Insurance was created to help people guard against the unexpected – but no one could have foreseen how 2020 would change society so fundamentally. In a disrupted world, what major trends do consulting firms see for the insurance industry, post-pandemic?
It’s been a tough year for insurers, although they have shown admirable fortitude. On the overall resilience of the global insurance industry, Swiss Re Group is cautiously optimistic: “The global non-life insurance sector has withstood this year’s recession better than initially expected and will rebound strongly in 2021. The life sector has been harder hit, but growth will rebound next year.”
Still, recovery will not be overnight. KPMG defines a four-phase process many insurers are working through post-2020, of “Reaction, Resilience, Recovery, New Reality”. Where a particular organisation sits on this timeline depends on different factors – where they operate in the world, their insurance line of business and how much progress they had already made towards full digital enablement pre-2020 – “across almost every aspect, becoming truly digitised is critical.”
Ubiquitous digitisation and automation
KPMG’s 2020 Insurance Survey reflects on how the pandemic has highlighted the ability of more digitally-enabled insurers to transition through this year with less disruption than those facing technological shortcomings; Covid-19 has accelerated insurers’ efforts to adopt a digital-first approach.
Deloitte says that, despite the economic impact of Covid-19, investment in the fast-growing insurtech SaaS sector is on a par with 2019 levels and that insurers have been prompted to “seek insurtechs that can help accelerate virtual interactions in sales and claims, as well as reduce expenses.”
Transformation specialists Axway foresee an increasing number of insurtech joint ventures specifically pursuing automation for faster data processing.
Deloitte predicts that “development of new services will be increasingly driven by the rising availability of detailed data and a greater capacity to analyse it.” Digitisation is the key to unlocking business success through data. The old way of looking at data is gone. Insurers, like companies in many other sectors, are now leveraging interactive, intuitive visual data that allows them to more easily spot industry trends, identify strengths and weaknesses and analyse customer behaviour.
A number of innovations are addressing the latter factor, which is crucial to helping insurers meet market demand more astutely. A recent EY report speculates on the possibility of insurers even pulling biometric data from customers’ wearable devices or electronic medical records, to ensure more accurate pricing.
From their bank to their educational institutions today’s consumer expects brisk service, convenience, and flexibility in terms of tools, channels and terms. Insurance has been slow to adapt to this expectation and now the pressure is on: “Consumer expectations and demands are setting the pace of progress in consumer and commercial insurance” writes Chris Maiato, Principal at EY Bermuda Ltd.
This Accenture blog outlines a “manifesto for a customer-first insurance industry”, with a wish list including an online folder of record containing all policy information; an electronic, consolidated bill for all policies held with an insurance company; less regular and more relevant marketing communications, and holistic “independent consulting that covers all my insurance needs.”
With social media granting consumers more power by giving them a public platform to praise or criticise what companies offer them, the insurance industry has no choice but to adopt a transparent and highly responsive customer-first footing. Many insurers already have, and demonstrated this in 2020 by adapting quickly to consumers’ changed lifestyles in a Covid-19 world – MiWay, for instance, introduced discounted premiums for South Africans who work from home.
New ways of working
Covid-19 has swept across the globe in 2020 and, in creating a remote-first society, has been “compelling virtualisation of insurer operations practically overnight”, says Deloitte. This pressure has necessitated urgent investments into business restructuring to support largely remote workforces, even as the industry battles the financial fallout of Covid-19.
EY’s Tony Steadman sees some silver linings coming out of Covid-19, like the breaking down of silos thanks to the sustained cross-tier collaboration triggered by the era of virtual meeting technology;
A culture of rapid innovation born out of pandemic-generated necessity, and widespread agreement that remote workers can be organised, reliably productive and motivated.
Willis Towers Watson’s research indicates that the insurance workplace has irrevocably changed:
“We found that 60% of insurers anticipate making adjustments to how work gets done, including primarily exploring new ways of working and leveraging technology as immediate priorities”.
While the unexpected pandemic of 2020 has placed enormous financial and logistical pressures on insurers around the world, it has arguably accelerated the adoption of an exciting new model for the industry – more digital, more adaptable and offering greater customer-centricity driven by things like self-service, automation and intuitive data.
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