This could be achieved thorough a focus on three key areas:
- Customer focus
A linguistic and format review of all policies will provide greater clarity on scope of cover and make policies as simple as possible. Insurers should also focus on product design to ensure the delivery of more customer-centric products, and consider a modular approach whereby individual policies can cover more than one line of insurance and clients can select the coverages they require (each coverage having separate limits).
- Solution innovation
With most insurers in South Africa having removed infectious disease and pandemic cover from their policies, carriers must respond to the pandemic protection gap with innovative solutions – for example, by providing limited pandemic cover or using parametric type insurance products.
A parametric pandemic solution would link claims payments under the policy to a pre-agreed and independently verifiable trigger, such as a specific government action mandating a set period of lockdown, and would pay out a pre-agreed fixed amount – thereby avoiding lengthy loss adjusting processes. However, the current regulatory uncertainty regarding the classification of these products as insurance or derivative instruments poses a barrier to their take up.
- Effective broker relationships
I anticipate that underwriters’ responsiveness and productivity will increase as they meet the challenge of restoring the industry’s reputation. This will involve working closely with distribution channels on developing new products, and swift claims handling – whether internal or by third parties – will be key to delivering on the promise of BI policies. Good communication and relationships with brokers will be key determinants of insurers’ ability to deliver value in an effective way to insureds.
