March 16, 2021 by Jason Contant
Seven in 10 consumers and small business owners want home protection and usage-based insurance policies for the current remote working environment, a recent survey from Ernst & Young found.
“With consumers spending more time at home and online, new concerns are mounting over things such as protection against cyber fraud or paying insurance for a vehicle they’re driving less,” Janice Deganis, EY Canada insurance leader, said in a press release Tuesday. “Canadian insurers will have to update their products and services accordingly if they want to align with consumer values, while tapping into future demand and growth opportunities.”
Three-quarters of Canadian small businesses are interested in a product that pays their fixed business expenses for three months in the event of a pandemic-related shutdown, according to the survey. There’s also interest in insurance that covers liability in case employees or customers catch a disease in their place of business.
Results of the EY Global Insurance Consumer survey reveal that 81% of Canadian small business owners are interested in cyber insurance to cover additional exposure from employees working offsite. Fifty-five percent are interested in insurance that assists them with adjusting to the new business environment (i.e. online delivery). Seventy-eight percent are interested in commercial vehicle insurance that only charges them for distance driven.
“Cyber fraud as a result of increased time online was the respondents’ top concern, followed by paying for insurance for a car that’s being driven less,” the survey said. “Given that remote working is expected to continue for many employees, insurers should develop products suited to the ‘new normal,’ such as home-protection and usage-based policies.”
In late 2020, EY Insurance conducted a global survey of 2,700 consumers and 1,200 small business owners to understand how COVID-19 has impacted their lives, specifically from a personal lines and life/retirement insurance perspective. Five global markets were studied: Canada, the United States, France, Italy, and the United Kingdom.
In Canada, 72% of respondents said they were concerned about their financial well-being as a result of the pandemic; nearly half (45%) plan to save more and pay off debts to mitigate future financial uncertainty.
Nearly two-thirds of small business owners in the survey reported either partially or completely shutting down their operations during the pandemic. Canadian small businesses most affected by the pandemic reported a revenue downturn of at least 40%; in some instances, business owners reported a revenue decrease of between 80% to 100%.
Conversely, the least financially-impacted small business owners have seen minimal effects on their revenue, with 65% of this respondent segment experiencing no change.
A November 2020 study from PayPal Canada found that one-third (34%) of 1,001 Canadian small business turned to digital payments only after COVID-19 was declared a global pandemic in March 2020.
“The number of Canadian small businesses selling online spiked nearly 400% in the last five years, with the global pandemic being a major catalyst for merchants going digital,” PayPal Canada said at the time. Without the ability to sell online, 58% of small business owners said they don’t think their business could survive the impact of COVID-19.
Heightened anxiety about financial security is also pushing consumers to look for cost-effective insurance options, EY said. Survey respondents are willing to provide personal data (70%) or install smart sensors or share real-time data (67%) in exchange for a discount.
Going forward, there will be a stronger call for insurers to align their business with a higher social purpose, the EY study found. More than half of EY survey respondents reported that a firm’s commitment to social responsibility causes — like income equality (80%), environmentalism and racial injustice (78%) — are important factors when deciding to purchase insurance.
Feature image by iStock.com/ake1150sb