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As consumers opt to buy insurance online, insurers with a robust digital presence outperformed competitors during the Covid-19 crisis.
In fact, over the first two quarters of 2020, online insurance sales spiked by 35–50%, with over a third of consumer says they would buy insurance from big tech firms. A quarter of consumers say they would use digital to buy insurance in the future and would likely move to brands offering a better online experience.*
Consumer demands have changed. The pandemic is shaping new buying habits including insurance, social distancing and working from home, are the new normal meaning that insurers must adapt to meet an ever-growing number of consumers on their chosen channels.
In an analysis of Q2 2020 quote volumes, fully digital and multichannel insurers performed 22% better-than-average year-on-year (YoY).
In addition, digital aggregators and direct online distribution proved more successful than in-person interactions.
Since the start of the pandemic, countries such as the UK, US, and Canada — where digital penetration is high and insurance well-legislated — fared better than more heavily intermediated industries in nations like India and South Africa.
However, in South Africa (with 60% broker distribution), digital insurers outperformed the competition by avoiding the need for physical interaction.
Insurers that most effectively weathered the COVID-19 storm got these three things right:
Investor expectations evolve with consumer demands; insurers that don’t digitally transform and show resilience will lose out. There’s also cost — where insurers looking to improve expense ratios must actively reduce expensive broker commissions to stay competitive.All this doesn’t mean the end for brokers/agent-driven channels.
On the contrary, as life insurers strengthen their digital distribution, organisations offering multichannel options will achieve higher net promoter scores (a key measure of customer experience and business growth).
*Capgemini (2020) World Insurance Report, Swiss Re, iResearch Analysis (2020)