Here’s how Covid-19 has changed the way South Africans view risk, insurance

Covid-19 has changed the way we see risk and insurance significantly, regarding what we insure, as well as new risks, such as increased digitisation, cybercrimes and identity fraud.

Our driving behaviour has also changed completely, while we are – for obvious reasons – also more concerned about or health.

People are keeping their cars for much longer and delay buying new cars and they are adopting more pets because they work from home and have more time to spend with their pets. The cost of healthcare and access to quality healthcare in a crisis have also become more important, says Carl Moodley, chief underwriting and claims officer at Genric Insurance Company Limited.

“Given the changing nature of our behaviour and personal risk, the demand for niche insurance solutions has consistently grown as consumers try to find certainty of protection against very specific exposures.

“We have seen this trend across various lines of business and more specifically in areas such as gap cover for medical schemes, mechanical warranties and service and maintenance car cover, cybercrime and medical emergency services.”

Moodley says while cost-containment has been a big drive for many consumers, they also appreciate insurance and the risk protection it offers against the hard financial knocks an uninsured peril can cause, especially now when their finances are already strained.

He has also noted that more consumers are going to brokers for advice due to the growing complexity and inter-related nature of risks.

“As consumers find themselves in increasingly volatile times and uncertain of how to balance cost and potential risk, many consumers want to avoid the pitfalls of a do-it-yourself approach to risk, especially in healthcare.”

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Key trends in risk and insurance

These are some of the key trends and shifts in personal risk noted over the past year and what they mean for insurance and risk planning in 2022:

• Gap insurance has become non-negotiable as members buy down on medical scheme benefits due to financial pressures, to cover potential in-hospital tariff shortfalls on treatment when specialists charge more than the approved medical scheme rate, especially on lower benefit options. Without gap cover, the patient would be responsible for any shortfall.
• Migration to health insurance as many consumers and even employer groups find they are unable to afford the high cost of medical scheme benefits, but do not want to lose access to quality private healthcare when they need it most. Health insurance provides a range of options on cover from basic primary care only options, hospital only and combined in-and-out-of-hospital benefits that is cheaper than medical scheme benefits because it does not cover Prescribed Minimum Benefits.
• Mechanical warranty and service and maintenance insurance is in demand as consumers drive their cars for longer. Millions of South Africans delay buying new cars, but then find themselves facing the risk of ‘out of manufacturer warranty’ breakdowns. A mechanical warranty insurance policy covers car repairs due to mechanical failures or breakdown once it falls outside its factory warranty period. Service and maintenance insurance provides for a much smaller and affordable monthly payment.
• Increased digital adoption creates a need for personal cyber protection as e-commerce and digital banking grows. Card-not-present (CNP) fraud on South African credit cards remains the leading contributor to gross fraud losses in the country, accounting for 79.5% of all losses, while mobile banking application fraud has increased by 100%.
• Consumers’ mobility patterns have changed due to the established trend of remote working and learning, requiring them to drive less. Less time on the road also means much lower risk for accidents and theft. The integration of vehicle telematics will be increasingly important in insurance solutions to reduce insurance premiums based on reduced mileage and better driving behaviour.
• Pet adoptions soared during the pandemic while relationships and marriages have taken strain during the various lockdown levels and increased time spent at home. This has driven new demand for pet insurance as pet owners look for reassurance that if their pets get sick or injured, they will never have to decide between their finances and a pet’s health and wellbeing.
• Crime is on the rise as the economy falters and more people find themselves unemployed and desperate. Extra safety and security measures at home and on the road are essential for mitigating measures, as is checking that insurance covers are in place for all potential scenarios. Insurance solutions that add extra layers of protection, telematics and private response to emergency situations, are increasingly in demand.