What will life look like in the post-COVID-19 World?
While we adjust to the significant changes that COVID-19 has forced each of us to make, it is increasingly important to start seriously considering what our lives will be like when the pandemic eventually ends.
We recently commissioned Ipsos, a leading global Market Research agency, to conduct a 2,500 person survey in five major urban centres across Asia Pacific. We were unaware of the invaluable insights we would glean from it. We are certain that both Swiss Re and our partners will benefit greatly from this wealth of knowledge. For years, we've talked about reducing the protection gap, and, for the first time, we have actionable insights on how we need to proceed in this period of stress and uncertainty.
The findings from Singapore, Hong Kong, Australia and the Chinese megacities of Beijing and Shanghai are a fascinating and almost a real-time view of what is important to consumers right now. Among the findings are:
#1: Mental health is a concern
For many years, mental health was the second cousin to physical health and visible ailments. In many parts of Asia, mental health remains taboo. Following the recent drastic and immediate changes to employment, as well as drops in financial markets and overall economic uncertainty, the survey reveals that just over a quarter of respondents are feeling anxious and overwhelmed.
When it came to feelings of isolation and loneliness, almost half (49%) were concerned about the impact of COVID-19. Research has shown us that the effects of losing our job and a loss of income can be devastating, and there is a trickle-down effect to the other family members that is not just financial.
#2: Insurance is more than just a payout
Respondents were also asked what other services would add the most impact to their insurance policies. Immediate financial assistance was the top ask in Singapore (57%) followed by Hong Kong (47%) and Australia (44%). Respondents in Hong Kong (66%) and mainland China (67%) also said that they would, 'Give strong consideration' to a policy that gave them priority access to healthcare products such as face masks and medication.
Respondents in Singapore, Hong Kong and mainland China also rated faster claims payments and more flexibility of high interest, but these were not a priority for Australians. Instead, Australians preferred to have their premiums paused or to benefit from a discount on future insurance purchases if they could not meet their premiums.
Across the five cities, we found that the digital journey and the ability to process claims end-to-end online was important. Chinese respondents ranked the highest in this regard at 77% while Australians were the lowest at 59%.
These statistics tell me that re/insurers need to be moving at scale to a digital client experience that is intuitive to customers' needs as they evolve. For many, COVID-19 forced them to live online – and that expectation has shifted over into insurance. I suspect this will only accelerate as better bandwidth such as 5G and smartphones spread into previously unreached communities.
#3: Insurance is a must have in times of crisis as a safety net
As the first country hit by the pandemic, it's no surprise that such a large proportion of Chinese respondents (73%) have searched for new insurance policies in the past three months. Indeed, more than half (56%) elected to add on or buy a new policy. When asked about the role insurance played, for the vast majority it was seen as a tool to ease the stress and financial burden caused by COVID-19.
By comparison, only a small number of Australians looked further into their policies (14%) and only one in five of that percentage decided to add to what they already had. The telling statistic here is what people are willing to sacrifice if they can no longer afford it.
Nine out of 10 surveyed in Hong Kong and mainland China were unwilling to give up their life insurance policy, while it was closer to 8 in 10 for Singapore and for Australia it was around 7 in ten. In contrast, only 10% of Chinese and 14% of Australians would sacrifice their home or motor insurance if times were bad.
Which of the following expenses would you forego if your financial position was disadvantaged as a result of COVID-19?
This could mean several things: Australia recently suffered the worst bushfire season in its history, and the need to protect homes has now become a priority as addressed by David Sinai. We also know that the insurance penetration rate for home insurance in both Hong Kong and Singapore are fairly low, and this could be due to a number of factors such as a lower crime rates or safety from natural disasters, as is the case in Singapore.
In response, we need to tailor-make solutions and be agile. In a policy bundle, dynamic underwriting may play a crucial role, as highlighted by Teresa To.
#4: What does this mean for the protection gap?
In the past, we've addressed the protection gap – what is insured compared to what should be insured - by either looking at the big picture numbers or addressing it through a climate of fear over the next big natural catastrophe or a health crisis.
What I have personally gathered from this study is that people want us to care for them and meet them at their point of need. COVID-19 has changed outlooks for many people, and what they used to take for granted may now retain a greater measure of importance.
The reality is that most life-changing decisions take place at defining points in our lives: life, death, illness, divorce, birth or even a once-in-a-lifetime travel experience.
This pandemic cuts through all of these.
The Swiss Re Institute estimates a mortality protection gap – a measure of the lack of financial resources households have to maintain living standards should the main breadwinner(s) of the family die ‒ of USD 82 trillion in 2019 across the Asia Pacific region. This shows that worryingly, 75% of households are under protected. This number is large, but by addressing consumer pain points and targeting the right solutions, we can make real progress. We owe it to our customers to help make them – and Asia – more resilient.
The results of this study are the catalyst for debate, dialogue and action amongst us all. I am, though, reminded that every time the human race has been put under extreme pressure or discomfort, we have emerged stronger. This is our opportunity to do so again.