The COVID-19 situation has taken everyone by surprise; from the healthcare highly pressurized medical industry to the oil and gas industry, and everything in between. With everything that’s going on, it is no wonder that the insurance sector has also seen its share of uncertainties and problems.
Regarded as a non-essential service, the lockdown that ensued after coronavirus posed numerous challenges for insurance providers across the globe as they struggled to maintain operational capacity. Until March, 2020, most insurance providers only relied on working on-site, not remote.
Shifting to Work From Home
Digitization of the Insurance Sector
Insurers only spoke over the phone and focused on face-to-face meetings to sell plans and investigate. However, as more than 90% staff across the globe is working from home, the initial feedback wasn’t so great – especially in the insurance sector. Most agents found digitization difficult at the start, but the idea is now working well.
With hardware devices such as laptops and mobile devices being provided by companies themselves along with remote connectivity systems and of course, extensive video conferencing facilities, the industry has seen a long-awaited digitization revolution.
In many ways, this lockdown has been in the favor of many companies who couldn’t spare the time to undergo drastic reforms and perhaps disrupt operations. Thanks to the reduced activity and low competition during the initial phases, the systems have been put in place in just 2-3 weeks, where it would have taken 2-3 years.
Digitized Means Optimized
The companies that underwent the same digitization process before the COVID-19 outbreak forced their hand, fared much better thanks to their advanced digital underwriting, claims and administrative processes, especially in the first month.
Where other companies struggled to set their work from home systems, these companies reaped the rewards. There was a 40% increase in online insurance sales over the first month alone – most of them being life insurance policies.
Fraud Risk Stacking Up
COVID-19 has been a backdoor for many insurance scammers, reaching out to customers over the phone and selling them fake insurance policies, among other insurance frauds.
Some examples include travel claims, where customers who got their tickets canceled fabricated an illness, specially the novel coronavirus, to secure compensation from their insurer. Fake insurers have also told travelers who travelled anywhere starting January, suggesting that they are entitled to a settlement by the travel company or agent for endangering their lives.
This risk has increased threefold due to the remote activity of the insurance sector as a whole.
Distribution Channel Disruptions
Insurers’ interactions with their brokers, investigation agents, and other intermediaries have also suffered because of the pandemic. Brokers usually lack a widespread IT infrastructure and are thus prone to administrative problems.
For example, call centers all over the UK and US are having difficulty operating due to short staff. Customers have complained about long waiting periods and sometimes their calls don’t get forwarded to Customer Service Representatives. This has made getting support or Certificates of Insurance issued very difficult.
Claim Resolution Amidst Social Distancing
All the above-mentioned issues come together to become the beast that is social distancing for insurance agents. This has made getting claim resolutions rather difficult as that is relying mostly on digital technologies, such as photo evidence and estimating tools.
There are many precise tools out there but they aren’t available to the normal citizen, which means the photos, most of the times, offer only limited insights, unable to capture the requisite details.
With so much going on for the insurance sector, only those companies fared well who had already digitized their complete supply chain. Although others have adopted to the situation, they aren’t performing at full capacity, thus are bound to face losses.
Employees working from home, on the other hand, are facing long working hours at homes due to the distractions and the lack of a working environment. A task that would normally take an hour is taking more than two, meaning that work is more taxing now than ever.
[Mac191]Link to “Understanding the Impact on Insurance Sector of COVID-19 & the Lockdown”