What Impact Has COVID-19 Had On The Commercial Insurance Industry?

What Impact Has COVID-19 Had On The Commercial Insurance Industry?

Recently PWC did a survey on how COVID-19 has affected insurance buyer patterns, they found that because of the influence of COVID-19, 15% of survey respondents indicate they are inclined to get life insurance and 37% are concerned that the pandemic will have a negative impact on their retirement savings.

Individuals, society, businesses, and the global economy continue to be impacted by the COVID-19 situation around the world. Although the insurance business has not been spared, insurers have reacted fast to the crisis. Insurers will confront a variety of hurdles while the broader economy recovers and responds to the epidemic, but they will also find numerous new opportunities in the medium to long term.

As a result, it's no surprise that the COVID-19 situation presents insurers, whether they provide liability insurance or health insurance, with a wide range of obstacles in maintaining their operations as typical working practices are substantially disturbed.

So, how are insurers faring, what are the key flashpoints, and what longer-term operational changes might we see as a result?

Remote Working

One characteristic stands out across all of the insurers: a widespread shift to remote working. Of course, this is true in a variety of sectors. In most countries, close to 90% of employees now work from home, with only a small percentage remaining on-site for important tasks that cannot be completed remotely. In countries where the virus was initially detected, such as China, a handful of employees have returned to work, most likely in alternating A and B team patterns.

In many ways, the circumstance has expedited an already existing trend. Many insurers have been seeking strategies to expand their digital footprint and connection while reducing their dependency on physical co-locations of personnel. The fact that they were able to put this in place in only 2-3 weeks rather than 2-3 years is a major accomplishment in a timeframe that most people could not have envisioned.

Because of the speed with which the system is being overhauled, some principles and checks are more critical than ever. Leadership must communicate clearly, effectively, and frequently so that employees are kept informed and understand the priorities as the situation evolves or changes. Line managers should arrange a 'virtual coffee' with their employees to catch up, keep team spirit strong, and listen to any concerns, as well as more frequent 'checkpoint' conversations on key areas of work to understand performance issues and evaluate progress against deliverables.

Overcoming channel overload

One of the most difficult aspects is that all of this is taking place at the same time as a massive increase in consumer contacts. Customers are bombarding insurers with questions about what they may or may not be covered for, or how to actually submit a claim, whether it's about travel insurance, critical illness, health insurance, business interruption, or another issue. As clients face greater financial hardship, service and call centers affiliated with retirement programs are receiving significant inquiries ranging from understanding account balance fluctuations to withdrawal choices.

Other goods, such as motors, have grown substantially quieter in recent weeks, with claims for motors dropping by 20% or more.

A variety of actions are required in response to these concerns. For starters, insurers must require clients to call them only with the most pressing questions; all else must be handled online. It also means that insurers must examine their internal resources and how they are organized, with the goal of putting as many people as possible into claims, even if it is not their primary function. They must also alter their specialized teams, such as relocating personnel from areas such as auto claims to hotspots such as travel. This more nimble manner of working, dubbed "volume shifting" by some, may be one of the new ways of working that emerges from this predicament.

The Importance of Social Responsibility is Increasing

China was one of the first countries to be hit by the virus, and we're seeing insurers step forward to help their clients in new and innovative ways. Some companies, for example, are offering longer grace periods for premium payments, waivers for some aspects of their claims processing to speed up payments, and reduced the need for much paperwork, among other things. This is a global trend that we see in other insurers. All of this will necessitate operational processes that change and adapt at a rate that was likely unimaginable prior to COVID-19.

In terms of digital transformation, the insurance industry has arguably lagged behind other industries. All of this has resulted in an increase in client expectations in terms of digital services, which is posing a readiness challenge for insurers.

Final Thought

So far, the sector has held up well, although there are some aches and pains to be expected. How much worse they get will be determined by the success of the insurers' response as well as the severity of the epidemic from here.

Whatever the unknowns, the insurance industry is moving quickly and with a strong commitment to provide the support and service that its workers, customers, distribution channels, external stakeholders, and society require.