Redefining insurance in the 21st century

Chaim Shalpid, Senior Financial Advisor

Uber, battery-operated motor vehicles, smartphones, mobile apps…the list goes on when it comes to new emerging technologies, fresh ideas and out-the-box innovations.

Many analysts and commentators refer to the concept of ‘disruptive technology’; technologies that offer new and innovative ways of doing business and that challenge traditional and conventional ideas and methodologies.

The current favourite example is Uber, a company listed on the NYSE with a market cap worth billions that uses a mobile app to facilitate taxi services worldwide to consumers (yet doesn’t own a single taxi of its own). By virtually connecting available taxi drivers with consumers needing transport, Uber has revolutionised the global taxi industry.

The insurance sector is not immune to such disruptive technologies, and has also had to keep up with the changing world and its various trends.

Here’s a snapshot of the current state of the insurance sector and its related products:

Traditional insurance

Yes, despite the rapid changes in the world around us, you can still pick up traditional insurance products. That is, straight forward, plain and simple insurance benefits with no frills or special add-ons.

Examples include:

  • Life cover
  • Disability
  • Severe illness
  • Child benefits (education)
  • Income protection

In this case, individuals purchase the exact insurance product they need based on their particular circumstances.

New age insurance

This type of insurance offering has been introduced to the South African market over the past 15 years with great success.

It revolves around providing consumers with the very latest insurance products linked to loyalty programmes that offer financial and other rewards.

These loyalty programmes are designed to enhance and add value to consumers’ lifestyles by rewarding them for remaining physically fit and healthy.

Consumer engagement is encouraged through offering highly attractive rewards from service providers aligned to the programme. These typically include discounted airfares, cheaper gym fees, travel specials and everyday perks like reduced movie tickets.

The discounts offered increase based on individuals’ personal engagement with the programme. So higher levels of activity are rewarded with greater discounts.

Insurance for professionals

There are a number of unique insurance offerings that today cater exclusively for professionals like doctors, dentists, accountants, lawyers etc. Over the years these insurance offerings have been extended to include investment products as well as short-term insurance and medical aid products.

Online-based insurance

Technological and security advances in the online space means individuals can now easily purchase insurance products via the web. Although there are a plethora of service providers offering products online, these benefits should be carefully considered and thoroughly investigated before being purchased.

For example, in many cases, online insurance and investment advice is provided by a robo-advisor – a virtual wealth management advisor that dispenses automated algorithm-based advice without the use of human financial planners.

It’s clear the insurance industry has evolved significantly, and navigating it and the abundance of offerings available today is not as cut and dried as it once was.

Every person’s unique circumstances are exactly that – unique. And while the exciting new offerings provide consumers with so much more choice when it comes to insurance, those products that will provide optimal insurance coverage based on personal needs are still best selected and customised with the assistance of an accredited and qualified financial advisor.