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Online insurance sales skyrocket during lockdown

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The coronavirus (COVID-19)-induced lockdown period has been a catalyst for insurers to accelerate their business through technology, with insurtech companies witnessing a surge in life and asset insurance policy sales since March.

Local insurtech companies Simply Financial ServicesPineapple and Naked say they have seen strong growth of sales since SA re-adjusted to the new normal, after government instituted the national lockdown in March.

The shutdown period led consumers to rush to digital platforms to purchase policies – a trend expected to drive a permanent uptick in online insurance sales.

Anthony Miller, CEO of SimplyFinancial Services, says the Cape Town-based insurtech firm reported a 500% increase in broker sales in the last few months, triggered by the impact of COVID-19.

“Our monthly broker sales have increased more than fivefold since mid-February,” notes Miller.

“COVID-19 has caused a seismic shift in consumer behaviour in relation to life insurance, with technology platforms easing the administrative burden and allowing brokers to focus on their clientrelationship – which is where the real value lies in the intermediary role.”

Founded in 2015, Simply Financial Servicesprovides life insurance productsunderwritten by Old Mutual Risk Transfer, which include life, disability and funeral cover, through its online platform.

The fully digital insurance company attributes much of its growth to its no-touch broker platform, which enables its brokers to sell simply and remotely in a secure way.

“Traditional life insurers and brokers have struggled during lockdown, with face-to-face players largely shut for new business,” according to Miller.

Matthew Elan Smith, co-founder of Pineapple, says the company initially saw a decrease in activity during the start of level five lockdown, as short-term insurance may not have been a top consumer priority at the time.

“However, since moving from level five to level four and now to level three, we have seen large growth and a surge in demand for our products online. Our net growth has been approximately 32% since the lockdown began,” says Smith.

Pineapple, which has over 30 000 customers and more than 100 000 mobile app downloads, allows consumers to form pools of funds, from which claims are paid out.

Launched in 2018, the company says it has made insurance as simple "as snapping a picture" – users take a photograph of the object they want to insure and load it onto the platform.

Its artificial intelligence capabilities recognise what the image is and place it in the appropriate category for pricing purposes, according to the company.

“Affordability and Pineapple’s business model of distributing leftover profits and connecting insurance back to its social roots has led to a strong growth avenue of new members who are referred from existing members. We believe this was particularly prevalent over lockdown with people investigating and seeking new digital services to fulfil their needs,” adds Smith.

Record sign-ups

The recent local surge of online demand for insurance products reflects global patterns.

For example, in the UK, insurtech firm Aegis says it has seen substantial increase in demand for its electronic placing platform, which provides underwriting for several products, allowing its underwriters to continue delivering business during lockdown.

Globalonline insurance portal Policybazaar says health insurance sales jumped by 35% to 40% on its platform, while life insurance registered 20% growth during the lockdown period.

Naked Insurance says its key metric for success during the lockdown was the fact that it offered the “CoverPause feature” on its app, which allows users to pause the accident portion of their car insurance cover and downgrade to stationary cover on the days they’re not driving.

“Despite car sales being close to zero during lockdown, we saw record sign-ups for Naked Insurance from new users,” notes Alex Thomson, co-founder of Naked.

“Lockdown has accelerated digital adoption on many fronts, and as more consumers shift to e-commerce and self-service, we are growing our footprint.”

Naked says its CoverPause feature allows users to save up to 50% on their premium and still be covered while their vehicle is parked.

Earlier this year, the company expanded its product suite from car insurance to include home, buildings and standalone item cover.

“Our focus is now on scaling the rollout of these products as we expect sales to continue increasing,” according to Thomson.

Mutoda Mahamba, CEO and founder of local insurtech firm Solvency, warns that while it’s business as usual for insurtech companies during lockdown, in a worst case scenario, the pandemic could lead to consumers’ income/earnings being affected adversely, in which case, clients could cancel their insurance.

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