2020 has been, without doubt, a challenging year for everyone. Businesses were forced to close for months, countries all across the world were placed into lockdown, lives have been lost and others changed irrevocably.
Several months on from the start of the pandemic and we now have much more information and understanding of the virus. Meaning many businesses have been able to resume regular activity, with appropriate safety measures in place. People are learning to live with social distancing and wearing face coverings. Some businesses, however, unfortunately, remain closed.
Businesses have lost profits and many have suffered losses from which they are unable to recover. Thousands of people have lost jobs. Typically, in the light of such disruption, one would look towards insurance. This blog explores how the insurance industry has been affected by the COVID-19 pandemic.
There is much uncertainty around the future of the industry, with interest rates diving, falling global equity and reduced investment return income. Businesses closing has had a knock-on effect for their insurers. Needless to say, it has not been easy.
Challenges for Insurers
Along with the rest of the world’s industries, the insurance industry has faced challenges that have arisen from the pandemic. In particular, how to effectively serve customers while adapting to working remotely, using different technologies to ensure they can continue providing a high level of service.
Similarly, logistical issues have made handling claims more difficult. Loss adjusters have, in some cases, struggled to visit sites where parties have been isolating, for example. The pandemic has introduced a whole new set of logistical challenges for insurers to overcome.
Supporting customers has never been more important, as more people become vulnerable as a result of the pandemic, or require more flexibility around their renewals and policies.
Communication and Operations
Many insurance companies have experienced a surge in enquiries from existing customers. As a result, efforts are being channelled into responding in a timely manner to these queries, instead of seeking out new business. There has been changing in wordings for most types of insurance such as high net worth insurance, commercial insurance, business insurance & many other types
In addition to this, claims operations for many insurers have been strained by the increase in queries around certain lines of insurance. In particular, travel and business insurance.
Changes in Customer Behaviour
Over the course of the pandemic, customer behaviour has altered, as well as the nature of cover that is sought. Some are unwilling to invest in longer-term policies, when they don’t know if their business will survive the next few months.
Data pulled from Google Trends shows that in April, when the official lockdown had just begun in the UK, searches rapidly increased for ‘small business insurance’. Even following the reopening of businesses in the UK, many still sought the added reassurance of small business insurance to cover them if, for example, an outbreak is linked to their place of work.
The perception of risk is changing. And other lines of insurance are expected to see greater interest from clients, as the nature of the risks customers are exposed to changes. For example, several experts anticipate an increased need for cyber insurance as businesses move towards remote working, where IT systems may be less secure and more at risk of cyber-attacks and data breaches.
As things remain uncertain for many industries, so too is the future of insurance. For now, insurers are continuing to look after their customers, providing appropriate types of cover, responding to claims and offering value for money. But the road ahead is far from smooth.
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