COVID-19 and life assurance: global threat, new opportunities


Lazarus Sauti


THE global COVID-19 pandemic and the ensuing instability in market conditions are affecting the life assurance sector in Zimbabwe and other countries.

Given the uncertainty that exists in these unique times, life assurers are facing both short-term and long-term challenges to sustain business continuity and profitability, a fact supported by the Insurance and Pensions Commission (IPEC) commissioner, Grace Muradzikwa.

“The COVID-19 pandemic has not only reduced the uptake of insurance products, but it has also increased expenditure to capacitate employees from working from home,” Muradzikwa said.

She added that the COVID-19 crisis has affected the 12 registered life assurance entities in the country.

Life Offices Association of Zimbabwe member, Reginald Chihota also said the life assurance sector in Zimbabwe has seen a drop in business because of the COVID-19 pandemic situation.

“The drop was caused by the continuous erosion of disposable incomes of people because of the COVID-19 pandemic,” he said, adding that the COVID-19 crisis has brought an immediate cash and liquidity crunch to life offices.

Chihota further said measures put in place to flatten the COVID-19 curve have limited the ability to complete new life assurance business applications and underwriting.

“Life assurance consumers are facing temporary and/or permanent unemployment and loss of income because of the COVID-19 pandemic. This has affected the appetite for purchasing new life assurance products,” he added.

For Kenya-based insurance practitioner, David Kimwei, the life assurance market in his country has also faced operational and economic challenges brought about by the global COVID-19 pandemic.

“These confronts have negatively affected on new life assurance business, premium payments, and continuation of existing policies,” he told insure263.co.zw in an interview.

Deloitte, in its paper COVID-19 impact to life insurance and annuity companies added that the shock to the economy and markets caused by the pandemic is having an earth-shattering impact on the life assurance sector.

“Interest rates and equity markets have declined, credit spreads have widened, and implied volatilities have increased,” Deloitte noted, adding that each of these movements have affected fixed income and equity investments and the life products insurers sell, creating balance sheet and earnings volatility.”

Global threat, new opportunities

Kimwei said the COVID-19 pandemic has not only threatened the health and economic securities, but it has also presented new opportunities for life assurers to adopt technology and sustain business continuity and profitability.

“The adoption of technology has enhanced service delivery, and this is a plus for the life assurance sector that is poised to grow through increased usage of technology for improved efficiency and customer service delivery,” he said.

Deloitte also noted that the rapid shift to virtual operations has forced increased collaboration between finance, Information Technology (IT), and life assurance companies to meet business needs and continued operations.

“This swift transition to virtual operations has also presented an opportunity for life assurance companies to speed up future-of-work initiatives,” Deloitte noted. “Remember, the global pandemic has provided evidence that increased flexibility can work.”

Chihota concurred: “The COVID-19 crisis has allowed life assurers to come out with novel digital solutions such as new products and digital signatures to triumph over the handicap of the traditional selling approach.

“The innovative digital solutions are likely to prompt an increase in hacking attempts by poor actors seeking to get customer data, siphon off financial information, or disrupt services.”

Follow: @lazarussauti @insure263

 

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