The worldwide outbreak of COVID-19 and its consequences have challenged the insurance industry/sector to better understand customers’ changing needs and pushed insurers to embrace Insurtech.
Innovative, digital solutions and services have come up to the forefront of standard insurance operations. In the near future, insurers and consumers are likely to use online resources and tools for insurance offering and purchasing, respectively. Insurers are increasingly moving toward digital adoption in order to appropriately and promptly meet customers’ needs.
Growing Developments in Insurtech
Insurtech companies offer a myriad of online insurance platforms for policy quotation and form submission. Some companies also utilize algorithms for underwriting, allowing insurance seekers to find and purchase the best suitable policy online in one go. These companies were already growing, collaborating with well-established insurance companies, and the global pandemic has only made them more important and relevant to the world’s current situation.
With people increasingly practicing social distancing and doing several things remotely, online shopping and home delivery became more common. Similarly, Insurtech platforms are not more important and common for people looking out for ways to purchase a policy online.
With coronavirus cases still rising and physical distancing becoming the new normal, people are likely to be interested in buying insurance online conveniently. Thus, Insurtech will continue to play a vital role in 2021.
Growing Demand & Competition
The pandemic has led to the importance of assessing the predictability of life and human mortality. This has caused an increase in demand for life insurance among age groups other than seniors. This increment in demand has further increased competition in the life insurance industry, leading to lower insurance prices.
Demand for life insurance might remain the same even in the post-pandemic time, especially among people who were adults during the recent COVID-19 crisis.
However, premiums will recover and grow in 2021, according to Deloitte’s 2021 insurance industry outlook. Demand levels may return to pre-pandemic levels due to a change in risk perceptions once the COVID-19 health crisis comes to an end.
Customer Reviews Will be the New Game Changers
The insurance industry has been notorious for underwriting issues and delays in claims processing. In March 2020, PWC found that 70% of insurance CEOs were planning to include customer service in their priority list.
Insurtech developments are expediting insurance processes; now, what previous customers say about their experience will have a massive influence on how prospects will interact with insurers and make buying decisions. As customer reviews will play a crucial role in how potential policy seekers choose insurance providers, enhancing customer experience will be significantly valuable.
Cyber Security Coverage
Another major trend emerging in the industry is cybersecurity – an issue that insurance companies should look at from both coverage providers and client perspectives. While insurers deal with risk management on a daily basis, they seem to lag behind (compared to other financial sectors) in terms of cybersecurity precautions.
Insurers have not been hackers’ target that much, but since other targets are becoming more secure and inaccessible, cyber attackers and scammers are shifting toward easy targets that are unprepared. Insurers hold large data files containing customers’ sensitive personal information such as financial worth, assets, property, health records, etc.; in the absence of a robust cybersecurity system, insurers can be an easy target.
Another way cybersecurity might influence the industry is by including it in different policies. A lot of business enterprises are operating remotely, and their employees who are working from home using less secure network protection systems are prone to cyberattacks, breaches, and theft. Therefore, the need for cybersecurity coverage is arising.
Digital Insurance: The Era of Remote Servicing
Remote operations are not a temporary solution to problems arisen due to the COVID-19 outbreak; it is the new normal. In simple words, insurers will need to put all their available policies on online platforms (mostly a website) from where potential customers can purchase new policies or renew the existing ones, regardless of their location.
Apart from that, customers who have already been using online channels for their daily purchases or work will be more interested in adapting to a digital experience. Therefore, insurers can reconsider and completely go online even after the impact of the pandemic goes down. As insurance companies are moving toward digital tools to provide advice and service, they can turn out to be their one-stop platform for solutions, enabling them to save enough time and resources.
Adopting remote operations (also with the help of insurance outsourcing companies) will help insurers prevent possible operational disruptions that might occur in the future. No matter what happens, they would not need to close their offices.
An Overview of Both Digital and COVID-19 Disruptions
Insurers worldwide are continually working toward improving, transforming, and digitizing insurance processes.
According to Deloitte’s 2021 insurance industry outlook:
“Deloitte’s survey found 79% of respondents believe the pandemic uncovered shortcomings in their company’s digital capabilities and transformation plans. That rose to 87% among respondents with operations responsibilities, who was probably the most directly impacted.”
“In response, 95% of those surveyed are already accelerating or looking to speed up digital transformation to maintain resilience. Europe (59%) and North America (55%) seem further along in implementing such plans, compared to 41% in APAC.”
Since we have quickly gotten used to using technology more for almost everything and doing more things remotely, many insurance seekers are likely to rely on technology for a convenient policy buying experience. Before the pandemic, online shopping was a lot more common across industries, and, now, insurance will not be an exceptional one.
Insurance companies are increasingly embracing digital transformation. The insurers who will be able to address the challenges that 2021 will pose on them will be those who are capable of adopting innovation for reinventing their business by staying on top of emerging insurance industry trends. Despite the ongoing uncertainty in global economies caused due to the COVID-19 pandemic, insurers can consider digital tools and embrace change to gain client trust, stay relevant in the sector, and lay the foundation for success in the long run.