SA is entering the third month since the coronavirus surfaced, which has shaken up all sectors of the economy and given steam to the world’s new work-from-home adaptation.
The move will see car insurers rethink their models and, most importantly, will accelerate their digital transformation agendas. New, fully digital insurance companies have already marked their territory with innovative and flexible product offerings — and low-cost premiums.
The Covid-19 lockdown imposed by the government has significantly restricted the movement of people, which has inevitably translated into more cars parked at home and consumers questioning the value proposition of paying marginally cut, or in some cases, full premiums for their policies.
Digital disrupters in the insurance industry have been slowly creeping up on the larger, conventional insurers, such as all-digital insurance start-up Naked Insurance, which, even before the coronavirus, had the option for its clients to be in control of their premiums by allowing them to pause cover when their car is parked.
Some of the country’s major insurance companies have applied blanket reductions to premiums to help alleviate pressure, and ultimately retain clients, but short-term insurers will have to do more than just reduce premiums to retain and, more importantly, lure new customers.
Consumers have become comfortable with a fully digital lifestyle as they have been pushed to incorporate technology in almost every sphere of their lives during the lockdown. Dealing with insurance online, where they can be in control, may be one of the things they have become less reluctant to try.
A Bolt out of the blue
Ride-hailing company Bolt, formerly known as Taxify, has just secured €100m (R1.92bn) in new funding for its business, an interesting development considering the negative effect of Covid-19 on ride-sharing businesses.
Given SA’s place as Bolt’s largest market on the continent, there is indication that a sizeable chunk of the investment will come to our shores.
Perhaps this is a nod from the investment community that they believe the business model as a whole has a future in a post-coronavirus economy.
It’s no secret that the Covid-19 lockdown has resulted in less people needing ride-hailing services, such as Bolt or its main competitor Uber. This has led to these businesses focusing more on alternative services such as food delivery to keep drivers on the road, which may end up being the future of these companies.
When the lockdown starts lifting, this may give operators a new lease on life as more people delay buying new cars. Reduced incomes and reduced need for commuting to and from work may dampen new car sales for the rest of the year, which would be a good thing for companies providing a solution for short commutes to and from grocery shops or the occasional visit to one’s office.
At the same time, those that have lost their jobs or had their incomes cut as a result of the pandemic may turn to the gig economy and platforms such as Bolt to put food on the table in this brave new world.
This is the future that Naya Capital Management, which led the investment round in Bolt, may be anticipating, preparing itself for and putting its money into.
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