As businesses around the world contend with the new realities of the world in the wake of the coronavirus outbreak, the insurance industry finds itself in a particularly unique position.
On the one hand, insurance companies have to expect fewer new sales as consumers are delaying large purchases which typically require insurance policies. By the middle of May the coronavirus had prompted 51% of consumers around the world to delay purchasing a vacation, 23% to delay purchasing a smartphone, and 22% to delay purchasing a car.
On the other hand, these companies are also in the perfect position to cater to the millions around the world who’ve lost their jobs in the last few months, because of the need to update the policies previously held through their employer.
So where exactly does the insurance industry stand as the impact of the pandemic drags on?
Younger consumers drive new insurance sales
For the most part, insurance agencies and providers are intended to be financially crisis-proof and built to ensure they can pay out when their customers need them most.
Many of these businesses rely more on yearly renewals than new sales, but even so, it’s paramount to know how to reach new, possibly lifelong customers.
Over the last few years, insurance organizations have focused their efforts on digitizing their sales processes and marketing strategies in order to sell directly to a new wave of young and tech-oriented insurance buyers.
Now may be the perfect time to draw in that demand.
Older generations, those more likely to own a home, a car, or other big-ticket items, are more likely to have insurance policies covering those goods stretching back years.
Conversely, consumers under 35 years old are by far the most likely to have purchased or upgraded their insurance recently, and this reality doesn’t change given the pandemic.
But the types of insurance that consumers are purchasing has shifted in the wake of COVID-19.
In normal times, car insurance is by far the most common insurance type owned around the world. Before COVID-19, 71% of consumers in the U.S. and UK had auto insurance, while 66% owned health insurance, and 42% owned life insurance.
But since the outbreak, health and life insurance policies have seen the biggest growth in new sales; products typically offered through one’s employer.
The suggestion is that sales in the pandemic may be a direct result of increasing economic uncertainty and the shifting employment status of younger generations.
The new insurance buyer audience
When looking at insurance buyers as a group, surprisingly we’ve seen very few changes in their behaviors since we profiled the insurance buyer audience at the beginning of the year.
They remain a young, tech-oriented and price-conscious audience – 65% of COVID-19 insurance buyers are under the age of 35, and 73% say they always try to find the best deals when purchasing a product.
They prefer convenient, simple tech solutions – something many businesses have relied on for their survival lately.
Coronavirus insurance buyers are nearly 30% more likely than the average consumer to be interested in technology, and over half say that having the latest technological products is important to them.
But the fact that these consumers represent a significant portion of new business for insurance agencies at the moment does not mean they’re new to the insurance market overall.
In fact, the opposite is true:
The overwhelming majority of insurance buyers during the pandemic owned some type of insurance beforehand.
Nearly 6 in 10 had health insurance or car insurance, while over 4 in 10 had life insurance or home insurance. What’s more, just under 3% of insurance buyers since the beginning of the outbreak owned no insurance beforehand.
The market for digital insurance sellers, already growing at the outset of the crisis, is further amplified by the increasing opportunity for cross-selling these past few months.
The future of travel insurance
Unsurprisingly, the most affected insurance product during the pandemic has been travel insurance.
About a third of all consumers have said they’ve delayed purchasing a flight due to the coronavirus, and over half said they’ve delayed purchasing a vacation for the same reason.
Even with vastly reduced sales for travel, the market for this insurance coverage may be primed to increase dramatically when the global situation improves, as people realize the value in protecting their trips from unforeseen circumstances.
When it comes to the value of travel insurance in the future, not everyone agrees on the predictions set of all insurance buyers. It depends more on the market and type of traveler in question.
In the UK, travelers are more likely to leave the country on their next vacation, whereas their counterparts in the U.S. are more likely to stay in the country.
So UK travelers, in comparison, are subject to more uncertainty due to the trepidations of international travel during the coronavirus.
68% of UK consumers are confident that they’ll purchase travel insurance on their next trip, whereas the situation in the U.S. is less predictable.
Digital sellers of travel insurance may want to focus their energy more on the type of traveler they’re attempting to reach and the channels most effective at reaching them.
It’s likely that businesses are more risk averse than individuals during this time given that these travelers are more likely to purchase insurance to protect against quick changes in global travel restrictions.
A significant majority of travelers who vacation at least twice a year say they’ll be purchasing travel insurance on their next trip, but over half of those who travel for business at least twice a year say the same.
And the channels they use to purchase travel insurance differs as well.
While business travelers are 23% more likely than average to say they will purchase future travel insurance through a travel comparison site like Expedia, vacation travelers are 25% more likely to purchase this insurance directly through the airline or hotel site they’re booking their travel through.
Going forward, the insurance industry faces a mixed bag of effects from declining sales in some categories to increasing focus in others.
So, as the effects of the coronavirus continue, it’ll be increasingly important for these businesses to be keyed into how each new announcement will affect the direction of their new business growth, and the mindsets of the individuals their policies cover.