The more things change, the more they stay the same
By John Racher, AdvantageGo
Cast your minds back to early March and those weeks of dawning realisation the world was about to change in a way not seen for a generation. At that time, speculation was rife about the impact the pandemic would cause not only to our personal lives but also to businesses and our livelihoods; Covid-19 was set to be a life-changing event. Sadly, for so many people across the globe that has been the case, with a terrible loss of life and countless businesses not surviving global lockdown.
Of course, the insurance market has not been immune, with offices closing their doors, businesses moving to work from home and even the Underwriting Room at Lloyd’s closing in March for the first time in its 333-year history.
Added to that there is the ongoing debate regarding policy coverage as a result of pandemic losses. As the tumbleweed rolls around the streets of the City in London and in many other business districts across the globe, many carriers are considering when or indeed if we get back into our suits and return to the “old normal”. Early indications are that the insurance industry is not particularly keen. The remote experience is working pretty well, at least for the time being, but is this new normal one we want to move to permanently?
As an insurance software provider with a large offshore team, we were very used to remote communications and the world of video meetings; pretty much everyone had some experience of home working. When we decided to close the office doors and move our 350 people to home working, the transition was relatively straightforward. In fact, like many businesses, we have gained a new resilience we are reluctant to lose.
Pivoting to succeed
Some businesses took a while to get up and running, but now, for most organisations it is business as usual and roles that many had said for years could not be done from home are now being performed from studies, dining rooms and kitchens around the country. At first, joining a call with your camera turned on was a little uncomfortable, but it soon became second nature as people realised seeing a colleague, business partner or client on screen was the next best thing to being face-to-face.
Market institutions where in-person trading was always thought to be irreplaceable adapted remarkably quickly and initiatives like Lloyd’s virtual underwriting room show a commitment to digital transformation that many believed would struggle to gain acceptance. The pandemic has put an end to the angst and mental hand-wringing concerning digital trading and a huge psychological barrier has been crossed.
A similar adaptability has been demonstrated in other global markets. Albert Benchimol, president and chief executive of Axis Capital and chair of the Association of Bermuda Insurers and Reinsurers (ABIR), said: “ABIR companies have quickly transitioned to remote working protocols in response to the coronavirus pandemic. The industry’s rapid response demonstrates technology enables business continuity in Bermuda – as it does around the world.”
Despite the surprising ease with which the insurance market switched to remote working and continued to do business, which has been one silver lining in all of this, the pandemic has caused a significant financial blow. Demand for many types of insurance has fallen sharply during the pandemic, with construction insurance, event cancellation contingency, travel and aviation insurance being badly affected, to name just a few.
Conversely, for some lines of business the impact has been more positive; operational pressures have significantly reduced, with companies like Direct Line Group reporting a 70% reduction in motor claims during the pandemic period; however, predictions are this will slowly return to normal numbers during 2021/22.
The impact of the pandemic has exposed gaps and inadequacies in many companies’ digital readiness and capability.
One evident and immediate impact has been the acceleration of digital transformation projects to enable a more agile workplace.
In the six months since lockdown, I have seen five distinct areas that have been immediately impacted by the pandemic. There are still so many unknowns and the full repercussions of Covid-19 will not be known for a long time. Whatever the long-term impact of the pandemic may be, these are the areas I believe require immediate attention:
Digital proficiency has become an immediate necessity and not something that can be addressed in the future. We have seen companies with advanced digital underwriting, claims and administrative processes in place have a distinct advantage in running a business smoothly and limiting losses. Having a robust, flexible digital working model not constrained by travel, office space and physical presence will be on every chief operating officer’s agenda.
The remote workforce is here to stay, whether it is the full team or just specific roles. Many carriers have said they do not see a return to the office until spring 2021 and even when office doors do reopen, there will be a hybrid working model in place with employees opting to work a few days in the office and a few days from home. However, it is incumbent on all players not to ignore those non-financial risks in the reset world: primarily the mental health of employees and company culture. Working from home for an extended period, if not managed carefully, can cause a range of issues such as isolation, disconnection and overwork. All managers should be regularly checking in with their team and organisations should have mechanisms in place where an employee can safely seek assistance with issues related to home working.
Also, can the insurance industry create and foster a culture via a Zoom call? Communities can and do successfully exist online, but let us face it, they will never replace in-person contact. This industry famously runs and thrives on face-to-face negotiations. Nurturing customer relationships, training new staff members and sharing tacit knowledge will force us to be flexible in the way transact business.
Customer experience and the customer journey has become a focal point for many. Our teams’ ability to communicate efficiently and effectively with our customers has been paramount and has brought into focus the opportunities for automation, frictionless processing and artificial intelligence within the insurance life cycle. Now is the time to for the whole industry to really focus on getting closer to customers and to make communication the number one priority.
The latest advances in exposure management and aggregation software allow carriers to assess potential losses across all classes of business providing real-time analytics and exposure assessment metrics. This includes the ability to assess pandemic risk exposure and assess portfolios in unparalleled detail at a macro level. Having the right software tools will become the key differentiator for those that thrive in the new normal. Digitisation of insurance processes has accelerated amid the pandemic and there is no turning back.
Cloud-based underwriting platforms with in-built collaboration capability allowing business to be processed and discussed remotely in real time will be near the top of every chief investment officer’s list. The digital underwriting platform retains focus with submission data ingestion, automated triage and efficient workflow distribution to underwriters even more important than ever.
To perform optimally and be successful, underwriters need a tool that provides the capabilities to operate in the new online world effectively, including integration with electronic placing platforms, augmenting underwriters decision process with third-party data and ultimately introducing artificial intelligence to advise and assist in rapid decision-making. Underwriters need the right capabilities to keep up and make the best use of these technological advances now more so than ever.
With the opportunity to return to the City in London, albeit in a limited capacity, many of us are still reluctant to get back into the daily commute and return to our office desks. This is true not just in London but in business and finance hubs across the globe. With a second wave of cases sweeping across the UK and Europe at the time of writing this article, it is hardly surprising most of us are decidedly unenthusiastic about returning to the office.
At this stage, with the situation changing on a daily basis and with the looming possibility of a second lockdown in the most affected cities, the industry must continue to remain flexible in its working practices for the foreseeable future.
It is fair to say that as an industry, we responded exceptionally well to the changes enforced by the lockdown and, in fact, everything went on pretty much as normal; as the French say, plus ça change, plus c’est la même chose.
John Racher is vice-president, head of UK operations and international growth at AdvantageGo