Post Covid-19: Six Tips for the Insurance Industry

This article is part of The Future of Insurance -LinkedIn’s Newsletter Series, authored by Dogan Kaleli. Click here to subscribe and get updates on the technology, customer & employee experience, future of insurance industry and trends!

Covid-19, such a tragic pandemic with so many deaths… My heart goes out to those individuals and families affected by this, and my gratitude and appreciation to all those brave individuals who are on the front lines! 🙏

We have witnessed different strategies from organizations in the insurance space, to navigate these tough times: insurers giving premium refunds, or creating guidelines making sure their customers safely reopen their businesses, workshops being done to design new products for the post-covid19 era, or discussions to pay for the uncovered business interruption claims, or some insurers already expanding coverages to support their clients. Let’s start with a basic fact: the way insurers respond to customers and society’s needs in these tough times of Covid-19, will dictate public perception for many years to come.

Another fact is that Covid-19 changed the insurance industry permanently. Not only did it forced us to rethink our products and coverages, but it also showed us, once again, that the customer behaviors and employees’ expectations have changed, and operating models have to transform. In this article, I would like to talk about 6 critical points I believe our industry needs to adapt, because our traditional industry is undergoing an upheaval and as a result, it has to change rapidly.

1. Creating a winning team is the key!

Creativity and flexibility are important criteria for future employment, especially when it comes to new business models and disruptions, as well as changing political frameworks and regulations.

To be successful in this new era, breaking down barriers in your company is a must. A “future” organization should have a connected workforce. I’m not talking about promoting collaboration and communication, which almost all organizations do nowadays, but I’m talking about really breaking down the barriers between teams: having product development constantly discussing with claims to design new products, having underwriting involved in marketing / sales activities to boost customer satisfaction and strengthen sales culture, having engineering working with customer service to kick off initiatives that will transform the customer experience, having the innovation culture so embedded into each team’s DNA, as a result, people “on the ground” are empowered to transform the company. The traditional hierarchy structure will not make sense anymore for a modern company.

“A hallmark of a healthy creative culture is that its people feel free to share ideas, opinions, and criticisms. Lack of candor, if unchecked, ultimately leads to dysfunctional environments.” — Ed Catmull

There has been a disruption to the workforce, with stress in employees’ personal lives. That’s why companies need to promote strong policies addressing mental and physical well-being. Being open to remote working practices is important, which means not only implementing this new way of working but also supporting the cultural changes in the organization. This is the “new normal”. In addition, having a flexible organization brings a huge opportunity in terms of accessing a much bigger talent pool. With an efficient, collaborative and agile working environment; managers will be able to hire not only from where their offices are but anywhere.

2. Customers expect more!

We all experienced the recent challenges and disruption in our lives, in which we were forced into a digital-only way of life. So it’s expected that insurers and brokers create digital experiences, although this does not mean it should all be digital and no human touch. The PWC research showed, before the covid-19 crises, that

• 59% of customers indicated that companies lost touch with the human element, and
• 75% preferred to interact with a human vs a machine,
• 73% consider “experience” more important than price or product quality, which means they’re willing to pay more for a better buying experience.

In this “new normal”, the marketing campaigns for the best price and/or the great product will “lose the fight” against campaigns with emotional intelligence, care, honesty and empathy which are more human. Also, due to covid-19 challenges, the consumers are adapting more digital and less-contact ways of purchasing. I would call it an “art” to combine both digital experience (and less-contact) and increased human interaction; but it is necessary.

Specifically in our industry, insurance companies and brokers need to identify how their customers’ behaviours are changing, what demands are being asked for, and even beyond that, identify who their new customers are in the “new normal”. Customers’ profile and expectations are evolving, therefore insurers and brokers have a responsibility to respond to these new needs. Besides all these, it is the moment to start implementing win-win transformations based on these evolving expectations. Underwriters should have access to ML / AI driven risk scoring tools, risk inspectors should start leveraging online tools to complete risk surveys instead of travelling all year long or utilize drones for such inspections, some claims adjusting processes should be handled by AI technology minimizing the errors, making the processes far quicker and boosting the customer experience. Of course all this transformation requires strong leaders in the driver seat.

3. Strong leadership with a futuristic vision is necessary!

If you delay your adaptation plan, you will be out of business. In the startup world, people tell you that you need to move quickly, if not, you will get “ubered”, meaning someone will come and disrupt your business (just like Uber did to the taxi industry). This can be good or bad for you, but it’s definitely good for the customer and that’s what matters. After the Covid-19 crisis, the transformation needs to happen much quicker and more aggressively, which requires leadership and acting with urgency.

“Management is about persuading people to do things they do not want to do, while leadership is about inspiring people to do things they never thought they could” -Steve Jobs

I would strongly recommend kicking off -what I call, “our future” with your employees to discuss, challenge and re-define the following topics;

1. Your Company: who are you, what is your purpose, what does your company stand for in the post-covid19 era?
2. Your Culture: what is your culture, how do you work with each other or with customers and partners, what are the dynamics within the team, how agile are you, how do you empower your employees and decentralize your company?
3. Your Operations: what should you change in your operations, how to transform your company, what digital strategies to focus, what is your real estate strategy, how can you build a new operating model around customer and employee expectations with the right processes and governance?
4. Your Business: How has your line of business changed with the crisis, what do your customers expect from you now, how are your competitors acting, what new products should you develop, should you invest in insurtech or other partnerships, should you adapt digital marketing strategies?

4. Embrace change and transform!

Leading companies understand that modernizing their core operations, including customer-centric and improved customer service is essential. The technological upheavals come at a time when the number of traditional companies will shrink, while the industry will expand into new areas where there is a need for new technologies, new business models, and new employees. It was already clear that technology-driven operations are the future of insurance, it just became more clear in the post-covid19 era. It is the right moment to invest time and resources to leverage different technologies and change the way you run your business.

Besides digital transformation, companies should bring outsourcing back which is a strategy to enable them in order to;

1. Create efficiencies and automation with an experience partner
2. Be able to scale without spending on recruitment and training
3. Most importantly, focus on perfecting the customer experience and improving loyalty, rather than wasting resources on operational “battles”

One important step you should consider is launching internal programs to boost digital transformation and engage your workforce to do that. Some examples are creating a “digital factory”, teaming up with an accelerator, incubator or consulting firm to launch an “innovation lab”, or implementing an “intra-preneurship” program. If you’re interested in the innovation lab or digital factory idea, send me a note and I can connect you with people who can help you with that. About intra-preneurship, check out this article by Carole Stromboni. These solutions will lead you towards having cross-functional team collaboration, identifying new business opportunities quicker and sometimes to reinventing your core business model.

Remember that, with the Covid-19 crisis and its aftermath, the insurance ecosystem fundamentally changed, and taking actions now to adapt is essential. This means you need to “break” the traditional behaviors, and focus on bringing your revenues back, creating productivity, implementing transformation strategies quickly.

5. Stop reinventing the wheel, and focus on partnerships!

Insurers and brokers need to recognize that they cannot do everything on their own, so they need to create partnerships to modernize every step of their business. There are many companies doing this already, but we need more.

Collaboration with startups brings forward-looking products and services. When you include qualified employees in the mix, who can develop and maintain them, and provide guidance on how customer expectations can be met; that combination will boost your transformation. While technology is indispensable for improving transparency, removing barriers to purchasing, and enabling the experiences customers crave, a true transformation can only succeed if we bring talent and partners from different profiles such as startups and others; rather than spending so much resources to manage the transformation internally.

One of the priorities for the post-covid19 era is to rethink and redesign the traditional business models and inefficient processes. And to do that, insurance companies and brokers should develop new partnerships and focus on collaboration with startups and other partners within the ecosystem.

Many developments, crises, and ultimately covid-19 situation have shown us that the insurance industry needs more innovation; at the same time new opportunities emerged from these crises: cyber insurance, specialized underwriting through MGA/MGU business model, parametric insurance, ecosystem models, UBI (usage based insurance), etc. There are a ton of startups, service providers and innovation labs out there that can assist insurers and brokers to innovate, transform and generate more revenues; if you have an open-mind for partnerships.

6. Focus on transformation, but address the current challenges!

Besides everything I have discussed above about changing and improving insurance industry, it’s also important to focus on the business-as-usual tasks, that have been impacted by covid-19 situation;

• As you are probably aware, there are ongoing discussions to require carriers to expand the business interruption coverage to some businesses to minimize their losses, which triggers so many concerns in terms of risk capital, reserves and solvency (!)
• The crisis triggered discussions around ensuring stability and strength, therefore keeping your underwriting discipline and strong governance is more important than ever,
• Reduction in investment portfolios and income will likely create more pressure on the underwriting results,
• The crisis is bringing a more hardening market. In these times, keeping your sales-force engaged and motivated, despite the challenges of remote working etc, is critical to keep writing enough business,
• Loss ratios will be negatively impacted by unexpected losses, increased losses and/or premium refunds that some carriers have decided to implement,
• Talent gap is a known issue in the insurance industry, which showed some positive development lately as a result of insurtech trends and tech investments by insurers and brokers. Although, the crisis may cause our current workforce to delay their planned retirement, which would reduce demand for new talent joining the insurance industry, which might unfortunately enlarge the talent gap.

Leadership, innovation and execution are the critical things to have right now, in order to prepare your company for the post-covid19 era. The business-as-usual we knew will not be enough at all; because our ecosystem, our employees’ and our customers’ expectations have changed permanently. Besides the tragic event we have been living in, this crisis is an opportunity to start transforming our industry and “re-brand” ourselves.

To close, I would strongly recommend you to follow these actions described in an article by Ernst & Young, created by Peter Manchester, Simon Woods, Isabelle Santenac;

Next few months;

• Review capacity constraints and non-critical processes — repurpose and automate where possible
• Look after your people and focus on physical and mental well-being; then work to ensure connectivity and engagement survive the loss of the office experience
• Assess and address risks of remote working by strengthening cyber risk capability
• Introduce virtual assistants and other tools to manage and maintain service levels; retool and/or automate existing sales and service processes to handle increased volumes
• Assess the options for third-party support to provide burst capacity and to address offshore center challenges

6–12 months:

• Enrich digital sales and service channels as customers shift their buying behaviors and service preferences
• Deploy cloud technology to effectively scale infrastructure in response to demand
• Create new products (e.g., protection products) to match urgent market needs and enrich service experiences

1–3 years:

• Create a new and more flexible operating model to reflect the migration to digital channels
• Rethink sourcing strategies and optimize the balance of internal vs. external providers
• Use AI to boost the productivity of people and teams, increase straight-through processing and expand automation
• Introduce Agile at scale across the business and IT, and transform the organizational change delivery model

What changes do you expect in the insurance industry post Covid-19? What changes have you noticed in customer behavior, or employees’ expectations?

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Originally published at https://www.linkedin.com and authored by Dogan Kaleli.