What can be said about 2020 apart from…”wow”? Last year was full of extraordinary change, principally from the COVID-19 global pandemic. The adjustments caused by the pandemic have had an outsized impact on the P&C insurance sector with effects that will be felt for years to come.
To name just a few of the major developments in 2020:
- Organizations have had to rethink their structures and how their employees work;
- The transition to digital has rapidly accelerated;
- Business Interruption insurance has gained market share;
- The industry has learned how to better service customers from home and identified new tools and analytics to do business more effectively and efficiently.
While we believe many of the innovations from this year are here to stay, we expect (and hope for!) a smoother 2021. Here’s our take on the year.
The Human Side for Employees Working in Insurance
COVID has been the biggest influencer by far on changes in human behavior this year, both within and outside the workplace. The importance of staying physically distanced and minimizing the risk of transmission have resulted in profound shifts for employees in the P&C insurance sector.
Companies have been forced to redesign processes to create greater flexibility and develop metrics for productivity in ways unheard of just a year ago. Many of these changes have produced positive results. For example, companies are now more versatile than ever before and much better prepared for future disruptions.
Another unexpected benefit has been the impact on talent sourcing. With physical location being less of a consideration for many P&C insurance employees, companies can now hire and onboard employees from almost anywhere in the world.
The ways organizations recognize and celebrate their employees’ successes have expanded as well. Employees in 2020 noted kinder bosses, with managers being more aware of their employees’ needs and wellbeing. It’s certainly a rare remote worker this year who hasn’t seen someone’s cat run across the screen on a Zoom call, or someone’s child require a moment — or two — of attention.
Organizations have also become more aware of the need for home-bound employees to work more flexible hours, and to respect the importance of allowing employees to turn off, even if they don’t actually “leave” the home office at the end of the day. Overall, 2020 has brought the human side to the fore, bringing a greater understanding of our shared commitment and sacrifices to the P&C workplace.
The Race to Digitize
What we’ve witnessed in 2020 has been a major increase in the speed of digitization for organizations.
In the case of the P&C insurance sector, the speed of the transition to digital has principally affected sales and service in insurance software, with digital transformation timelines reduced from years to months or even weeks. Projects that were formerly labeled “nice to have” became more critical as organizations hurried to change their systems and processes.
As an example: The P&C insurance sector requires extensive documentation with many agreements, explanations, signatures, etc., previously managed by big administrative teams at carriers. Due to the geographic dispersal of workforces because of COVID, insurers have had to quickly incorporate digital and automation solutions for those documentation needs.
Business Interruption Insurance: Strap on your Seatbelt
Prior to the pandemic, Business Interruption insurance was a relatively sleepy product for most carriers. With the onset of COVID, this type of specialty line suddenly assumed greater relevance as thousands of businesses were forced to slow down or even close completely.
Because Business Interruption insurance was traditionally geared towards organizations suffering interruption because of physical damage or loss to insured property, many policies did not provide coverage for losses incurred by the pandemic, with viruses either not included in the policy, or specifically excluded. The battle over business interruption coverage resulted in a wave of litigation from both carriers and policyholders with varying degrees of success — often depending on location and competing precedents. Carriers have so far prevailed in most, but not all, of the lawsuits over business interruption coverage for COVID-related closures.
On the heels of these disputes, new ”pandemic proof” business interruption insurance programs have entered the market, illustrating how new business opportunities always emerge in times of crisis.
Serve Your Customers, From Home
2020 also showed the P&C insurance sector how to serve customers while staff at carriers operated out of their homes — a surprising workforce change. As the pandemic grew and physical work spaces began to close, carriers needed their customer service teams to support clients more than ever. By necessity, more customer service touchpoints began to move online. API solutions that integrated with legacy insurance software systems automated previously manual processes such as billing and claims. The result of this was two-fold: greater internal efficiency and a better overall consumer experience.
P&C insurers improved customer service areas such as self-service portals for policyholders, designed more user-friendly websites and apps, and optimized their call centers to manage additional doubts and concerns from policyholders.
Carriers reaped the benefits from this customer service process digitization, including shorter turnaround time for claims, easier communication with customers, and fewer documentation mistakes, all of which helped keep customers protected, appreciative, and loyal during a time of difficulty.
A Better Year to be a Developer… and for Analytics
One group of P&C workforce members benefited from the pandemic: developers. As P&C carriers sought faster digital solutions for their services, they increasingly discovered APIs were a solid option for developing insurance software systems that integrated easily with existing technology stacks and freed time and resources for developers to work on more important projects.
2020 was also a big year for analytics. As P&C insurers adapted to rapid changes in the marketplace, they needed to better understand their customers and the state of their businesses. In the case of insurance rating engines, advanced analytics and reporting tools addressed this urgent need. For many organizations, analytics toolkits democratized access to data, allowing non-technical users to search data systems independently without tying up IT teams.
These analytics tools optimized the speed, efficiency, and reliability of business decisions, giving deeper insight into a carrier’s current state and uncovering patterns, revealing opportunities for new areas of revenue and profitable growth.