Demand for insurance is increasing in emerging markets amid growing health-related concerns and financial vulnerability following the outbreak of COVID-19, a global survey has uncovered.
The findings show that 78% of consumers in emerging markets dipped into their savings during the pandemic, with 61% losing income, and 54% having to skip certain bills or payments, compared to 33%, 30% and 22% in developed markets, respectively.
The poll of 4,200 consumers across Africa, Asia, North America and South America by EY also found that concerns about losing a loved one and financial well-being were notably higher in emerging markets.
In these countries, 61% of respondents said they would be interested in purchasing life insurance, compared with 22% of respondents in developed markets. They were also 30% more likely to be interested in an insurance product that pays for hospitalisation expenses.
Among eight insurance product offerings proposed in the survey, demand was nearly twice as high among emerging markets consumers than those in developed markets.
“Insurers have an important role to play in protecting those that need it most”, said Fayaz Jaffer, EY Americas' insurance product innovation leader. “They must start by building trust through personal connection and empathy to deeply understand their client’s personal and financial goals.”
The findings also show that 75% of consumers in emerging markets are under the age of 44, and only 3% are retired, with many lacking a comfortable financial cushion and certain insurance coverages.
For example, only 10% have $100,000 (£72,300) or more in investible assets, versus 37% in developed markets, and just 56% of homeowners have coverage for their home, compared with 88% in developed markets.
“Connecting with customers on a human level – especially across digital channels, which younger consumers prefer – is imperative to meet the evolving needs of their clients, improve financial well-being and build sustainable relationships long term,” Jaffer added.
Over half of emerging markets consumers were willing to share personalised communication data with an insurance or financial company in exchange for help meeting their individual savings goals, compared to a quarter in developed markets.
The survey findings also highlight how the COVID-19 pandemic, along with other events of the last year, have advanced consumer interest in corporate social responsibility (CSR).
Reputation is the most critical factor, with a quarter of respondents saying that they have chosen one insurance brand over another due to its CSR reputation.
“Social responsibility and purpose continue to remain top of mind for consumers, so it’s important for insurers to demonstrate their commitment to these issues,” said Bernhard Klein Wassink, EY Global insurance customer and growth offering leader.
“Now more than ever, insurers should focus on bringing these issues to the forefront of their products and services to help with financial and social recovery efforts, especially for those who are most vulnerable in the uncertain environment.”