By Anton Keet
As Covid-19 continues to wreak havoc on the South African economy, with travel bans and increasing infections taking a toll, both consumers and businesses are again feeling the pinch. In fact, 2021 has not seen many people recover financially from the impact of the initial outset of the pandemic. Sadly, many have dipped into personal savings to keep bread on the table and pay for everyday expenses.
So, will we recover in 2022?
Covid and life insurance
We have already seen that there is a correlation between economic activity and vaccination rates - higher rates means stronger economic activity. The longer it takes to vaccinate our population, the longer our economic recovery time and as we have entered a fourth wave, this is likely to have an impact on GDP and job market recovery. And critically, consumers will be financially impacted – lowering their ability to save and plan their finances effectively.
From a life insurance point of view, there is a direct impact on policy affordability. Yet without life insurance, and considering the potential for increased deaths, consumers could be facing even worse financial impact over the long term.
This means that for our sector, affordability, value and customer service will be more important than ever before. In a price sensitive economy, insurers will need to provide intrinsic value and flexibility even more if they want life insurance to be viewed as an essential and not a grudge purchase.
Opportunity to create wealth
With current South African unemployment levels at a low 39.4%, South Africans who earn more than R10 000 a month with a debt-to-income ratio of 127%, as well as unsecured loan sizes increasing by as much as 46% (according to DebtBusters), South African consumers are in trouble. In 2022, we hope to see a shift in consumer thinking around their finances. And given the lessons learnt over the past two years, we are hoping to see more people decreasing expenses, seeking assistance for debt management and critically, learn how they can make the money they do have, work for them.
The financial services sector needs to help consumers understand how they can begin to take steps towards creating generational wealth for the future wellbeing of their families. So, in 2022, as with much of the back end of 2021, we expect to see a spike in the financial services sector’s provision of assistance to consumers to help them reach financial stability – be that in services, products or value add.
The importance of personalisation
Consumers want to engage with providers on their channel of choice, with rapid resolution on issues and quick turn around on payment. Critically however, and especially as consumers face tougher financial positions, providers need to take a tailored approach to consumer needs, to help them make informed decisions that are valuable to their families’ financial future. Consumers do not merely want transactional service – it’s a relationship and so insurers, now more than ever will need to engage with a much more empathetic approach.
Speed and efficiency
Speed and efficiency are critical when it comes to claims turn arounds and in fact, even taking up a policy. And so – to get the right value and flexibility from a policy, technology plays a crucial role. Choosing an insurer that has the right technology to support faster claim and process turnaround times will not only give consumers the trust they need in a financial services provider but also provide the peace of mind that their money is well looked after. Those insurers that make insurance easy and convenient by offering product flexibility, personalised underwriting that is unique to consumer budgets and lifestyles, flexible payment options – including online and digital payment options – will certainly be top of the consideration set. In fact, some insurers may even offer things like digital wearables that use technology to help improve lifestyles, and digital programmes which help improve consumers’ own financial literacy.
There is no doubt that consumers are in a tough place and have much less money to work with. But with the right financial guidance and support consumers can have a better 2022. It is about embracing a new way of thinking and taking one small step at a time.
Anton Keet is Head of Risk Services at 1Life and Truth About Money administrator.