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8 July 2020
The COVID-19 virus has put insurers in the spotlight, and retention of customers and the need to meet higher service expectations will be a challenge going forward, a KPMG survey of 1500 consumers found.
Insurers have been the most affected financial service in terms of consumer expectations in the pandemic, KPMG says, with many people now more aware of what their policies do and do not cover.
Customers are demanding more from insurers in the key areas of pricing, services, flexibility and claims experience, David Kells, KPMG Head of Insurance said.
“Customers are understandably more price-conscious than ever and are looking around for better deals or considering cancelling areas which they now consider discretionary rather than essential. So retention will be key for insurers,” Mr Kells said.
Many insurance lines such as life and income protection are still seen as a necessity by those who have been directly impacted by the pandemic though, and car and home and contents cover is seen as an essential purchase.
“While insurers are under more consumer pressure than ever, there is a solid base to build on,” Mr Kells said. Claims experiences had also been seen as good and almost 60% now expect to do that wholly online, he said.
KPMG says many customers now expect a “complete rethink” on travel, life and income insurance due to current financial pressures they face. More than 70% want better value for money from their insurance, and one-third of consumers are either switching providers or considering cancelling policies in the next 12 months.
Nearly half are now looking to insurers to include ‘prevention’ approaches to likely causes of claims rather than insuring against them.
Consumers of financial services products have gone increasingly digital in the COVID-19 era, with almost 80% now preferring online access, compared with 51% pre-crisis.
Consumers have been increasingly shopping around the best value products and are more likely to switch providers, with younger Australians financially impacted by the COVID-19 crisis much more active in doing so.
Tim Thomas, KPMG FS Strategy, says the financial impacts from COVID-19 are having far-reaching consequences on consumer spending and attitudes and there is a "refusal to return" to the old pre-COVID-19 ways of interacting with providers.
There is an expectation in the COVID-19 era that businesses will offer greater value for money and be more flexible in the services and products they offer and insurers now have to meet a "will you put my needs first?" test, he says,
“Providers need to be aware that even those whose job has not been directly impacted are reducing their overall and discretionary expenditure, and they must respond to these new circumstances and demands,” Mr Thomas says.
The report found that nearly half of respondents’ financial positions have declined in the pandemic, and 68% have reduced both their overall and discretionary spend.