For consumers, the COVID-19 pandemic has been the equivalent of a massive life event. Its broad-based and multi-dimensional effects were felt psychologically, emotionally and economically. The profound financial impacts forced people around the world to reassess their priorities, goals and needs —indeed their entire lifestyles in some cases.
Widespread health concerns, pervasive economic uncertainties and strict lockdowns bound people around the world into a shared experience of unprecedented scale. But while anxiety and psychological effects were felt universally, it truly has been a tale of two pandemics, financially speaking.
Consumers in emerging markets were hit harder than those in mature economies, both in terms of their health and finances. They faced more severe consequences such as job loss, reduction in working schedules and the need to dip into savings. Younger generations were more heavily impacted financially, while older citizens faced a greater mortality risk. Of course, many of these initial effects are still lingering as the virus persists.
Recent EY research confirms how the pandemic fundamentally changed consumer needs, how they plan to increase their financial security, and what insurers can do to seize the opportunity. Conducted between May and August 2021, EY surveyed 4,200 people in seven countries (Brazil, Canada, Japan, the Netherlands, the Philippines, South Africa and the US) about the pandemic’s financial impacts, respondents’ plans going forward, their interest in different types of insurance products, and their buying preferences (see full
We also spoke to people in cities across the world to get their perspective.
The results of our research reveal consumers’ interest in new products, with strong value propositions and specific features, and an openness to interact and buy in new ways. Insurers will need to engage consumers with empathy, develop solutions that strengthen financial well-being, innovate their product sets and optimize digital distribution channels. Ultimately, insurers must live their purpose of providing protection to those who need it most, with an eye toward bridging the protection gap.
The four key findings from the EY 2021 Global Insurance Consumer Survey:
1. The pandemic caused almost universal anxiety, which has prompted consumers to take action and increased their interest in new protections.
2. Beyond the shared psychological impacts, emerging markets and younger generations took the biggest financial hit and show the greatest interest in new products.
3. Emerging market consumers are digitally savvy, open to sharing data and ready to buy new products in new ways.
4. Because corporate social responsibility matters to consumers, insurers need to stand behind great values as well as great products.
The threats of the COVID-19 pandemic were felt quite close to home. Losing a loved one earlier than expected was the top concern for consumers worldwide, with 76% of overall respondents citing concern. Clearly, this was more than an economic crisis, though the financial stakes were high too. Financial well-being was the second-highest concern, cited by 73% of all respondents.
Consumers around the world also have much in common in terms of their reaction to the pandemic. Three out of four (75%) anticipate making financial preparations in response to the pandemic. Specifically:
- 50% plan to save more
- 30% plan to develop emergency plans
- 23% plan to speak with a financial advisor
The implication is clear: nobody wants to be caught out like this again. Recovery and preparation for another crisis are the immediate priorities, rather than retirement or estate planning.
Significant percentages of respondents are interested in new types of insurance products. They expressed the greatest interest in policies that pay for hospitalization expenses (94% in emerging markets and 64% in developed markets are interested), followed by an add-on feature for life insurance that allows access to funds in case of emergencies (91% in emerging markets and 56% in developed markets are interested). They are also thinking about short-term income protection products, like insurance that funds college education plans or pays for credit card bills in the case of a job loss.
Compared to a similar study EY conducted in mid-2020, these findings show a remarkable consistency. Despite the hopeful signs in the late spring and early summer of 2021, financial worries do not look likely to abate anytime soon. Consumers are keenly interested in avoiding what we call “long financial COVID-19,” a sustained state of financial anxiety due to overall uncertainty and a sense of not being prepared for another highly disruptive event.
This blog entry has been reposted with permission
