Source: asiainsurancereview.com

The COVID-19 pandemic has led to high unemployment levels globally and this means that insurance providers will struggle to convince policyholders to keep policies, said data and analytics firm GlobalData in a recent commentary.

Individuals who are employed full-time are more likely to hold insurance products than those who are employed part-time or who are self-employed or unemployed – as per GlobalData’s ‘2019 Banking & Payments Survey’. Citing the example of UK, he said that 71% of those who are employed full-time there have home or contents insurance in comparison to 67% of part-time employees, 68% of self-employed individuals, and 33% of the unemployed.

“While some economies will begin to open up again, high unemployment levels and reductions in disposable income will be a big issue for insurers,” said GlobalData insurance analyst Yasha Kuruvilla. “Those who are full-time employed are more likely to have a higher income, making them more able to afford non-compulsory insurance products. However, uptake of these products will fall as unemployment rates increase across the world and individuals can no longer afford some insurance products.”

Therefore, he stressed the need for insurers to be flexible with their customers in order to reduce the impact of rising unemployment. For example, allowing customers to miss the occasional monthly premiums can help for a limited time period. “Insurers should also be flexible and allow their customers to adjust their level of cover to one that is more affordable for them. The development of usage-based policies and short-term, on-demand policies with lower premiums will also help insurers retain some of their customers during difficult times,” he said.