The insurance industry is built on the concept of protection; its whole mission and purpose is to minimise and mitigate risk for its customers and, by extension, for society and the economy.

Insurers must embrace the post-pandemic world with a new lens. It is in everyone’s interest that the industry responds to the challenge of the times by addressing the clear and present threats, recovers from the devastating impact to become leaner and stronger, and thrives by getting on the front foot to prepare for the new circumstances.

That means understanding how customers’ needs and attitudes have changed, how digital trends have been massively accelerated, how collaboration is key, and how agility and flexibility are now vital.  But these words are easy; go back five years and we were saying similar things. 

The shift towards digital adoption had been seen as beneficial in terms of enhancing speed and efficiency, but in many cases, insurers were wallowing from left to right and getting nowhere fast.  However, insurers no longer have the luxury of time. It’s critical to adopt digital now, it has become a fundamental and existential necessity.

Here are the five key actions we have identified that insurers need to take to thrive:

Support Your Customers

The pandemic has revealed what customers and brokers really care about: their wealth and their health. They want clear advice, support and reassurance about surviving the pandemic and making it through to the other side.

The expectation of great customer experience has taken a quantum leap. Simply answering the phones doesn’t cut it anymore. As inquiries and claims rocket, anxious customers do not want to stay on hold in long call queues or rely on inadequate, out-of-date FAQs on a website: with modern cloud technology, there is no excuse for not scaling up rapidly to handle high customer demand, seamlessly and friction-free, through a digital, omni-channel approach. There are no alternative options.

COVID-19 has given the industry a golden opportunity to reset itself, focusing on customer needs rather than product push. It may be non-traditional, but millions of customers would value getting advice on business interruption whether linked to their policies or not. Insurers should step up and provide meaningful support to serve their employees, customers and brokers.  Leverage your relationship to offer an independent view on securing government relief funds or advise businesses on what employees can and cannot do during furlough – be more than just the insurer.  As we often say to our children, in a time of crisis – always look for the people rushing towards you, there are always people ready to help.  Insurers, time to hold the mirror up – was this you?

Brokers and intermediaries too, want a different client experience. Most are SMEs, so their number one concern right now is to still be here in six months. Given such existential concerns, cash flow support from a provider would underline effectively that these relationships are collaborative and long-term, not merely exploitative, expedient and transactional.

Reinvigorate the Workforce

COVID-19 has put employee well-being and workplace culture at the top of the organisational agenda. Lockdown and social distancing have created a new world of stress for employees – unfamiliar working patterns, health and employment concerns, and juggling duties as parents and carers in equal measure.  It has also created positive change, regions feel more connected and on par with their HQs, teams are closer than ever before –and are able to connect beyond work talk thanks to unscripted cameos from children and pets during meetings.  It’s often Millennials and Gen-Z who suffer the most, as they lack a frame of reference to assess the impact on their careers, and, are more susceptible to lock down social isolation. Your talent and future leaders are feeling anxious and destabilised. 

Crises are the incubators of innovation. Traditional silos have already been blown wide open as everyone works remotely. That new-found feeling of dynamism and novelty can translate into new types of team empowerment, collaboration, cross-discipline engagement, faster decision-making and implementation. In essence, work is moving from fixed locations on-premises to dynamic and collaborative remote-working from anywhere.

The move out of traditional insurance offices gives the industry a chance to take a fresh look at what it does and to fundamentally re-examine its ingrained practices. Why not use this as opportunity to challenge Gen-Z to redefine their day-to-day work life?

The future of the insurance workplace will combine the best of the physical and virtual. Platforms and collaboration tools will take over from desks and offices with adaptability being prized above procedure and hierarchy. Technology with a human face will be the gold standard as robotics, telematics and AI – all enabled by cloud – blend the best of human and machine. Simplifying and standardising processes in this way removes all the old functional frustrations, freeing employees to do what they do best - serving customers and solving their problems; being innovative and creative.

Operationalise for a changed world 

The pandemic has ruthlessly stress-tested the insurance industry’s legacy business model as never before, focusing minds on the need for innovation, resilience and flexibility.

The crisis is accelerating new ways of working across the industry, compressing timeframes for innovation and change management from years to just months or even weeks.

Sleepy inertia in much of the industry is giving way to recognition of the need for dynamic and agile responsiveness. The disruption has highlighted the value of automation in the industry. Personal lines have exploited aggregator and comparison websites for 20 years, but the pandemic may have given the impetus to finally apply the model to the SME sector after years of talking about it.  It equally means we may focus more on enabling brokers      to engage better with customers and provide them the right tools to do so.

It is possible to digitise and automate the entire end-to-end process even for large chunks of the specialised insurance market: creating the policies, underwriting, offering direct and embedded sales, and processing their claims. By simplifying, standardising and automating, efficiency soars and costs tumble. Cloud makes that both possible and desirable. 

Look at the recent market release of Ki, a standalone business and the first fully digital and algorithmically-driven Lloyd’s of London follow only syndicate, that will be accessible anywhere, at any time. In collaboration with Google Cloud, Ki plans to redefine the commercial insurance market.

Future operating models will be characterised by destroying traditional silos and adopting transformative approaches such as collaborative working and the building of ecosystems in which various partners combine to deliver a package of complementary services spanning traditional boundaries – data providers, customer champions, social media channels, InsurTech players – in mutually advantageous ways.

Drive Growth 

The industry faces a double whammy as premiums drop while claims soar. Insurance tends to grow in line with the economy but with GDP collapsing over the lockdown period, identifying new growth opportunities is vital if the industry is to recover and thrive.

Future growth will stem from the development of innovative policies and products that are fit-for-purpose, meet emerging and new needs, cover new risks – such as cyber risk for home and remote working, income protection, remote health monitoring  – and enhance the value proposition.

Post COVID-19 products will not be merely about loss recovery: risk advisory and loss prevention services will become essential additions to the portfolio.

Quickly identifying hot spots is the mark of dynamic and successful players in any industry. Event insurance is a great example of this, given the mass cancellation of sporting and concert fixtures since March. At the same time, income protection and school fees protection will be front-of-mind for many now.

Products that no longer address the new market realities must be adapted or scrapped. With most of the UK’s 33 million passenger cars lying idle for much of lockdown, customers will push back against paying premiums for risks that they are not taking. That opens the way for more innovative policies based actual usage and real-time risk indicators.

Flexible usage-driven insurance products provide the chance to offer insurance-as-a-service rather than insurance as an inflexible, traditional annual product – unchanged in centuries. That moves the industry, and the more dynamic players, away from race-to-the bottom on price competition towards genuine value proposition. In other words, from what-you-pay to what-you-get and ultimately how it makes you feel!

Engage in the Industry Response

Learning lessons, boosting resilience and improving safeguards are vital parts of a crisis response. In the wake of the Global Financial Crisis, regulators introduced sweeping reforms, created new consumer protections, and implemented new standards.

The industry’s reputation and licence to operate depends on markets being seen to function smoothly and a perception that customers are being looked after. But the industry’s response to COVID-19 has been viewed negatively in some quarters with criticism of the lack of cover for pandemic losses and a lack of transparency over contractual terms, who sold them and how. In many cases, confusion over coverage has been exacerbated by a lack of market standard for policy wording.

The industry needs a strong and consistent voice to defend its reputation and shape the new regulatory and legislative environment that emerges post-crisis. It should proactively engage with government and regulators on how to respond to the current and future pandemics, ensuring that it is fairly treated and supported.

For instance, the pandemic has exposed a lack of state-backed insurance of pandemic risk in the same way we have in the UK for Flood, with Pool Re, of course which could be addressed by state-backed pandemic risk pools.

From Legacy Problems to Cloud Solutions

As insurers adapt to the new challenges of the post-COVID-19 world, it is clear that the winners will be those agile insurance companies that embrace new business models that exploit the potential of digital.

They will thrive by harnessing data-driven insights and AI-powered automation enabled by cloud capability to achieve better, more flexible, more secure and more efficient working environments and cultures. 

Every aspect of the insurance model will benefit, from underwriting quality to efficiency of claims processing. Insurance-as-a-service becomes a reality.

Delivering product innovation and an enhanced value proposition relies on agile core systems and an operating model that has the ability to flex and adapt rapidly, down and up in line with needs and demand - responding rapidly to new customer needs with the launch of new products and instant amendments to existing ones.

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