.
Despite the accelerated shift to digital communications, the potential for market disruption by major tech brands remains limited: most respondents were found to trust their insurers more than the tech brands. However, trust is closely linked to age: younger respondents were notably more likely to favour the tech brands. Levels of trust also vary hugely between countries.
Insurers are particularly concerned with their reputation in the wake of Covid-19, as they have had difficulties offering cover, and as pandemic-related claims disputes have been widely reported. Finaccord’s survey offers reasons for optimism: looking at how respondents’ views of their insurer had changed since lockdowns began, the result in eight of the ten countries was net positive.