Impact of COVID-19 on the Insurance Industry
A year ago, none of us could have anticipated a life in which hosting barbecue nights for friends would classify as a public offense and possibly translate to jail time. The COVID-19 crisis towards the beginning of 2020 shifted global dynamics in an almost animated manner, threatening more than just lives. While it continues to be a threat to the economic wellbeing of countries, the health of the masses, and the global social fabric, one can also not deny the stream of new possibilities and opportunities that it has created. The insurance industry has undergone a massive transformation, reinventing its policies to evolving demands, optimizing costs, and modernizing its facilities to sustain themselves and expand the policyholders’ value. Strict lockdown situation reduced insured’s claims against auto insurance and accidents, mitigating some of the losses borne by the industry.
McKinsey’s survey(1) on digitalization in the workspace has shown that the massive digital transformation that companies have undergone in the last two years has accelerated the technological advancements of the industry by at least seven years. Many insurance companies were rather shocked at their own quick response to the global crisis and plan on continuing to integrate digital initiatives long after the pandemic is overcome. Digital transformation goes beyond just minimizing cost and increasing efficiency, it is considered critical to businesses with its quick response action and other unparalleled capabilities. During the pandemic, customers’ use of online resources and channels has substantially increased leading to many industries responding by rapidly shifting to digital platforms to accommodate new natured customer interactions. Insurers have exhibited unprecedented proactiveness and increased communication with their customers in these tumultuous times, even some offering rebates on auto insurance due to a decrease in the use of automobiles. Respondents revealed their preference towards virtual healthcare facilities and medical staff over cash claims from the insurance company, which have been actively accommodated. COVID-19 has created the opportunity to consider usage-based insurance (UBI)- which allows for the policy premiums to reflect the performance of a certain activity.
Many insurance companies had been rather traditional in their approach towards daily operations and workplace flexibilities, but the current crisis accelerated their transition to functioning remotely. The Insurance industry has exhibited phenomenal crisis management skills, setting workstations at home for employees and ensuring smooth operations remotely in limited time. Presently, the need to develop connections, facilitate teamwork and visibility is greater than ever before. With distance being a huge factor integrated into the modern workplace, the majority of the companies have adopted virtual collaboration platforms such as Microsoft Teams and Slack, among others, to connect their distributed workgroups from all around the world. These applications provide security and encryption features that prevent data leakage. They have further also developed industry-specific features to accommodate varying needs and continue to respond to evolving demands. It could potentially lead to companies overcoming geographical barriers and curbing workplace bias by maximizing diversity and making opportunities more accessible. One could optimistically hope to achieve inclusivity of people with disabilities and other constraints if the option to work from home and flexible workstations are offered alongside the traditional work system path.
*The way forward *
One thing COVID has taught us is that unpredictability is normal, and continuity is the desirable approach to overcoming challenges. Insurance companies that have persevered and pushed through circumstantial barriers have produced the best results and achieved their targets. It is important to plan and strategize for companies with limited budgets and resources rather than dropping tools and shutting down momentarily to prevent any losses. The pandemic has shifted attitudes, consumer demands, even as far as the norms of greetings and social interactions. Small businesses must collaborate and cross-pollinate workshops to not only monetize their outputs and increase their respective share values but also to achieve economic and social goals. In the spirit of working and growing together, I want to extend an invitation to the readers of this blog to reach out, explore collaborative opportunities, and brainstorm industry-specific solutions. It would be an amazing opportunity to network with individuals having diverse sets of expertise and experiences, to share their insight, and lend support to the network.
By Laila Yamin