What Should Insurers Focus on Post–COVID-19?
COVID-19 has had a massive impact on most businesses worldwide, and insurance is one of those sectors going through challenging times. As all the pandemic consequences are not fully identified, and it is hard to predict where this might lead to, insurance customers are putting their best effort to preserve their health instead of filing claims. When the public health improves, and the situation around the globe resumes to normal, insurers are expected to make underwriting clearer and comprehensive.
For now, insurers need to focus on future preparations, by increasingly transforming processes from traditional into digital and planning to discover more business opportunities. For this, insurers must be aware of the impact of the pandemic.
Top concerns emerged due to COVID-19
- Financial impact
- Operational disruption
- Impact on liquidity and capital resources
- Potential global recession
- Workforce disruption
- Reduction in productivity
- Decrease in consumer confidence, leading to a reduction in consumption
The pandemic’s impact on different insurance segments
- Health Insurance
Health insurers are experiencing the largest impact due to an increase in the number of patients getting hospitalized and the costs of medical services, treatment, drugs, etc. The U.S is on the top with the largest number of COVID-19 patients in the world. Commercial health insurers bear the cost of testing and treatment. With more than 10 million people filing for claims simultaneously, claims processing is becoming a considerable challenge.
- Travel Insurance
The outbreak has impacted the travel and aviation industry on a large scale. On-air connectivity between countries and even domestic states is restricted, in fact, almost stopped temporarily. As a result, a lot of travel plans and reservations are canceled by individuals and businesses. There can be a lot of people and companies claiming coverage for losses due to travel restrictions.
- Others
Insurers providing compensation coverage to emergency service providers such as hospital staff, firefighters, and workers employed in vulnerable industries such as transportation, manufacturing, retail, etc., are likely to experience a rapid hike in claims. Similarly, general liability insurers might have to deal with increasing numbers of claims. Meanwhile, many business interruption policies are on hold as they are yet to be applicable for the COVID-19 pandemic.
What insurers need to do amid the current situation?
The insurance sector can play a significant role in mitigating risks and losses by transferring sufficient funds to individuals and companies affected by COVID-19. Doing this can support economic recovery as the capital will flow in the form of investments and similar.
But before all of this, insurance markets are in absolute need of multiple improvements to become able to support the economy. Policymakers and regulators, along with the entire insurance sector, must take appropriate actions as per their markets. If changes are made over time, insurers might become able to respond to the crisis effectively, at present, and in the future.
- The insurance sector needs effective coordination between the government and the industry.
- Insurers need to shift to supervisory approaches while ensuring their systems inspire technical expertise and appropriate data utilization.
- The insurance sector should give more room for innovation and use engagement channels with the entire industry to trigger responsible innovation.
- Policymakers must ensure that imperative insurance products, such as third-party liability for motor vehicles, fulfill the requirements of the insured.
- Policymakers should build the insurance sector that can help enterprises of all sizes, by not only reducing their risks but also managing them.
What insurers will need to do in the post-COVID-19 period?
Basic insurance operations, processes, and financial performance need to be controlled to tackle the challenge of adapting to change. It will be essential to adopt new systems to encourage remote operations in the long term and boost interactions between insurers and customers.
Besides, insurance carriers and agencies need to deal with financial pressure; for this, they might need to reduce costs and automate processes with the help of AI-powered tools that can also help improve policy administrative functions. Insurers are likely to invest in cloud-based solutions for business improvement, data security, appropriate monitoring, scalability, compliance, and eliminating bottlenecks.
Post COVID-19 crisis, insurers will require digital tools that are developed for the modern, digital age. They need to adapt to change, collaborate with other industries, and create an ecosystem of insurance products and services.The insurance companies that achieve this are more likely to be in a better position to capture a considerable share of the insurance market, expand business models, and step into totally new markets.
How things will change in the industry?
During the COVID-19 crisis, insurers have been focused on responding to customers and their financial needs. Due to this, many are still evaluating the impact. Therefore, before they find what might or might not happen in the future, they should consider the following points.
- Before formulating response plans, assess a variety of scenarios and what impact these could have on the insurance business.
- Reach clients and prospects using digital mediums and partnering with others in the industry to increase leads. Make customers aware of the potential impacts of such pandemics and the importance of insurance coverage in such a crisis.
- Digital transformation of insurance processes.
- In the case of workforce shortage, which is likely to remain a big concern, insurers may consider insurance outsourcing.
Undoubtedly, insurers are putting their best effort to help COVID-19-affected people and businesses that are insured. The overall situation is challenging, especially while running short on resources, sales, profit, dealing with disputes, etc. Insurers need to find out ways to become prepared for such a crisis. Maintaining a balance between plans of action and new long-term strategies will help insurers offer relevant insurance advice, products, and services in the future. The insurers that successfully go through the current crisis are more likely to be in a better position to serve the insured when they really need support. For this, insurers may need to revise the business model to be competent in the post-COVID-19 period.
