Top trends shaping the health & accident insurance sector
Johannesburg - The last three years have been fundamentally disruptive for consumers across the globe, particularly when it comes to healthcare financial planning. Following the pandemic experience, there remains a heightened understanding of the need for risk protection, notably in the life and healthcare space.
“Many of the pandemic after-effects of changed work and lifestyle habits are also still playing out and remain well-entrenched such as gig-economy workforces and hybrid work models. Closer to home, radically tougher economic conditions, rising interest rates and inflation, unemployment and declining household incomes are also weighing heavily on consumers. These factors are having a profound impact in terms of how consumers approach their healthcare funding and provisioning, with their changing needs and financial circumstances demanding greater innovation and flexibility in health and accident insurance solutions,” explains Cornel Schoeman, Chief Operating Officer of GENRIC Insurance Company Limited (GENRIC).
GENRIC Insurance Company unpacks what the key trends and drivers are, and how health and accident insurance providers are responding with solutions to these evolving risks...
#1: The workforce has changed, and so have employee benefits
Tough financial constraints are seeing a distinct shift in the make-up of employee benefits, with an increasing number of employers opting out of enforcing mandatory membership of a company-subsidised medical scheme membership for their employees. At the same time, younger workers and gig-workers are opting out of medical scheme membership entirely due to affordability challenges. Employer groups are increasingly having to revisit their employee benefits offerings to cater for this changing dynamic, offering primary care health insurance options for employees as part of their employee benefits offerings, helping to deliver a healthier and more productive workforce.
#2: Focus shifts to primary health insurance coverage
As medical scheme membership and private healthcare remains unaffordable for a huge swathe of the population, insurance companies have stepped in to offer more flexible and affordable coverage options, especially in the primary healthcare space. Customisable primary health insurance plans with add-on benefits such as maternity and accident and emergency cover benefits, and family-specific benefits that offer unlimited GP visits especially those with younger children, are in high demand.
#3: As medical scheme option buy-down accelerates, gap insurance becomes critical
Where consumers are buying down on their existing medical scheme benefits to ‘core’ plans due to financial distress, they are taking up gap cover insurance to protect them against potential medical scheme financial shortfalls on specialist and in-hospital treatment. The steep uptake in gap cover is not unwarranted as recent mega claims paid by Sirago Underwriting Managers show massive shortfalls between R40 000 to R160 000 not covered by the medical scheme¹ – without gap cover, the consumer would have to pay for this from their own pocket.
#4: Growth in emergency medical support as an insured solution
In South Africa where road accidents and crime are a daily occurrence and where public emergency services are over-burdened and under-resourced, demand for emergency medical assistance and evacuation insurance has increased sharply. GENRIC is seeing significant demand for emergency medical assistance cover from the likes of cycling, hiking and running clubs where participants are at high risk of being involved in road accidents and even falling victim to crime. Likewise, employer groups in heavy industry, trucking, transport, logistics and so on are using this solution to protect employees who are at higher risk for accidents, hijackings and armed robberies. A medical evacuation insurance product is one of the solutions in providing a safe working environment for employees and delivering on the employer’s duty of care in high-risk industries – as well as protection against unexpected and onerous costs for emergency medical services, especially where an employee may not have underlying health insurance coverage to pick up these costs. More and more insurance companies are offering lifestyle-related or accident-only products that cover insureds under specific conditions.
#5: Telehealth and Virtual Care
The COVID-19 pandemic accelerated the adoption of telehealth and virtual care services. Health insurance providers have started offering coverage for virtual doctor visits, remote consultations, and digital health platforms. In the context of South Africa’s drive towards universal health coverage, access to telehealth as an insured solution holds tremendous potential to improve access to healthcare services, reduce healthcare costs, and improve patient outcomes.
#6: Younger consumers are entering the market
As younger, tech savvy consumers are entering the insurance market, they are having a profound influence on the type of insurance products they seek, as well as how they purchase them. While older generations preferred broker and advice-led insurance, millennial and Gen Z consumers want instant information and gratification that comes from digital fulfilment, which in turn demands simpler insurance product design. This is driving opportunities for Insurtech companies to help fill the gap. However, while Insurtech companies may have the tech covered, many have limited experience in meeting the onerous compliance and regulatory requirements, nor the financial muscle to manage the solvency requirements of operating an insurance licence. This has seen a move whereby established insurance companies are working closely with tech partners to help bridge the divide between insurance, advice and distribution. We expect to see more innovation in how insurance products are designed, underwritten and brought to market, and more simplified insurance product design, including event-specific insurance solutions that can be purchased and fulfilled online without underwriting.
“Risk and insurance has changed over the years, but especially so in the health and accident space where there is a far greater appreciation of just how unpredictable, far-reaching and costly such risks can be. People want the peace of mind that comes with having an insured and affordable solution that links them with the best possible care in a health crisis or emergency. Health and Accident insurers bring significant product innovation to the market that allows consumers to be a lot more granular in their approach to these risks, while getting the absolute certainty that you’re covered for specific and unique events,” concludes Schoeman.
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