Don’t judge an industry by its stereotypes: Why insurance shouldn’t be a grudge purchase

When we make a purchase, our brains often release endorphins and dopamine, providing a sense of happiness. It’s the phenomenon behind the term “retail therapy.” Unfortunately, purchasing insurance doesn’t typically evoke the same excitement and has long been perceived as an obligatory expense rather than a choice.

This perception has led to a significant number of people worldwide going without insurance. In South Africa alone, only 17 out of every 100 individuals have medical insurance, 70% of the over 11 million registered vehicles on the country’s roads are uninsured, and just 10% have life insurance (excluding funeral cover).

Even for those who do have insurance, it often becomes the first expense to cut when financial strains emerge. A recent study found that 7% of consumers had reduced their insurance coverage in response to the current cost of living crisis, with 43% of them completely cancelling certain policies.

Today, as South Africans face record-high inflation and a rapidly rising cost of living, with monthly expenditures on essentials like food, housing, and transportation increasing by 3% since 2022, this trend is expected to continue.

However, insurance is one area where cost-cutting through cancellation is not advisable.

Shifting perception from a grudge purchase to a crucial investment

Insurance is a crucial component for ensuring peace of mind, offering protection against unforeseen events that could lead to financial stress from damages or loss. It is essential that we view insurance as an opportunity to safeguard ourselves, our loved ones, and our most valuable assets.

Quality should never be compromised when it comes to insurance. However, due to the prevailing perception of insurance as a grudge purchase, many consumers aim to secure the cheapest policy available, often exposing themselves to unforeseen risks.

Quality doesn’t necessarily equate to higher cost. The key question is: how can you determine what constitutes high-quality insurance?

When considering any other product or service, consumers commonly understand the relationship between price and quality. Yet, this correlation is often overlooked in the insurance sector due to a lack of accessible information.

The question at hand is: How can one determine what qualifies as high-quality insurance?

In most other sectors, we readily recognize the relationship between price and quality. However, this same association often eludes us when it comes to insurance, despite its importance.

Consider this analogy: When you’re in the market for a car, you understand that premium brands come with a higher price tag. You also associate this higher cost with superior service, enhanced safety features, top-quality components, and additional benefits like crash protection or “run-flat” tires that allow the vehicle to continue driving even with a flat tire. However, this direct correlation between cost and quality is often missing in the realm of insurance.

The challenge arises from the limited accessibility of information for insurance consumers. Policy processes may lack transparency, and exclusions within your coverage are not always clearly presented, making it difficult to discern precisely what you are protected against.

To evaluate the quality of insurance, it is imperative to consider several factors, including an insurer’s financial stability as reflected in their balance sheet, their track record in paying out claims with a high likelihood of doing so, the fairness of their practices, and the extent of coverage they offer.

Removing inconvenience and frustration from the customer journey

Getting insurance has often been seen as a hassle, leading to frustration. Many people endure lengthy phone calls to get price quotes and set up policies, only to find out that their coverage falls short when it’s time to make a claim.

What makes insurance unique is that its value often becomes clear only when you actually need it.

Thankfully, advancements in technology, like AI, machine learning, and data analysis, have brought about a welcome change. Digital brokers such as Everything.Insure are giving consumers the power to buy insurance, make changes to their plans, and file claims at their own convenience. You can now easily pause and resume your insurance coverage with a simple click.

Considering the crucial role insurance plays in protecting you and your loved ones during emergencies, if you need to cut costs, it’s better to review your insurance needs and get new quotes from different providers instead of cancelling policies outright.

This approach ensures that you maintain sufficient coverage and allows you to reevaluate what might initially seem like an unpleasant expense during challenging economic times.

In conclusion, insurance doesn’t have to be a burden. Instead, it should be seen as a vital investment in your financial security and peace of mind. By understanding the importance of quality, making use of convenient technology, and making informed choices, you can transform insurance into a smart decision rather than an obligation. Everything.Insure is leading the way in this transformation, making insurance a proactive and value-driven investment accessible to all.

[By Mishaya Chettiar, Executive Head of Everything.Insure]