Rudolf Britz: They haven’t taken away a great proportion of vehicles from our roads. The average consumer who uses Uber services usually owns or uses their own vehicle as well. Although there are very few consumers who rely solely on Uber for their daily transport, this number could rise in the foreseeable future.
Uber will reduce traffic congestion and accident rates on our roads, which will contribute to the decline in insurance costs. Uber operators will require more specialised insurance packages for their services and will need to handle this type of service delivery. Insurance policies could increase in this regard in terms of business-to-business services.
Britz: In 2016, there were no major disrupters to the short-term industry, in particular. However, captive/specialised distribution models are still practised by many short-term insurance companies. These companies will do much better than those who do not use new methods of distribution models.
In terms of weather, 2016 has actually treated short-term insurers well: Up until mid-October, there weren’t any major catastrophic weather events, severe earthquakes or other events, only a small spike in unexpected mid-winter rains in July.
Telematics is another innovative disrupter in our industry. The marketing of products to clients is becoming more streamlined and focussed on the client’s needs, rather than on selling policies alone.
Britz: Reduced growth in the economy was a big factor influencing the drop in car sales. Economic uncertainty, as a whole, made it difficult for consumers to plan ahead effectively. The subdued growth has put pressure on consumers’ disposable income, which has, in turn, put pressure on sales. It also negatively affected policy lapses and made the growth of insurance business very challenging.
Another key influencer in the drop in sales is the rise in household debt, which has left consumers desiring fewer assets, requiring them to spend large amounts of money over a short period of time.
The drop in new vehicle sales resulted in a severe reduction in one of the traditional sources of new insurance business.
Britz: On a commercial vehicle level, we are seeing a slightly different trend, compared with retail vehicles. Some of the segments are showing an increase in heavy commercial vehicle sales. The reason for this could be that large corporates have invested more in the logistics element of their businesses to further increase productivity levels in our volatile economy.
Lack of forecasted growth will put pressure on commercial vehicle sales and commercial insurance sales in the next two months.
Britz: Insurance companies need to use client information and insights better. This can be anything from capturing customer information properly (client services) to following up with clients on a one-on-one basis. Insurers should focus on treating existing clients with a personalised approach, rather than mass customer care. They should also put more thought and effort into customising insurance policies, based on a client’s needs and where the client is in their life financially.
Insurers should start thinking about how they will overcome the consumerism trend to own less. Traditionally, insurance is written off the back of an asset, and with fewer assets in the hands of consumers, this will be cumbersome. For example, insurers should start thinking about – for the future – insuring vehicle trips or rides, rather than the actual vehicle. I think this would be a real challenge for the industry to overcome.
