The short-term insurance sector has faced major upheaval in South Africa over the past few years with unexpected climate disasters and of course, social unrest in parts of the country.
Source: Supplied. Brina Biggs, senior manager at Budget Insurance.
But more than this, we have also seen a significant transformation in the way in which products are developed and sold – driven by shifting customer expectations, and the need to address new societal and environmental risks.
As we approach 2025, insurers are introducing products that reflect changing consumer needs, emphasising personalisation, flexibility, and digitalisation. These products will share key traits, and their development will be influenced by factors such as data-driven insights, customer preferences, and evolving global challenges.
We believe that in 2025 we will see a few key similarities between new insurance products being rolled out, that cater to the modern consumer, including aspects such as:
Personalisation: Traditional policies that are standard across consumers are rapidly being replaced by highly personalised products that are tailored to specific budgets, needs and lifestyles. Using big data, AI and machine learning and really tapping into data means that we are now able to create personalised policies across various sectors based on an individual’s risk profile, driving behaviour, or health metrics.
In fact, McKinsey research has shown that 60% of consumers are willing to share personal data in exchange for better pricing and more tailored coverage, and the shift to on-demand insurance is expected to grow by 25% over the next five years, with millennials and Gen Z taking the front seat in this regard.
Furthermore, 75% of consumers are interested in using IoT-connected devices to manage their policies, which is creating a real platform for ongoing, innovative technology development in the sector.
Customer-led product development: A growing trend in the industry is customer-led product development. Insurers are increasingly involving customers in the creation and refinement of their products.
Through data analytics, feedback, and behavioural insights, insurers are able to quickly design and deploy products that meet real needs, reducing time-to-market and enhancing customer satisfaction.
Data is at the heart of this innovation. By analysing vast amounts of consumer data, insurers can offer more personalised policies, predict risks more accurately, and fine-tune pricing models.
Real-time data provides insurers with the ability to pick up on trends within their base and drive products that meet these data-led trends and dynamic changing needs of their customers.
And for us, this is one of the biggest defining factors for products into 2025 where really harnessing the needs of the consumer/business that you serve and using real-time insights can be an essential product-development tool which in essence feeds into the very personalisation we are trying to achieve.
Flexible, immediate & digital insurance coverage: Consumers are seeking more control over their insurance coverage. On-demand insurance—where customers or businesses can adjust or purchase coverage for specific periods is becoming paramount to the competitive advantage of insurers – allowing consumers to adjust policies based on their immediate needs.
Similarly, consumers expect a simple, digital-first experience that enables easy access to policies, claims, and modifications – making insurance as simple and transparent as possible, with real-time communication and quick processing – be it claims, onboarding or simply information.
Sustainability as a deciding factor: Globally insurers are starting to develop products that that promote sustainability. This includes discounts for eco-friendly behaviours, such as owning electric vehicles or installing energy-efficient appliances, and while we as a county are still pretty far off from this – the move towards such product development is definitely more a reality today than ever before.
Additionally, more climate-resilient policies are being introduced, providing coverage for extreme weather events, floods, and wildfires. In South Africa, we are seeing a massive shift in solar for example where load shedding and the impact on consumers and industry is massive and so, insurers are prepping to ascertain how can they be competitive in the solar-insurance space to give consumers and business the cover that they need for this essential system.
Speed and efficiency: As the market is very saturated and highly competitive, if insurers want to stand out and win market share a key focus for the coming year will be on speed and ease of deployment. The ability to launch products quickly, with intuitive user interfaces that make policies easier to understand and use, will be key in keeping up with customer expectations.
The insurance landscape of 2025 will be defined by products that are insights led and in turn more personalised, flexible, and driven by data. A customer-led approach to product development will ensure that insurers meet real consumer needs quickly and effectively.
The focus will be on providing seamless digital experiences, leveraging emerging technologies, and responding to environmental challenges with climate-resilient policies. Insurers that can deliver these innovations while keeping the customer experience at the forefront will lead the way in the evolving insurance market.
