Consumer priorities have changed significantly as a result of the COVID-19 pandemic, with nearly half (45%) of consumers surveyed planning to save more and those most impacted financially seeking to mitigate future financial uncertainty.
This is according to the EY Global Insurance Consumer Survey, a survey of more than 2,700 consumers across Europe and North America with life and personal line insurance.
The research, released today, offers insights into how the COVID-19 pandemic has impacted consumers’ lives. To better understand their concerns and needs, the survey groups respondents into three segments: most financially impacted, moderately financially impacted and least financially impacted.
Consumers Most Financially Impacted Plan To Minimize Future Financial Risk
The most financially impacted demographic experienced the biggest change in their financial security and stability compared to pre-pandemic levels. Ninety-one percent of this segment experienced a loss in work schedule, 90% experienced a loss of income and 86% felt the need to dip into their savings to meet their everyday expenses, according to the survey.
The impact of the COVID-19 pandemic was felt to a greater extreme by consumers in North America compared with Europe, where governments have provided more financial support (e.g., the French Government paid up to 70% of the gross salary of each employee temporarily unemployed).
Globally, the data shows that the most financially impacted consumers plan to minimize future risk through financial planning. In anticipation of future uncertainty, they are much more likely than the moderately and least financially impacted respondents to develop an emergency savings plan, speak with a financial advisor, increase contributions to pension/retirement accounts or purchase new forms of insurance.
Despite this group’s heightened focus on financial planning, a large contingent (60%) say they have not been contacted by their insurance provider since the beginning of the pandemic. In addition, 63% of this demographic say they do not completely understand the extent of their life insurance coverage.
Bernhard Klein Wassink, EY Global Insurance Customer & Growth Offering Leader, says:
“Insurers that proactively connect with consumers most financially impacted by the pandemic communicate the value and purpose of insurance and provide protection solutions in a time of need that can help them recover, while forming the foundation for long-term customer relationships.”
Social Responsibility Plays Significant Role In Consumer Purchasing Decisions
The most financially impacted consumers are also concerned with what insurers are doing around social responsibility. More than half of those most impacted say that an insurance company’s demonstrated commitment to social responsibility causes like racial justice (58%), environmentalism (55%), income equality (58%), police brutality (54%) and employee relations (57%) is very important in informing their decision to purchase insurance products.
Individuals in this demographic are also much more likely to be involved in social responsibility causes themselves. According to the survey data, most financially impacted consumers are almost twice as likely (61% vs. 31%) to donate money, time or supplies to a racial justice organization compared with respondents overall.
Fayaz Jaffer, EY Americas Insurance Product Innovation Leader, says:
“Insurers need to think differently about how they demonstrate their purpose. They have a unique opportunity to reach an energized audience by amplifying and better communicating their corporate social responsibility efforts.”
Overall, Changing Consumer Priorities And Behaviors Call For Product Innovation
The overall respondent population show an appetite for insurers to offer flexible, cost-effective policies that address changing consumer behaviors and areas of concern.
From a life insurance and retirement perspective, financial well-being is respondents’ top concern followed by losing a loved one. They are therefore more interested in products that cover loss of income and other existing financial commitments, along with insurance products related to health expenses. According to the EY Global Insurance Consumer Survey, respondents expressed the most interest in:
- Products that pay three months of income in the event of a job loss (70%)
- Policies that pay credit card bills (65%)
- Exchanging personal health data for a product with a lower or customized rate (63%)
From the perspective of personal lines insurance, cyber fraud as a result of increased time at home is respondents’ top concern, followed by paying insurance for a car that’s being driven less. As a result, respondents are more interested in usage-based and home-protection related products:
- Usage-based car insurance (70%)
- Insurance for home services such as a smart thermostats and water sensors (62%)
Jaffer says: “The insurance industry can maintain its relevance by playing a critical role in both the recovery of consumers and the wider economy from a financial and social perspective. Now more than ever, insurers must focus on a client-centric product innovation strategy to meet evolving consumer needs, provide protection to those in need and position themselves for future growth.”