The Old Model Is Broken
There is a disability income insurance gap of approximately 750 billion euros in 13 European and Middle Eastern countries, according to an eye-opening report by the Swiss Re Group, a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer.
“A sudden critical illness or disability can have serious financial consequences for the individuals and families affected. However, most Europeans do not have the financial protection in place to deal with such a shock…people in the 13 countries surveyed for the report would currently struggle to secure 40% income replacement in case of disability. Together with the witnessed trend of the welfare state’s gradual withdrawal of benefits, this is set to drop further,” according to the report.
Around the world, regular people are starting to look in the mirror and ask themselves some tough questions: will the state or my employer provide for me in desperate times of need? Will my children look after me in my twilight years? If I get sick and I can’t work, will I have enough income to survive?
The answers will vary per person, but one thing is clear: the old model is not sustainable. People are living longer, which means more medical care in later life – the cost of which is rising. Governments can’t and won’t shoulder the burden alone. Birth rates are dropping globally, meaning it’s unlikely that tomorrow’s generation will be able to support today’s generation. Meanwhile, the economy continues to fluctuate, with many areas struggling with austerity.
The need to address these issues through increased private provision is critical and will become increasingly so. The growing protection gap presents a huge opportunity for insurers across Europe (and really around the world) to deliver protection solutions to plug this gap.
Private Protection – A Growth Market
To meet the unique protection needs of each individual – whether those needs include simple life cover, critical illness, income protection or any combination of those elements – it is critical for providers to develop flexible, digitally-engaged solutions to support omni-channel distribution and engagement strategies.
Understanding the triggers as to how, when and why people decide to take on private cover is critical: how do consumers perceive their vulnerability to illness? When and why do people realize they are on their own in terms of coverage? These are difficult questions, but providers must be able to answer them when developing services and solutions.
The implications of not having adequate levels of protection in place should be highlighted through positive case studies and consumers can subtly emphasize the social benefits protection delivers to society (keeping people financially solvent when catastrophe strikes, etc.).
Because “next generation” benefits will not be delivered by most governments, private protection is seen as a growth market for providers who are prepared to embrace the opportunity with flexible strategies buttressed by digitally-enabled IT solutions.
To succeed in this space, insurers will have to provide a personalized and tailored experience that satisfies their consumers’ desires and is truly an omni-channel experience. The offering must also include a future vision that considers how needs will change throughout different stages of life. This type of foresight and agility are possible, but they require solutions and services capable of flexing rapidly to changing needs.