The impact of the Covid-19 crisis on digital transformation in Insurance
In the light of current COVID-19 crisis it became clear that the world is becoming digital even faster than we thought. For instance, multiple businesses across the world realized that working remotely is no longer an exception, but a necessity. Those companies that adapted their business processes and shifted to digital working are now less affected than those with traditional business models.
The insurance sector is not an exception either. The current COVID-19 crisis revealed the importance of digital transformation in the insurance industry.
According to Mark Breading (a partner at “Strategy Meets Action”) in his article “Will COVID-19 Disrupt Insurtech?” he stresses that “Self-service, DIY, mobile and virtual capabilities will all be elevated in importance – not just for the period when people are sheltering in place and businesses are closed or at limited capacity – but for the long run. Any insurer that has not already focused on the importance of digital transformation via these types of capabilities is sure to pick up the pace when the storm passes.”
But what are the main advantages of digital transformation that can help the insurance companies to overcome the crises like the one that the insurance industry is experiencing now with COVID-19?
A new era of “digi-working”
It will be very hard to roll back to the old ways of working in post corona times. Many big insurance companies already experienced the advantages of homeworking and saw that the productivity of their employees didn’t decrease, but even increased.
Recent studies have supported the idea that working from home can increase productivity and decrease stress. On top of that it can save some money for the companies with the flex office – when the days of the homeworking are taken into account and fewer working stations are needed at the office.
Also, it significantly decreases the commuting time for the employees. As a result – less traffic jams and decrease of CO2 emissions. This is a very good example for Belgium, where workers spend commuting on average 53.2 minutes a day, compared to the European average of just less than 45 minutes or nearly seven full days a year (according to ‘’The Bulletin”).
The growing role of Insurtech
The current crisis brought a lot of challenges to the insurers: increased market volatility, a pressure on Life & Retirement Insurers as the number of claims increased sharply, disruption of distribution channels such as brokers… But on the other hand, it is an opportunity for Insurtech industry to find the solutions during the crisis.
For instance, in China quarantine measures pushed the innovations in the Insurtech startups as one of the ways to adapt to the crisis:
- Doubao partnered with Guahao.com to provide online diagnosis services. The platform provides free unlimited access to 24-hour online diagnosis for all types of illness.
- Haola Tech launched an AI-driven COVID-19 online self-evaluation tool for the public to measure the risk of infection.
- Ins for Renascence was the first to launch the “Zero-Contact” advance payment system for hospitals.
- During the COVID-19 outbreak, GetyAI used its telematics technology in the fleet transporting medical supplies for fighting the virus to ensure the safety of transportation during this particular time of need.
- YiTong Health launched a unique online monitoring platform for enterprises to monitor the health of employees during the COVID-19 outbreak.
- Threatbook provides a free OneDNS service for individuals and corporates during the quarantine to ensure a safe and smooth environment for those working from home.
- LingBan AlaaS provides a free chatbot for communities to monitor the COVID-19 situation.
(Source : https://www.plugandplaytechcenter.com)
On the other side of the Globe, a Canadian Insurtech ‘’Slice Labs Inc.’’ is adapting to the pandemic by helping insurers develop new products from people’s homes.
Instead of taking months or years to develop new products, Slice Labs aims to quickly define how a product will be priced, how the customer interacts with the insurer, and how a claim is filed.
(Source : https://www.canadianunderwriter.ca)
Lessons learned and the new way of working after COVID-19
All those examples show that in the post-corona times, being flexible and adapt to the crisis situations will become even more important for the traditional insurance companies.
Those big players should not only adapt IT Agile methodologies, such as Scrum, but become agile at scale. It means expand the agile way of working beyond the IT department.
For example, the remote working should be properly organized on the organizational level and the employees should be provided with all the necessary software tools alongside with the focus on security.
In the future it will become more and more difficult for traditional insurers to cope with the degree of change on the insurance market. The COVID-19 has shown that smaller Insurtech players adapt faster to the crisis situations and provide new innovative solutions.
One of the responses to that could be the digitizing of customer journeys and automation of travel claims handling on the back end.
Customers should be better informed during the crisis period through various digital communication channels. If the proper triggers are implemented in the system, all that could be done automatically (ex: automatic e-mail notifications, sms, etc).
The flight cancellations around the globe caused by COVID-19 crisis have led to the surge of travel and cancellation insurance claims. But what if a certain amount of those claims was automated? What if the rules coded in the system could identify which claim should be paid out automatically and which not? We can also imagine the role of AI and Big Data that could play in that situation.
Last, but not least, the special attention should be paid to the possible disruption of distribution channels, such as brokers.
In some countries they play a very big role in distribution of insurances. But the current crisis affected them also as not all of them digitized their operations enough. It means that there should be a clear digital line of communication between insurance company, broker and the client. One of the solutions for the brokers is to digitize their operations through the modern cloud services, such as BrokerCloud (https://brokercloud.app/).
The COVID-19 crisis is a big challenge for all the companies working in Insurance sector, but it is also a unique opportunity for change and making sure we will be more ready for the next crisis to come.