As consumer buying behaviours and preferences are ever-changing, insurers need to continuously engage with clients to better understand their needs and find new ways to adapt their businesses to cater to these needs, whether it be through technology or professional and personalised service. In an industry like long-term insurance, consumers have different preferences and needs, which is why tailored solutions and communication is key.
Consumers are expecting more value for their money and during tough economic times, it is important for insurers to provide the value they are looking for. In fact, digital innovation and the impending implementation of the Retail Distribution review provides a wealth of opportunity for both the client and the insurer, for those willing to embrace change and technology.
Let’s take a look at some of the key trends that will mark the long-term insurance landscape into 2017. While we have seen these trends emerging this year already, we are sure that they will take further shape into the year to come.
There is no doubt that 2017 will present some interesting opportunities and challenges for the industry – with the expected implementation of RDR. The industry is going to be very focused towards not only providing a better quality of investment advice to consumers, but also ensuring that consumers understand the advice given and that they are able to make informed financial decisions, based on this.
In 2017, tailored, individual financial advice that meets changing regulation and ensures that the consumer is placed at the centre of the business model, is going to drive competition in the market and open up value-added offerings for the consumer.
Consumers want access, transparency and choice when it comes to all aspects of their finances and their financial planning is no different. In fact, we predict there is going to be an increasing need to provide clients with the access and ability to do their own needs analysis with immediate results. An online or telephonic-based needs analysis, for example, that is built and designed using data, within the actuarial science profession, and is fully compliant with the requirements set out by the industry at large, will be central to this movement.
Not only should a financial needs analysis take into account a client’s lifestyle, life stage, income, dependents, risk profile and their personal financial goals, but so too is the system able to provide a client with the optimal amount of cover they should have - whilst treating them fairly.
Consumers’ preferences and habits will influence the role insurers play in fulfilling their long-term insurance needs. The insurance landscape in 2017 is going to be centrally reliant on a consumer centric business model – one that looks at cross platform engagement to stay connected with clients, to better understand their needs and find personalised solutions.
Relationship building with clients will continue to become more relevant and important and insurers will need to continuously keep them informed of new offerings, changes, business updates or relevant and informative content.
Communicating with them on a continuous basis via their channel of choice, such as SMS, email and post, is essential. Direct insurers will also need to ensure an engaging and agile social media presence that is able to quickly address any queries or concerns - critical to maintaining client relationships and providing value and convenience for the customer.
Furthermore, insurers will need to provide a tangible service offering to help empower and educate consumers about their finances. Many South African consumers are struggling with their financial management and understanding and therefore – beyond free financial advice - providing educational articles and content that equips them about various topics, is key to ensuring that consumers are educated around their financial choices.
During difficult market conditions, consumers are under financial pressure and are looking for ways to reduce their spending to have more disposable income. As a financial policy, such as life or funeral cover is intangible, it is most definitely in a consumer consideration set to cancel, as many consumers don’t realise the impact of cancelling. It is for this reason that, 2017 will form a critical time for the insurance space, where an insurer that is able to understand the client’s situation and adjust their cover to meet their budget and provide truly personalised value to each individual client will see stronger success. Not only will this be good for the industry but so too does this encourage clients not to cancel or let their policies lapse, but to rather adapt them, to ensure that they are covered - even in tougher times.
2017 will be about providing a number of options – tailored to affordability – to ensure clients have alternatives when affordability is lower. This means that innovation, communication and personalisation form key pillars and that, solid financial advice and client understanding, will be a main driver within the sector into the new year.