COVID-19: The Impact on the Global Insurance Industry

This week marks the eighth week of our “New Normal”. With all employees working remotely, we are lucky to be fully operational and able to support our customers during these uncertain times. 

However, it has taken us some time to adapt to our new routine. We’ve always used video conferencing as a way to communicate internally and externally, but while we were camera-shy before, we’ve been making more of an effort to fully engage online. With travel coming to a complete halt for the foreseeable future, and in-person industry conferences being rescheduled, it’s been great to be able to catch-up with our customers, partners and industry friends as we’re all getting more comfortable with this setup. 

Conference organizers have been busy changing in-person events to online digital events and, luckily without the restrictions of travel time and location, I’ve been able to listen to and discuss industry trends with insurance professionals across the globe. Below I have outlined a number of trends we’ve been discussing.

Claim Payouts & Policy Purchases

Short-term disability policies will be payable on claims where COVID-19, or any related illness, prevents a policyholder from working due to a medical reason, verified by a medical professional. As some medical institutes are turning away individuals with COVID-19 related symptoms, you might find claimants turning to ‘teledoctors’, which provide medical services virtually. With this in mind, we might expect there to be an increase in short-term disability claim spend. I recently chatted to a Claim Manager that had seen a spike of over 400 STD claims in just over two weeks! 

Since the pandemic hit, broker activity in the group space has slowed down significantly. We also see that individuals are not taking out policies as it’s difficult to conduct medicals to get coverage, or existing medical conditions prevent them from getting cover at the moment. However, the market remains steady with renewals being processed, particularly with the fear of illness striking during this time. 

Slower Claim Turnaround

Insurance companies operating in a digital environment have been able to maintain productivity during this pandemic. Electronic files, signatures and virtual meetings have been pivotal in maintaining business continuity. However, insurers and third-party administrators who are currently implementing, or have been slow to implement, digital platforms are finding themselves in a difficult position. Celent conducted research into the impact the pandemic is having on life insurers in North America specifically, and 80% of CIOs said that process optimization is now more important than before. 

From talking with peers, I’ve heard that some claim examiners are having to make occasional trips into the office to print documents, collect paper files or to get signatures for claim approvals. These trips are often essential to ensure business continuity, but they pose a risk for individuals, particularly those who are in the vulnerable category or living within COVID-19 hotspots. Of course, employers are taking this seriously and implementing other methods to keep these individuals, their families and communities safe. However, this does ultimately impact and slow down claim turnaround times. 

Legacy Issues & Digital Transformation

This pandemic has brought legacy system issues to light, particularly in the insurance industry. As mentioned above, some companies are struggling to maintain business continuity without full digital capabilities, while others who have existing working-from-home (WFH) policies have seamlessly transitioned to remote working. 

Within our own business, we have seen first-hand the impact our cloud-native software has had on our customers. Customers using our SaaS Claims software have transitioned to remote working and have seen no negative impact on productivity. Two of our customers have used this pandemic as a trajectory force, pushing digital transformation projects forward. One of our customers, using our legacy claim management platform has been planning to upgrade over the past two years. This pandemic has encouraged them to move the project up, so in the event of another pandemic they will have a digital claim management platform in place. In the report Celent produced, one insurer acknowledged a similar sentiment saying, “We will likely reprioritize current IT budgets to begin projects previously not considered to improve digital processes and support remote workers.” 

Another existing customer acquired a block of business last year and had been working to transition that block of claims to our Claims Management Software when the pandemic hit. While the claims department using our software was easily able to transition to remote working, unfortunately for the other team, they are unable to maintain business continuity.

What Does This Mean for the Future?

One of the biggest topics I expect to see coming out of this pandemic is that of business continuity.

“How can we adapt our processes to work effectively when a crisis hits?” 

This will become a key question for every business to ask themselves in the future. Locally I’ve seen bookshops switch to offer remote payment and delivery services, restaurants offering no-touch delivery of food and online stores offering to deliver gifts on our behalf with hand-written notes. These traditional brick and mortar stores are working hard to keep themselves operational in an alternative manner and we need to see the insurance industry adopt a similar approach to the future. The ability for companies to adapt to our new environment, refocus strategies and redirect resources will be key to ongoing success.

From what I’m seeing and hearing in the industry, I believe that this pandemic will encourage insurance companies to continue to push the digital boundaries, using this new normal as a guiding star for making digital purchasing decisions. In addition, the development of new products and services may emerge as another opportunity for growth and expansion. Time will tell on how this “New Normal” plays out.