2021 – The Insurance Year in Review

 

Our latest blog takes a look back on the past year in the insurance industry, drawing from insights published in the Santam Insurance Barometer.

Published annually, the Insurance Barometer aims to measure the concerns of the South African insurance market by surveying 150 intermediaries,
400 corporate and commercial entities, and 401 personal insurance consumers.

Unsurprisingly, some of the chief concerns listed by those polled included the economy, potential political unrest, the impact of the Covid-19 pandemic
on businesses, the rise of cybercrime and climate change.

The survey also measured consumer and corporate opinion on the insurance industry’s response to the pandemic, along with views on how insurance
needs to adapt to changing client needs and the evolving role of insurance brokers.

 

BUSINESS AS USUAL – BACK TO “NORMAL”?

 

In the business world, 62% of commercial entities identified the embattled economy as the key area of concern.

According to Andrew Coutts, Santam’s Head of Intermediated Distribution, the industries which were hit hardest during the economic downturn included
heavy haulage, aviation, hospitality and travel, and finally construction.

The top 10 risks highlighted by corporate customers in the Insurance Barometer included:

• Theft: 34%
• Economic downturn: 34%
• Fire: 26%
• Motor vehicle accidents: 21%
• Business interruption: 17%
• Pandemics: 17%
• Machine breakdowns: 14% feature)
• Loss of profits: 14%
• Climate change: 13%
• Public liability: 11%

With remote working contributing to a decrease in commuting, commercial motor claims dropped by around 16%, while still remaining the biggest claim
category by value. Similarly, unoccupied business premises resulted in claims on commercial properties reducing by 7%.

Driven mainly by business interruption claims, the average cost per claim across all commercial insurance lines skyrocketed by over 100% year on year.

 

THE IMPACT OF COVID-19

 

62% of corporate and commercial organisations saw a drop in profit, with 31% of these losing clients and 28% having to retrench staff.

The challenging economy had many businesses thinking out of the box and adapting to survive, with 10% of those polled diversifying their product or
service offering and 8% shifting to online sales and delivery.

Only 1% of consumers cancelled short term insurance policies last year

 

QUIET(ER) ON THE HOME FRONT

 

Despite lockdown regulations gradually easing, the work from home trend continued to grow in 2021.

16% of consumers upgraded their home technology to enable remote working, while 3 in 4 people reported an increased use of their tech and gadgets.
The shift to home working also changed the way we utilised our insurance policies, particularly in the car and home insurance sectors.

The report found that vehicle insurance claims decreased by a staggering 18% due to a reduction in the number of cars on the road. This was countered
by an increase in the severity of accident claims, caused by drivers risking higher speeds on less congested streets.

 

50% of consumers reduced the number of kilometres driven each week by an average of 44%, from 162km to 90km per week.

 

A sharp rise in both building (16%) and household (6%) claims had an unlikely cause.

Rather than theft- and burglary-related claims, which actually decreased in comparison to 2019, the culprit in 2020/21 was… burst geysers caused by
more people being at home.

 

THE ROLE OF INSURANCE BROKERS

 

A key takeaway in the report was that our expectations of brokers are growing, with insurance intermediaries unofficially evolving their roles into
risk advisors.

Businesses identified their top needs from brokers in 2021 as:

• Personalisation and understanding needs
• Efficiency with claims handling
• Expertise and knowledge of insurance products and policy details

With affordable but limited insurance options such as only theft policies becoming increasingly popular, the need to educate policyholders was also
highlighted. 65% of insurance brokers surveyed wanted more transparency on how claims behaviour impacts on premiums, 81% wanted more simplistic
policy language, and 45% wanted access to apps to encourage risk management.

 

At Genesis Insurance we take pride in already having developed a reputation for excellence in all the above areas, many years prior to the COVID-19 pandemic.

The new Genesis App, launching soon, will give our customers easy access to policy information, simplified claims and a host of value added benefits from
Genesis Assist.

Our team can guide you through all aspects of business and personal insurance to make sure you get the appropriate levels of cover for your needs.

Get in touch with your broker today if you have any questions.