Will COVID-19 Send Insurance Down a Road Less Traveled?

When we think of disrupted industries, insurers are certainly among those being challenged right now. Generally, change has come from emerging tech, natural disasters, or new business models, but now COVID-19 has uprooted society seemingly overnight. Fewer cars on the road these days have reduced risk to the point that insurers are refunding premiums. In health coverage, while the cost of COVID-19 treatments is significant, payments for elective surgeries and even routine checkups are down as people defer those visits. As we adjust to the behavior shifts that COVID-19 requires, the insurance industry has an opportunity to rethink its role in supporting people — even when people aren’t filing claims.

We chatted with Olga Dotter, our member lead at CSAA Insurance Group (CSAA IG), a AAA insurer, to discuss what these signals could mean for the future of insurance:

Shuya Gong, IDEO CoLab: An IDEO CoLab membership provides a forum for companies to collectively look for solutions to cross-industry hard problems (from insurers like CSAA IG, to financial services like Nasdaq, to energy companies like Exelon). How are you as CSAA IG anticipating the future in the midst of today’s challenges?

Olga Dotter, CSAA IG: One thing we believe is that some of our best partners will come from outside our industry. Collaborative innovation groups like CoLab are helpful because the changes we’re seeing affect multiple industries at once. For example, the sharing economy and gig economy have changed future generations’ relationship to cars and property — impacting how we use money, energy, and of course insurance. In insurance, this led to new products in cyber, rental, and usage based insurance, but for financial services this has created new marketplaces for labor and assets.

Shuya Gong, IDEO CoLab: So it sounds like the insurance industry was already in the process of redesigning itself. As we see systems impacted at all levels, and situations constantly changing, how is the COVID-19 outbreak affecting the future of the industry?

Olga Dotter, CSAA IG: In the time of COVID-19, we’ve seen structures on the verge of falling apart: careers interrupted, gigs cancelled, leases threatened. Meanwhile, new structures are scrambling to fill in the gaps — delivery services hiring, tele-services gaining traction, and communities banding together to support each other. As insurers, we can use this moment to rethink some fundamentals of our industry, and to design entirely new offerings.

Shuya Gong, IDEO CoLab: Let’s dive into some of those fundamentals. How might the insurance industry pivot to meet people who are living under these new circumstances?

Olga Dotter, CSAA IG: Although the sharing economy already signaled the need to insure more than property, this time around we can think beyond the basics. Our health and our homes might be insured already, but insurance is about feeling protected from uncertainty. If access to food, education, or career continuity are now uncertain, as insurers we have a responsibility to explore new types of support for our customers to feel safe. For example, our Strategy & Innovation group is actively exploring adjacent areas such as financial services, and answering questions such as “how might we support ‘aging in place’?

Shuya Gong, IDEO CoLab: Generally support comes in the form of monetary payouts. But payouts feel like a consolation prize — they provide a safety net but also signal that something went amiss. What can insurance provide that’s beyond financial support?

Olga Dotter, CSAA IG: AAA membership has been famously tied with roadside assistance since 1915 and it’s considered a signature of the brand. We’re considering how this kind of non-monetary support might show up beyond health and property. What’s roadside assistance for your career path? What are new ways in which we might help our customers succeed along any kind of journey?

For example, CSAA IG recently redesigned the wildfire claims experience to support people better through more transparency and ease of use for customers impacted by recent wildfires in California. The goal was to help them rebuild their lives faster.

Shuya Gong, IDEO CoLab: As insurers, you’re the subject matter experts in risk management. Together with IDEO we’ve explored potential future risks. COVID-19 is highlighting systemic risks and failures, and making clear many other things that can go wrong beyond cars, property, and even health. How does this change the way you think about risk?

Olga Dotter, CSAA IG: At CSAA IG, we moved quickly to execute a holistic approach to address the challenges that have emerged around COVID-19. Most notably, we announced a 20% premium refund for AAA Members, along with other efforts to address the needs of our employees and the communities we serve. For example, we’re extending auto insurance coverage to frontline drivers who have started volunteering their personal vehicles to deliver food and medicine.We’re learning how events like this affect so many communities that surround our members, and that our response can help meet the needs of people on multiple levels.

Shuya Gong, IDEO CoLab: Peering towards the future, how might we go beyond the stop-gap solution of paying a claim, and help pave the way forward? What might it look like for insurance to help me prepare for career shifts, take preventative steps for my health, or preemptively protect my property?

Olga Dotter, CSAA IG: We have made a strategic investment in future-oriented initiatives in order to play a role in the future of mobility, the sharing economy, blockchain, and autonomous vehicles. Most recently, we have done a deep-dive into the gig drivers’ community for empathy-driven design of new products and services we can offer. For instance, PostOffice is a recent concept that we’ve explored together with IDEO CoLab, aimed at offering employment shifts and up-skilling gig workers, such as delivery drivers, during/post COVID-19, to enable some form of income continuity.

Shuya Gong, IDEO CoLab: On that note of continuity, silos between organizations have long been a point of friction for users. The last thing people in need want to do is manage tons of independent relationships with companies — banks, hospitals, insurers. Have you been able to reach out, not only to customers, but also to the other services they’ll need to coordinate?

Olga Dotter, CSAA IG: For insurance, this is a moment where risk mitigation is no longer a world of statistics or siloed activities in an individual’s life, but where all parts of life are interoperable and flow seamlessly (whether we want it to or not) between work and home, sick and healthy, yours and mine. As the future is being redesigned by all industries for our new normals, we can’t just revamp insurance, but need to look at entire systems that are intertwined with insurance as well — transport, health, governments. We’re looking for CoLab’s help with that, too, Shuya.

Shuya Gong, IDEO CoLab: That’s why we’re here, Olga. Any parting thoughts?

Olga Dotter, CSAA IG: The future may seem unclear for our customers right now, but our commitment to our customers is clear: to be the protection not only for the things that fill our lives but the things that make life worth living.

Illustrations by Shuya Gong and Christina Johantgen