The insurance industry has always played the role of an indemnifier in the pandemics of the past, bearing and sharing losses, and the present COVID-19 situation is no exception. However, the impact and intensity of COVID-19 is incomparable to that of its predecessors.
Recent reports have shown that online insurance sales have increased globally by 30% - 50% for people aged below 45 years, thanks to mobile apps and demographic insights-driven underwriting. Pandemic insurance packages are increasingly being adopted across industries like TTH, public services and supply chains, creating new sales models for insurance, among others.
Usage-based insurance has been gaining prominence in the past few years, and now, with vehicle accident claims falling drastically during the lockdown period, it is moving quickly to the top of the list and can greatly contribute to the improvement of the combined ratio of insurers.
The rush to shift to the cloud is another part of the new normal, resulting in savings in opex. The remote work environment demands outsourced data center management along with self-healing systems of record and engagement. All of this is fostering partnerships between traditional players and insurtechs in their attempts to enlarge and build richer ecosystems.
From the perspective of risk management, for insurers, lifestyle-based healthcare products are helping in insuring themselves against large losses due to the pandemic.
Strong risk exposure analysis with the help of AI and insights-based actuarial modeling will soon become a necessity for life and health insurers to help determine the “hot zone" for specific pricing and exclusions.
The Tasks cut out for Insurers
We believe that insurance carriers can adopt a roadmap; for the short, near and long term.
- React (short term): Insurers will now have to embrace digital marketing, digital employees, providers and customer journeys in business processes, and a "human-machine” mindset to interact with the underlying IT infrastructure from cloud environments.
- Recover (near term): Insurers will need to optimize internal and third party spends and maximize straight-through processing of claims. The next few months will see them improvising on service experiences, sales and marketing programs to increase customer satisfaction and create awareness about proactive risk management.
- Reinvent (long term): Insurers will need to transform organically towards a digital and agile operating model, innovate in the short term and create on-demand/usage-based products.
Most importantly, insurers will need a strong digital core to adopt cloud services, create an intelligent data pipeline and insights, and improve risk management. AI-based cognitive process automation and next-gen self-service apps will go a long way in enhancing efficiency levels, achievable through a marketplace that can be created in collaboration with insurtechs.
Disclaimer: Views or opinions represented in this blog are based on the author’s own research and do not represent TCS BaNCS.