The World Health Organization declared COVID-19 a global pandemic nearly a year ago. Since then, efforts to slow the spread of the virus have caused seismic shifts for insurers and their customers.
In many ways, the world will never be the same. And for insurers, there was much that had to be learned along the way. While getting schooled isn’t generally an enjoyable experience, the hard-learned lessons are often the most valuable.
Here are five ways insurers can take COVID-19 as a teachable moment.
1. The “new normal” is data-driven. With the massive changes in activity and customer expectations that have taken place this year, insurers cannot continue to operate within the confines of demographic data. Customers now demand behavior- and usage-based offerings drawing on their unique attributes and with predictive and prescriptive insights to help them prevent injury and loss. The expectation now is that insures will collect and use customer-generated data for the purpose of guiding overall well-being. This isn’t just a trend in auto and home insurance products. We see this demand across segments and product lines, including personal and commercial P&C lines and in life, long-term care, and disability.
2. Sales and service need a Human + Machine approach. The future of insurance depends on a workforce with the skills to sell and service accounts across product lines. Millennial and younger consumers express the greatest desire for digital experiences and behavior-based offerings according to our global survey of insurance consumers conducted in 2021. But it isn’t just younger consumers and their needs to consider. Use of digital channels increased across consumer segments, and for most consumers, human advisors generally inspire more trust than automation tools. The insurance workforce transformation needs to include training and skilling for more sophisticated use of digital tools. The Human + Machine approach can help maximize customer lifetime value with younger consumers and promote trust and retention more broadly.
3. Customers are reimaging insurance and expect insurers to make their vision a reality. Customers want more highly evolved products and services that go beyond a limited indemnity model to one of holistic risk mitigation and protection. The desire for change is evident in the ongoing court cases over COVID-19 related business interruption claims. Whatever those legal outcomes, in the court of customer opinion the traditional indemnity model was weighed and found wanting. Customers now expect to be more included in the underwriting process. They expect their insurers to make clear which risks pose a threat and to guide them in making informed decisions before a loss occurs.
4. Remote work brings new risks. When COVID-19 forced workers into their homes, insurers found new risks and new revenue sources. Cyber insurance—traditionally a commercial lines product—grew in demand among consumers who brought work home and onto their home networks. Whether the exposure is on the personal or commercial side, insurers can incent the customer to help prevent loss with rewards for good cyber hygiene. Meanwhile, remote work poses challenging questions around workers compensation claims when a workplace injury happens at home.
5. There’s no place like the office. This year has tested us all in ways we never saw coming. For many of us parents, workdays have included working from home and accommodating distance learning for our kids. Such demands can stress more than the home Wi-Fi, and we saw evidence of that in our survey of C-suite insurance executives in North America. More than half of CHROs said reports of anxiety and depression among workers had increased due to work-from-home initiatives. Stress notwithstanding, remote work appears popular with those who have the option. And insurers will need to determine how much of it they can accommodate as part of the workforce transformation.