As the crisis evolves, insurers must support their people and rapidly evolve their technology and operations.
For insurance companies, the COVID-19 pandemic is disrupting nearly every part of the business, including front- and back-office operations. Most insurers are rightly focused on meeting the needs of their customers and workforces and ensuring operational resilience. Those priorities are closely intertwined, of course.
This article focuses on the ramifications of the pandemic on people, operations and technology, and actions in those areas that can help insurers shape an effective response and define a viable path forward.
Much uncertainty remains about the ultimate cost to and overall impact on the global insurance industry. However, it’s clear that the decisions and actions in the coming weeks and months are critical to the industry’s medium-term and long-term prospects. Coming out of the crisis, insurers will balance several priorities. Maintaining solvency, adapting to the “new normal” of widespread remote working, and proactively engaging regulators and government authorities top the agenda.
Taking a strategic view, insurance executives see the possibility to demonstrate the industry’s critical social purpose and to develop new products and services that will protect individuals, families, communities and businesses from emerging risks. Those risks include future pandemics (which seem inevitable given the globalized economy) and threats related to cyber crime and climate change.
Despite the sense of near-term urgency, now is not the time to pause critical transformation programs that are underway. Indeed, the most forward-looking insurers will look to accelerate them – taking into account both the changed conditions and new opportunities. The pandemic may help insurers realize the future they’ve been planning arrived much sooner than they thought possible. Beyond the immediate-term decisions they make in response to the pandemic, it is the success of these strategic initiatives that will secure the future of their companies and the industry.
People, operations and technology – core components of resilience
People, operations and technology will need to evolve rapidly in response to the pandemic. There has been significant disruption to the workforce, with severe pressure on normal teaming, sales activity and human interactions. The stress in employees’ personal lives cannot be overlooked. Insurers must do what they can to promote the mental and physical well-being of their people.
The strain on offshore and some onshore centers has been enormous. Some have closed, while others struggle to operate effectively with remote staff, hurting the customer experience at a critical time.
On the technology front, the rapid shift to remote working has put pressure on IT and security teams. A new wave of cyber security risks must be managed.
The bottom line is that taking care of customers requires first taking care of the workforce and ensuring the right technology is in place. Let’s look more closely at a few specific impacts and how considerations regarding people, operations and technology are related to broader response strategies and objectives.
Rebooting contact centers and operations for the remote working era
Because service levels need to be maintained, some insurers are having to limit interactions to existing customers. Virtual assistants, chatbots and other tools and technology can help insurers manage large spikes in call volume.
Similarly, automation can help sustain the third-party supply chain. The impacts will be varied at different links in the supply chain. Not every interaction can be automated, so alternate arrangements should be considered where necessary.
Newly remote workers will be looking for help and support for collaboration. That means cloud-enabled ERP and modern desktop tools (including videoconferencing) will likely need to be deployed at scale – and protected with new security measures designed for remote working risks.
Looking over the long-term, the COVID-19 pandemic may be a dramatic tipping point away from office-based teams. Certainly, modern collaboration tools are capable of powering a permanent shift that makes remote working more the rule than the exception.
Adjustments to third-party risk management may also be necessary. In some cases, it may become a part of core operational monitoring, as insurers seek visibility into the financial, operational and people challenges their key suppliers face.
New and intensifying risks from remote working
Speaking of risk management, control and security frameworks will be under stress and will need review in light of the new ways of working. People working from home and across distributed teams could lead to a rise in fraudulent activities, given the less effective internal control environment. Fraudulent behavior by customers may also increase. All of these developments necessitate new approaches to risk management.
Similarly, insurers can expect to be confronted with an evolving landscape of cyber threats resulting from the pandemic. As corporate networks sprawl to include huge numbers of new connections and personal devices, securing access at every node becomes exponentially more difficult. Company laptops will need security updates. The dramatic and predictable rise in phishing attacks and cyber scams is yet another challenge for security teams.
Of course, insurance companies aren’t the only ones dealing with increasing cyber risks from remote working. Businesses in other industries may be in need of stronger and broader cyber protections. That represents a clear opportunity for insurers to introduce new products and coverages.
Significant cultural impacts to come
The home office experience will accelerate newer ways of working, and will have profound cultural impacts for insurers. To adapt, insurers will need to ensure their people, operations and technology are aligned to the “new normal” of working in areas ranging from new product development and distribution, to claims and financial reporting.
Many insurers were already working to attract new talent and hire different skills. In conceiving the workforce of the future, it’s clear that organizations should be more flexible. Teams should be empowered to work on a more collaborative and agile basis. Creating a work environment that is refreshed by new ways of thinking and embeds the best of the existing cultures will be a significant strategic challenge for HR leaders. Here again, the pandemic is accelerating a necessary change across the industry. Insurers that can demonstrate a clear purpose and strong leadership in helping with the economic recovery will have a head start in attracting new talent.
The crisis will accelerate plans for digital transformation in key functions, such as sales, service and claims, and across all distribution channels. The value could be significant for insurers. It will be realized in the form of lower costs and higher operational efficiency, both of which are high on the board agenda.
A more digital organization, based on direct connections to customers, may spark further adoption of more personalized and flexible offerings, including usage-based products. Similarly, richer customer data can lead to more precise insights, giving insurers a better view of their customers’ needs. Ultimately, such visibility could deepen and broaden customer relationships beyond the realm of traditional insurance products. This is another area where the pandemic may prompt insurers to take actions they’ve long been planning.
Recommended actions for people, operations and technology
The COVID-19 crisis has only intensified the need for change in several dimensions. In forming their immediate response and their plans to emerge from the crisis, insurers must not lose sight of longer-term imperatives. Even as they focus on meeting immediate-term customer needs, maintaining solvency, ensuring operational resilience and helping with economic recovery, they should seek opportunities to optimize their operations, refresh their cultures and deploy new technology. The following actions are essential for insurers looking to move forward on all of those fronts, as well as build on the progress they’ve made with the transformation and optimization initiatives of recent years.
