Over the past year, life insurers have had to rethink their strategies and being pushed to adopt greater levels of digital services and underwriting flexibility – an area where life insurers have typically lagged. While the direct channel was already gaining ground before the Covid-19 pandemic, consumers’ preference for life insurance is expected to continue shifting even further in the coming years – especially as insurtech is increasingly targeting the life insurance market with pay-as-you-go life insurance, says analytics company GlobalData.
GlobalData’s 2020 UK Insurance Consumer Survey found that 24.8 per cent of consumers visited a price comparison website before purchasing term assurance in 2020, up from 19.6 per cent in 2019. In the non-mortgage-related market, the proportion of consumers seeking out comparison services was much higher at 31.6 per cent. GlobalData’s 2020 survey also found that financial savings are increasingly becoming a key priority for term assurance customers, with 69.1 per cent of consumers that would consider wearing an activity tracker and exchanging that data with a life insurance company only doing so for financial rewards, up by 18.6 percentage points compared to 2019.
Consumers are becoming increasingly self-reliant
Jazmin Chong, Insurance Analyst at GlobalData, commented: “These findings illustrate how consumers are becoming increasingly self-reliant and financially conscious, especially when it comes to term insurance policies – a market that is heavily tied to the mortgage market. Despite this, non-mortgage-related was the only term assurance product to record an increase, up 2.2 per cent in terms of new contracts sold in 2020. Meanwhile, contracts sold in the mortgage-related term assurance market contracted by 5.1 per cent for the year. Going forward, GlobalData forecasts that new contracts for mortgage and non-mortgaged-related term will grow by 4 per cent in 2022.”
Growth in the term assurance market for the next five years will be driven by both an economic recovery and the removal of Covid-19 underwriting restrictions. Even more importantly, a greater number of consumers will purchase term assurance policies because the pandemic has illustrated the negative impact of unprecedented events. Ensuring family members are protected upon death remains the key driver leading to purchases in the term assurance market.
In the travel insurance market, Chubb recently launched Pay As You Roam travel insurance, using mobile phone roaming data to identify when travellers are away from their home country, activating coverage automatically at a daily premium.