My previous blog post looked at some of the tough dilemmas European life insurers are facing due to COVID-19 (coronavirus), including a likely avalanche of claims due to niche income protection products and the coming toll from “over 50” insurance products.
A related dilemma: how do you underwrite someone who is vulnerable to coronavirus? The over 50 plans pride themselves on being guaranteed issue for people over 50, if they can answer two or three simple questions. Will there be a stampede of senior citizens clamouring for these products? Insurers will be required to respond rapidly if they want to continue writing these types of business, and they don’t want to alienate distributors and direct buyers by introducing draconian decisions without first communicating them.
Large value business protection claims, or key person insurances, are another issue for European insurers. These policies pay out on death of the insured key person, with the monies destined to go back into the business under a continuation arrangement to mitigate the business impact of such individuals passing away unexpectedly. Large value claims such as this tend to take more time to underwrite, but at a time when businesses are stressed by corona-related shrinking margins, they will want these amounts quickly. Automated and digitally-enabled claims processes are essential for now, but also in the future should such a thing happen again. It will certainly be part of insurers’ risk mitigation program going forward.
Customers in the digital world have long expected a supreme customer experience via all channels, including self-service. This will become all the more true during, and indeed after, this corona crisis, with life insurance teams, including agents, mostly home-bound and working remotely. Such capabilities derive from new technologies that automate processes.
But automation is only worthwhile if insurers can support business change and claims. Legacy and piecemeal infrastructure restrict agility, becoming the slowest/oldest link in the supply chain. The main lesson to be learned from this current crisis from a provider perspective is that life insurers must be equipped down the whole chain to better serve their customers generally, not just when there is a pandemic.