Sometimes, technology innovators make predictions that turn out to be remarkably accurate because they understood how needs and capabilities would advance. At other times, innovators turn out to be right for the entirely wrong reasons.
The
COVID-19 crisis has highlighted the accuracy of many forecasts of the
growth of areas like e-commerce, remote working and learning, and
medical services – but not because anyone predicted that a pandemic
would spark the change.
The
insurance sector is the latest to provide examples of great foresight
resulting in exactly the right kind of service for many consumers. A
South Africa insurance startup called Naked, which provides quick
cover and claims via an app, has for some time offered a “CoverPause”
feature. This allows customers who do not plan to use their cars for
a period to pause the accident element of their cover, and downgrade
it to stationary cover.
It
was never designed for lockdown conditions, but was perfect for
lockdown. According to Naked, its policyholders did not drive for
more than 27 days of the first 35 days of lockdown.
This
insurance “pause button” was not available to most of the
car-owning public, despite accident numbers and car usage plummeting
during lockdown.
According
to towing and roadside assistance provider Global Choices, South
Africa’s rate of car accidents fell by around 75% in April as
people stayed home. The figure is based on incidents for which tow
trucks had to be dispatched dropping to a quarter of the usual
levels.
“This
indicates that South African drivers adhered to the call to stay at
home, only using their cars for essential trips as defined under the
lockdown regulations,” says Naked co-founder Ernest North. “It
supports our decision to reduce premiums so that clients pay just
roughly 10% of the normal comprehensive premium when they enable
CoverPause.”
TransUnion,
which collects, aggregates and provides credit data, sees even more
of a knock-on effect as many people delay car purchases.
“We
are expecting work-from-home to be a reality for many people for at
least a year, meaning traffic won’t be back to usual levels for a
while,” says Kriben Reddy, TransUnion head of auto information
solutions. “Even after the pandemic, many enterprises will continue
to support remote working because they have invested in the
infrastructure and might see benefits in downsizing office space.
“Another
trend that we’ll see is vehicle purchases moving online as people
continue to follow physical distancing protocols.”
This
is bad news for most insurance companies as consumers look for
options that address their new reality, but good news for those that
have introduced flexible approaches. As North puts it, Increased
numbers of people working from home could mean fewer car accidents
and thefts in the future, resulting in lower claims, but increased
pressure to pass those savings back to consumers.
“The
rate of digital disruption in the car insurance industry has
certainly accelerated as technology-driven startups offer customers
more transparent and flexible insurance solutions. Using artificial
intelligence and digital channels allow us to bring costs down for
the end-user and to make it easy for people to manage their own
insurance coverage digitally.
“Given that people are becoming used to the convenience, low costs and control they get from digital tools they are using to manage their lives at this time, it’s difficult to imagine them going back to the old ways of doing things. Industries and companies that have not embraced digital will need to catch up – fast.”
Read more about how life insurance has transformed in the face of lockdown and social distancing.
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