Covid Disrupt Insurers

While overall sales of life insurance were stymied in the first half of 2020 due to the pandemic and accompanying shut-down, both term life and whole life products are expected to rebound in 2021 and onward. That trend will be aided by Covid-19 vaccine uptake and technological advancements that enable a smoother and more efficient application process. Here is what some industry experts expect to see in the coming year.

A Continued Growth in Demand - Since the onset of the pandemic, life insurer continued to see an increase in interest in life insurance across the industry as Covid-19 has put the question of mortality front and center for many. As economic conditions slowly improve post-vaccine and consumers “become more confident in their financial outlook, life insurance sales will begin to rebound in 2021 and return to pre-pandemic growth levels in 2022. More than a third of consumers said they think life insurance “is more important to own now due to the pandemic, while a third also said they have or are planning to purchase new or additional life insurance as a result of the pandemic.

Less In-Person Interaction - The pandemic has also had a major impact on how insurance is being sold. Less than a third of people buying life insurance policies since the pandemic have done so solely in person. This compares with 44% who were buying life insurance policies in person before the pandemic. Most of the sales that were previously made in person are now made as part of a hybrid purchase process, usually partly online and partly with a financial professional. These hybrid experiences are more popular among younger and middle-aged consumers as compared with older Baby Boomers. 98% of respondents from financial services companies say their customers increasingly want to shop online and use video engagement tools.

A Need for Speed - In keeping with the move online, applicants also expect faster turnaround times now. 50% of consumers say they are more likely to buy life insurance through automated or simplified underwriting than through the more time-consuming traditional underwriting.2

Where Rates Are Headed Remains Unclear - Some wonder if the arrival of the Covid-19 vaccine will mean lower policy rates, but, like many things with the virus, it is too early to say. However, if an applicant has an active infection, the underwriting process will be postponed until they recover. Covid has required nearly all life insurers to implement temporary changes to their underwriting guidelines and processes. However, just having the virus does not necessarily impact an applicant’s rates. Insurer will postpone underwriting for someone who has or recently had Covid-19. If they suffer longer-term effects from the disease, that would be factored into the underwriting process, just like other medical conditions. Some insurers are continuing to monitor ongoing developments related to the pandemic, including broad availability of the vaccine. While premiums shot up early in the pandemic, by late fall they were rising at close to pre-pandemic levels.