5 Lessons the Pandemic Has Taught Insurance Companies
Insurance is one of the most complex financial businesses in existence. The industry responds to market flux reactively, so it came as no surprise that despite advances in insurance technology and insurance claims management software, insurers could not predict the global pandemic’s effects on the industry.
The consequences of the pandemic have created unique problems for insurance providers. Yet, as unemployment rates reach record highs worldwide and companies struggle to make ends meet, insurance has become a vital tool to ensure personal and business continuity. As the insurance industry adapts to a new world, here are some of the biggest takeaways from the pandemic that can help service providers improve their business in the long run:
New Tech Adoption Needs to Be Sooner Rather Than Later
While the insurance industry has made considerable progress with digitization, the pandemic revealed many problems. For instance, face-to-face interactions disappeared, and the lockdown stopped in-person claims verifications. Therefore, insurers with digital underwriting processes, video or IoT-enabled devices for claims verification, and advanced insurance claims management software were better-equipped to deal with the changes compared to those with outdated workflows. Insurers will now know that even if the need for tech adoption does not seem immediate, delaying it is not a wise business move.
Agile Portfolio Reviews and Reprioritizing Clients Will Be Crucial
Research indicates that 40-60% of small businesses never reopen after a disaster. For insurers, this means portfolio reevaluations and planning adjustments. As economies open up, surviving entities will also adapt their business models to fit the changing world, meaning insurance providers will need to pivot their strategies.
The importance of going digital and adopting cloud-based processes has increased now more than ever. The growing demand for doorstep services like delivery demand and mobile healthcare will also mean new possibilities such as a spike in cyber insurance. Providers will need to be quick to jump on these changes to remain relevant in the long-term.
Flexible and Personalized Customer Solutions Will Reduce Churn
During the pandemic, as people lost jobs and struggled to make ends meet, many insurers faced lapsed policies. Insurance providers with flexible and personalized solutions to these problems are more likely to retain and even attract new customers than rigid ones.
For instance, insurers taking a humane stance to settle claims, even when customers missed premiums during the pandemic, are more likely to build strong customer relationships. Flexible solutions like recovering the premium from the claim instead of outright rejection help build trust. AI-based software and technological solutions can help understand policyholders better to differentiate between genuine and fake lapses or claims, provide personalized solutions and offers that can improve customer trust and engagement in the future.
Digital Distribution Will Dictate Profitability
Adapting to a remote-working world means that every aspect of the operating model will need reexamination. Apart from online data, document collection, and digital insurance claims management software, insurers will also need to employ digital distribution strategies.
A movement towards automation for onboarding customers and more accessible self-service tools in insurance can aid this digital transformation. Additionally, innovative features like intuitive digital cross-selling and personalized marketing can take the digital distribution game to the next level.
Cyber Security Will Take Center-Stage
Work-from-home setups mean data security will become a priority for most businesses. Home networks tend to be less secure than business networks, thereby becoming fertile grounds for cyberattacks. Companies with sensitive data will need to consider cyber insurance in addition to stronger antimalware. While insurance providers can capitalize on this trend to provide better products, they will also need to alert companies about the nitty-gritty, such as necessitating proactive security arrangements for remote networks and better cyber education among employees.
Takeaway
The global pandemic and consequent changes have been fierce in many ways but have also provided many key learnings to insurance providers. Resilient and innovative businesses in all industries will survive the worst wave. In insurance, it is now time for providers to look beyond the basics of digitization like insurance claims management software and remote communication to more advanced technologies like IoT- and AI-based solutions. Reinvention is the only solution to disruption.
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