Trends in insurance following COVID-19
At the start of 2020, one of our first blog posts of the year, we looked at the top insurance trends for 2020. The year is over halfway through, but due to COVID-19, the insurance industry, like all others, has had to adapt. With insurance companies needing to focus their efforts on setting up remote working facilities and coping with higher staff absence levels. Additionally, new trends have arisen due to the pandemic. In this week’s post, we’re taking a look at these new trends, and looking back on our initial thoughts.
Embracing technology
With many offices forced to close, the insurance industry, like many industries, has quickly shifted to working from home. Executives have replaced the desktop computers for laptops and mobiles, and the boardroom has gone virtual, with video calls used for briefing, catchups, and employee motivation. On the positive side, research from KPMG found that most insurers have reacted well. After a few teething problems, most teams could work effectively online.
The industry has traditionally been conservative and slow to change, but the pandemic has shown that insurers can adapt well and quickly when forced. At VouchForMe, we think this change will be positive for the industry. It allows insurers to offer their employees flexibility, something that many millennials and generation Z workers desire in a job. As the insurance industry typically struggles to attract young talent, this is one change that they should embrace.
Personalization
Personalization was one of the trends that we were looking out for this year and is one that may increase due to the COVID-19. While personalization is easier for retail and technology industries, insurance has struggled to personalize its products. They are bought infrequently and purchased out of necessity rather than desire. Now people’s lifestyles have changed. Many people who pay high premiums due to long commutes now only use their car to visit the supermarket once a week. Back in May, we wrote about how lockdown should lead to lower premiums. A handful of insurers, including Hastings and Admiral, have acknowledged this and given their customers either extra benefits or a part refund on premiums.
However, we’re starting to realize these changes are here for the long term. Insurance companies will need to recognize people’s changing requirements going forward if they want to retain their customers.
Digitalization
Online insurance channels have seen a significant rise in use during the crises, with a 40% increase in traffic since March. As we’ve seen with remote working, this is an acceleration of a trend rather than something unexpected. Call centers queue time has increased, thanks to travel insurance inquiries, putting people off renewing their insurance by phone. Meanwhile, few customers can engage with brokers in person. So naturally, even more, customers are turning towards the internet for their needs. Insurance companies can capitalize on this trend by investing in their online presence. Now is the time for insurance companies to scrutinize their user journey to ensure that any customer who visits them online, can access the information that they need.
Startup Adoption
If there are two things that the pandemic has shown insurance companies, they would be the benefits of technology and the need to adapt quickly. If one of the large insurance companies hadn’t been able to move their operations online, they would promptly have collapsed. As we wrote back in January, partnerships with insurtech firms can drive growth, allowing insurance companies to offer unique products. Some of which, such as UBI (usage-based-insurance), P2P (peer-to-peer), and IoT (Internet of things), can allow them to build truly innovative products that will differentiate them from the crowd in the post-pandemic world.
At the start of lockdown, many people felt that this would be a temporary bump in the road before things would go back to normal. But six months later, things show no sign of going back to the way they were for quite some time. Chances are they won’t, some industries may collapse, while others will adapt and grow. For the insurance industry, while travel and car insurance may struggle, customers may start to demand new products for life insurance or income protection.
Interestingly, most of our predictions from earlier this year seem to still be on track, as insurance companies recognize changing needs and lifestyles. Covid-19 may have slowed them down, while insurers switched their focus towards homeworking, and investment meetings were canceled, but things are moving again. The companies that embrace the new normal will thrive, as they look to the opportunities it brings rather than waiting for normality to resume.
Also, don’t forget to follow us to stay up to date.
References
Hay, L. (2020). COVID-19 insurance operations challenges. Retrieved 8 July 2020, from https://home.kpmg/xx/en/home/insights/2020/04/covid-19-insurance-operations-challenges.html
Sharma, A. (2020). 40% jump in online insurance sales on Covid-19 lockdown. Retrieved 8 July 2020, from https://www.businesstoday.in/money/insurance/40-jump-in-online-insurance-sales-on-covid-19-lockdown/story/399452.html
