This time of year is always a time of reflection. 2020 is no different. What is different is that it certainly wasn’t the year we expected, its nonetheless been very impactful and eye opening for the insurance industry.
“With the new day comes new strength and new thoughts” – Eleanor Roosevelt
In 2020, the two words that rang true for the insurance industry are resilience and reinvention – aligned with Roosevelt’s conviction that with adversity comes strength and reimagining who we can be.
COVID-19 swiftly impacted not only insurance, but the world. Almost overnight, we were struggling to figure out how to do business, what would be the impact on our future, how it would affect financials, and when would it end…. The future looked grim, uncertain and SCARY.
But we prevailed
Immediately, insurance companies reacted. Business continuity plans were implemented or developed. Employees were up and running and working from home in an industry that never imagined employees working from home. We have learned that not only were we wrong, but we were completely wrong. Insurance companies are now seeing a future of improved financials through reduced office space, increased flexibility and and sometimes even the benefits of home/work life balance. In May, Nationwide announced its reduction from 20 physical, pre-crisis offices to just four. Others quickly followed suit.
Policy holders come first
Never was a time for the industry to prove how they help insureds through a crisis than in 2020. We proved that we are here for our customers in several ways:
- We’ve always known it was about digital, even pre-COVID. 2020 and forward into the next few years, digital will continue to emerge as an area of change and re-invention for the insurance industry. Due to COVID-19, insurers worked overnight to digitalize service gaps. And also to continue business for their insureds by offering more and more capabilities than were expected or available online – think payments, policy access and claims processing. Customer engagement channels also took off – Chatbots, more live chat capabilities, enhanced engagement with agents and opening additional areas of communication such as Facebook Messenger and WhatsApp messaging capabilities. Customer-centricity and digital transformation will continue to be a top priority for most insurer budgets in 2021.
- Flexibility and agility is the name of the game, and we’ve seen insurers and regulators make decisions lightning fast. In uncertainty, the ability to be resilient and agile is critical to success. Insurers in 2020 have risen to the challenge and have committed to a deeply rooted culture of cost-effectiveness, productivity and operational excellence. Not only internally . Reacting to the changes in the insurance landscape, Liberty Mutual, Farmers, Allstate, American Family – to name a few – gave financial relief to their insureds in 2020 on the personal lines side, shaving 15-25% off customer premiums.
Many global insurers are adapting coverage terms and conditions (or interpreting coverage flexibly) to account for some of the behavioral changes as well. Insurers in countries like Australia, New Zealand, Germany, Canada and others are also voluntarily providing additional coverage benefits to existing policyholders or specific types of workers ( front line healthcare workers) or businesses (restaurants, hospitality businesses for the small and medium sector), as reported by OECD. We are supporting our customers in an unprecedented time.
- Transformational technologies are cutting edge, Mark Breading from Strategy Meets Action, reported in his blog with a resounding YES – insurance executives believe that technologies such as AI, Machine Learning, Computer Vision and others WILL help transform insurance. Initiatives and project investments are focused in these areas are already planned for 2021. It’s been said before and I’ll say it again; COVID-19 has only accelerated the need for digital. What does the future hold?
Here are some must-needed focal points for next year:
- The pandemic has given way for insurers to re-imagine new and improved business models, think outside the box for insureds and truly offer new, viable insurance options:
- Parametric policies (pay upon the occurrence of a triggering event rather than paying a claim related to a specific property loss) have emerged in North America.
- Lloyd’s of London recently introduced parametric business interruption policy for small/medium sized business in Europe.
- The Asia-Pacific region has expanded usage-based insurance with real-time monitoring
- Claims as a differentiator. Claims can make all the difference to your insureds. To accomplish this, insurers will need to get serious. That means introducing new technologies and data into claims processes to increase no-touch processing.
- The future is digital. Deloitte reported 95% of insurers are accelerating digital transformation. If we’ve learned nothing from the pandemic – we’ve learned this to be true. We have passed the point of no return. According to the the movie, “The Graduate”, the way to be successful in 1967 was “plastics”. Today for insurers its digital, digital and more digital. Go big or go bold.
To me, 2020 has been a year of millions of small defining moments. I’m proud of what we’ve accomplished together. We’ve been strong in our support of insureds, resilient in our reaction to crisis, and the future of insurance looks bright. Goodbye to 2020, and Cheers to 2021.