The uncertainties and volatility following the covid-19 pandemic and the resulting slowdown are proving to be advantageous for the advice market and the insurance sector in the UAE.
“One of the side effects of covid-19 and the economic situation is that it has led to a number of individuals revisiting their financial priorities,” said Anand Singh, senior associate in the insurance and reinsurance practice at law firm BSA Ahmad Bin Hezeem & Associates.
“A large part of savings and financial planning is motivated by the availability of such funds in case of contingency.
“Life insurance covers have stood the test of time and payment of benefits under respective policies by life insurers in these testing times proves that it continues to be an effective tool of financial planning.
“As a result the demand for protection policies and life insurance has seen an increased demand despite the lack of liquidity in the market,” Singh added.
Top priority life cover
A recent YouGov survey commissioned by Zurich International Life found that life insurance has become a top priority for almost half of UAE residents after the spread of covid-19.
The survey results show that 46% of UAE residents have indicated that life insurance is more important to them than before the pandemic, placing it four times higher than travel insurance and 3.5 times higher than property insurance, home finance and car loans.
Interestingly, 51% of the survey respondents identified savings as a key priority, while 32% voted for retirement planning.
“The unprecedented nature of covid-19 with the rising rate of infections and the increasing death toll across the globe has altered the mindset of individuals,” Walter Jopp, chief executive of Zurich in the Middle East, said in a statement.
The survey found that trust in the insurance provider is the most important consideration when purchasing life insurance online; followed by affordability and simplicity of terms and conditions, documentation and processes.
Almost half of those surveyed admitted that they were likely to buy a digital life insurance online with this number increasing to almost 60% of higher income earners.
Mindset change
“Most individuals wish to review their existing insurance exposure and take corrective actions wherever required,” said Ramachandran Krishnan, chief executive of Barjeel Geojit Financial Services, Dubai.
“The pandemic has created a compelling need and change in mindset to invest in good savings and protection plans which take care of such exigencies that may arise in the future.”
So, how can the financial advisors cash in on this situation?
“They have to scale up their services to their clients to ensure cost effective protection and investment plans are offered,” Ramachandran said.
Changing perceptions
The pandemic is also influencing people’s perception of protection, savings and investments.
“There are safety concerns, as well are new awareness, in the wake of economic slowdown and job losses and income depletion,” said KP Hussain, managing director and chief executive, Fathima Healthcare Group and FMC Network.
“People started realising the need for insurance protection when afflicted with illness, or else their savings will get eroded.
“What happens is, that in the event of any major illness, people actually sell their assets; often losing their life time savings. The demand for life insurance stems from this situation.
“The demand for life cover is there as people are making enquiries, especially the salaried class, who are living in an uncertain era. The plans that are sold here are for expats who can get global coverage with portability facility,” he added.
“In a volatile market, most retail investors are clueless on selecting a suitable portfolio and asset class. There, they need professional advice. Advisers can help them plan a well-diversified portfolio to reach their short or long term gains,” Hussain said.
