Insurance companies are shock absorbers for society and cushion the impact of the risk of such catastrophic occurrences for every industry by transferring risks. In all my discussions with CXOs of large insurance, broking and global reinsurance organizations, one thing has stood out clearly – the current pandemic is a rare event that is rapidly turning into an apocalypse for the industry.
Through a blog series, I’ll try and investigate the impact that COVID-19 is having on various segments of Insurance and try and suggest some steps – proactive as well as reactive.
It’s a brave new world
In my opinion each ecosystem will face unique challenges – hurdles that can be overcome by customized, new “solution strategies supported by technology initiatives”. Let’s explore at the impact:
- Disruption of existing biz models
- Severe pressure on bottom lines
- Surge of claims especially related to liabilities and business interruption
- Likely soft market conditions
Insurers today operate in a tough competition, high customer expectations, stringent regulatory environment and multiple other forces which impact cost of operations and adds to complexities in the existing processes especially related to data privacy compliance, product approvals, etc. This will get more intricate in the COVID-19 economy.
To overcome these challenges a robust strategy that focusses on 360 degree of insurer’s core processes, people, technology, data and governance is key to successfully compete in the turbulence caused by COVID-19 economy.
The strategy should do a holistic assessment of the insurance functional value chain which comprises of product design and actuarial calculations, marketing, sales & distribution, new business & underwriting, policy servicing, claims, compliance and other back office processes.
Each of these core areas must be reimagined in the COVID-19 context, recast to include the modifications and systems must be rewired for getting them implemented as complete user focused solutions.
Innovative Technology components would comprise of:
- A quick product enhancer type app with chat bots
- AI components to answer queries on new products
- Intelligent automation using RPA and Cognitive tools
- Video software for illustrations
- Big data, Image analytics & advanced visualization tools
- Cloud workplaces e.g. AWS Connect with supporting tools
To conclude, a strategic roadmap for insurers to compete in turbulence post COVID-19 will involve the following steps:
One, create innovative products that will be able to provide coverages against the direct and indirect damages caused by COVID-19
Two, build an omni channel, low to zero human touch advisor/broker of the future type interface to provide a comprehensive research and need analysis support with digital technologies. This must be augmented with illustration and personalized coverage selection options.
Three, in the soft market that will emerge, ensure that data enrichment and leverage is optimal so that pricing is adequate and will cover any potential losses.
Four, simplify the processes encompassing quote, bind, issue, claims, etc. and automate to the extent possible with AI, RPA and other tools.
Five, for delightful customer journeys use design thinking and psychographic analysis to expand reach and spread.
Stay tuned for the series:
This is first of the COVID-19 Impact – Insurance blog series. Keep a look out – we will be covering the following topics:
- COVID-19 Impact Series: Property & Casualty Insurance Revisited
- 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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