Mayhem in the markets
The COVID-19 pandemic has stretched into the fourth month and the repercussions continue – a manufacturing sector that has all but halted, supply chains disrupted, travel and hospitality grinding to an almost total halt, automobile sector has paused, and generally, there’s a slump across industries.
In this new normal of the COVID-19 economy, P&C carriers across segments – personal, commercial, speciality, et al stare at four major ground realities:
- Fewer renewals and for lower insured amounts, with fresh business accrual decelerating
- Clients asking for changes in coverages to include pandemic risks and related liabilities
- Claims arising where there are grey areas and pandemic exclusions are not clearly called out
- Increased margin pressures, leading to a slant towards lower cost structures
Add to this a surge of COVID-19 claims which will emerge from Worker Compensations, General Liability, and Business Interruption insurance covers to name a few, and you have super-challenging operating conditions for insurers!
Navigating turbulent waters
With changing dynamics of coverages to take care of the pandemic impact in D&O, E&O, event cancellations, business interruption and liability covers, the need of the hour is for insurance organizations to align and adapt to new operating models. These models should have a five-pronged strategy focused on the following functions:
Product Design: With COVID-19, insurance products & services will have to undergo modifications i.e. new products or variants of existing ones that redefine coverage availability, scope and limitations of the peril, coverage, number of occurrences, exclusions along with limits, sub-limits, deductibles and retentions.
Sales & Distribution: In insurance, a major chunk of sales – especially MSME, Personal, Specialty lines insurance in P&C – happens with a human in the loop. Adding Virtual Assistants to the chain to assist human Agents – even for complex products, will help.
New Business & Underwriting: Again, intelligent chatbots to the rescue for field underwriters and operational processes such as extraction and prefilling data. This will support a smooth, seamless, omnichannel, personalized and consistent POS experience at frontend.
Existing Policy Servicing: Current policy holders should feel assured that they can avail of the COVID-19 related risk cover as defined in the scope of their policies. Medical underwriting aspects should be brought in with futuristic impact either at the time of renewal or other relevant milestones.
Claims: COVID-19 related claims will raise unique questions. Automation of such claims based on cognitive technologies can improve response time, especially in high frequency cases and geographic zones. Routine business interruption claims often present proof and quantification tests, and in the context of COVID-19, there will be challenges related to volume surge and so on.
Success in times of turmoil
Clients will need end-to-end support from remote locations, lean implementation of new technologies and rapid responses to queries on both new business, renewals or claims. This means being super-agile and nimble to address new market needs – which can be quickly enabled by leveraging digital technologies:
Automation and artificial intelligence to present proof and quantification of business interruption insurance and liability covers.
Moving from legacy to nimbler technologies with support from chat bots to reduce response time and enhance customer experience across journeys.
Advanced analytics and big data-centric solutions to triage, sort and effectively prevent fraud leakage in the event of claims volume surge.
Given that COVID-19 claims will come without past data for pattern analysis, this will require machine learning, NLP and ontology-driven heuristic tools for predictive modeling and forecasting.
In my subsequent blogs, I will draw on my experience and try to share pragmatic insights, uncover hidden risks, and provide innovative solutions on various aspects of Insurance transformation in the COVID-19 era.
Stay tuned for COVID-19 Impact Series: The New Insurance Economy – Challenges and Solutions
- COVID-19 Impact Series: Growing Life & Annuity business in crisis times
- COVID-19 Impact Series: Healthcare transformation using IT
- COVID-19 Impact Series: Trying Times for Broking Sector
- COVID-19 Impact Series: Navigating the Turbulence in Reinsurance
Visit LTI’s Insurance page to find out more about our capabilities in this vertical.
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