Insurers have pressing opportunity to support new consumer needs created by COVID-19 pandemic 04 March 2021
Consumers most financially impacted plan to minimize future financial risk
The most financially impacted demographic experienced the biggest change in their financial security and stability compared to pre-pandemic levels. Ninety-one percent of this segment experienced a loss in work schedule, 90% experienced a loss of income and 86% felt the need to dip into their savings to meet their everyday expenses, according to the survey.
The impact of the COVID-19 pandemic was felt to a greater extreme by consumers in North America compared with Europe, where governments have provided more financial support (e.g., the French Government paid up to 70% of the gross salary of each employee temporarily unemployed ). Globally, the data shows that the most financially impacted consumers plan to minimize future risk through financial planning. In anticipation of future uncertainty, they are much more likely than the moderately and least financially impacted respondents to develop an emergency savings plan, speak with a financial advisor, increase contributions to pension/retirement accounts or purchase new forms of insurance.
Despite the most impacted placing a heightened focus on financial planning, a large contingent (60%) say they have not been contacted by their insurance provider since the beginning of the pandemic. In addition, 63% of this demographic say they do not completely understand the extent of their life insurance coverage.
Bernhard Klein Wassink, EY Global Insurance Customer & Growth Offering Leader, says: “By proactively connecting with the most financially impacted consumers, communicating the value of insurance and providing protection solutions in a time of need, insurers can help this group recover, while forming the foundation for long-term customer relationships.”
Social responsibility plays significant role in consumer purchasing decisions
The most financially impacted consumers are also concerned with what insurers are doing around social responsibility. More than half of those most impacted say that an insurance company’s demonstrated commitment to social responsibility causes like racial justice (58%), environmentalism (55%), income equality (58%), policy brutality (54%) and employee relations (57%) is very important in informing their decision to purchase insurance products.
Individuals in this demographic are also much more likely to be involved in social responsibility causes themselves. According to the survey data, the most financially impacted consumers are almost twice as likely (61% vs. 31%) to donate money, time or supplies to a racial justice organization compared with respondents overall.
Fayaz Jaffer, EY Americas Insurance Product Innovation Leader, says: “Insurers need to think differently about how they demonstrate their purpose. They have a unique opportunity to reach an energized audience by amplifying and better communicating their corporate social responsibility efforts.”
Overall, changing consumer priorities and behaviors calls for product innovation
The overall respondent population show an appetite for insurers to offer flexible, cost-effective policies that address changing consumer behaviors and areas of concern.
From a life insurance and retirement perspective, financial well-being is respondents’ top concern followed by losing a loved one. They are therefore more interested in products that cover loss of income and other existing financial commitments, along with insurance products related to health expenses. According to the EY Global Insurance Consumer Survey, respondents expressed the most interest in:
• Products that pay three months of income in the event of a job loss (70%)
• Policies that pay credit card bills (65%)
• Exchanging personal health data for a product with a lower or customized rate (63%)
From the perspective of personal lines insurance, cyber fraud as a result of increased time at home is respondents’ top concern, followed by paying insurance for a car that’s being driven less. As a result, respondents are more interested in usage-based and home-protection related products:
• Usage-based car insurance (70%)
• Insurance for home services such as a smart thermostats and water sensors (62%)
Jaffer says: “The insurance industry can maintain its relevance by playing a critical role in both the recovery of consumers and the wider economy from a financial and social perspective. Now more than ever, insurers must focus on a client-centric product innovation strategy to meet evolving consumer needs, provide protection to those in need and position themselves for future growth.”
For more information, please visit: ey.com/en_gl/insuranceconsumersurvey