6 Post-COVID Trends for Insurers

April 13, 2021

1. The crisis has driven innovation and change.

“As a result of the situation surrounding COVID-19, there is a unique opportunity for insurers to rethink and innovate as they adjust and respond,” notes Laura J. Hay, Global Head of Insurance KPMG International.

Firstly, we can anticipate a need for new products “that would be payable in the case of pandemics or epidemics.” While still in the early stages, the idea behind this would be “that there is a small lump sum payout to help a customer meet any kind of increased or new expenditure for certain defined events,” examples Hart.

An example of this would be including pandemics “with a payout being triggered once a certain number of cases have been registered in the customer’s state or region,” Hart adds. “In addition, products that are more similar to critical illness or riders on existing policies, which pay upon being diagnosed, could emerge as increasingly more popular around the world.”

Secondly, insurers might want to consider usage-based insurance (UBI) products. These are “where the premiums payable are based on the extent to which a certain activity is performed,” Hart clarifies. “The simplest example is for motor insurance where, through telematics and data analysis, a customer would be charged according to the actual number of miles they drive rather than paying fixed premiums over time.”

While there are obstacles to overcome when it comes to UBI, such as data privacy and security concerns, lockdowns and being wary of public transportation may have shifted motorists’ mindsets. Rather than viewing their vehicles as fixed assets, they’re considered variable ones. As such, UBI models may be more appealing to some motorists.

2. Personal health has become a priority.

COVID-19 stressed the importance of individual health and wellness. As a result, home fitness equipment, virtual fitness classes, meditation apps, healthy online cooking courses, health and activity apps, and teletherapy services have all boomed.

So, what exactly does that mean for insurers?

According to a DIA White Paper, authors Roger Peverelli and Reggy De Feniks, suggest that these are the five health first opportunities to seize:

Insurance will grow. “Many expect the volumes in health and life insurance to grow in the next few years,” they write. “The current pandemic enhances the overall concern for personal health and wellbeing. It will make consumers more aware of the importance of adequate life and health insurance plans.”
Pre-active and preventive services beyond traditional insurance. “The added value of an insurer is shifting from only covering risk when there is damage, to rendering pro-active and preventive services as a substantial part of the offering.”
Data-drive health and wellness platforms. “Platforms that combine self-tracking, data, and all sorts of incentives to help customers with healthier habits will become even more relevant than they already are,” add Peverelli and De Feniks. “In the long-term personalized nutrition may even accelerate the cross-over between food, tracking, and advanced analytics.”
Active participation by customers. With access to information and insights regarding their health, customers can take on a more active role with insurance products and services.
Ecosystems with health providers. “Current health systems are not sustainable due to the rapidly aging population and rising healthcare costs,” the authors state. “Connected healthcare devices allow healthcare providers as well as health insurers to extend their reach and interactions with patients.”

AI-powered platforms are already making this possible. For example, Telemedi.co (Poland) is using AI to decrease medical costs for insurance companies, while Infermedica (Poland) uses the technology to pre-diagnose, triage, and connect patients with the appropriate medical services.

3. Anticipate cyber attacks.

Between more smart devices becoming a daily part of daily life, an increase in remote working, and the rise of more sophisticated attacks, 2020 proved that cyber risk must become a priority. In fact, S&P Global states that the increase in systemic vulnerabilities will make the next decade “the most important period of growth for the cyber insurance market.”

For those unaware, the Cybersecurity & Infrastructure Security Agency explains that cybersecurity insurance “is designed to mitigate losses from a variety of cyber incidents, including data breaches, business interruption, and network damage.” Often this is accomplished by promoting preventive measures in return for more coverage. And, also “encouraging the implementation of best practices by basing premiums on an insured’s level of self-protection.”

The elephant in the room, however, is that customers, who are already facing financial uncertainty, may not have the resources to cover their cybersecurity needs. To address this problem, insurers might want to pursue partial programs or self-insurance mechanisms for their customers.

Additionally, insurers must also keep themselves protected by employing AI and machine learning to protect against malware, ransomware, and advanced persistent threats. This technology can also be used to mitigate risk

4. Digital adoption will continue to grow.

“COVID-19 pushed the need for nascent, innovative digital solutions and services to the forefront of standard insurance industry operation. The unpredictable environment that lies ahead indicates consumers and businesses will increasingly rely on and choose insurers offering online resources and tools that can best meet their needs, particularly as digital adoption continues to grow,” said Mark McElroy, executive vice president and head of TransUnion’s insurance business.

In fact, TransUnion reports that digital adoption in the insurance industry has grown 20% globally within the last year. Furthermore, the survey shows that customers prefer to correspond with insurance providers primarily through email (32%) and telephone calls (32%). This was followed by an insurer mobile app or website portal (18%).

With that in mind, it’s highly recommended that insurers strike a balance between introducing and expanding digital customer interactions, as well as “delivering friction-right experiences and protecting against fraud.”

And, for life insurers, you should embrace accelerated underwriting “which leverages third-party data to streamline the traditional underwriting process.” Not only is this less time-consuming, it requires fewer in-person interactions.

5. Be prepared for emerging compliance changes.

As pointed out in Deloitte’s 2021 insurance outlook, throughout the pandemic regulators “have focused on multiple areas of concern.” This ranges “from policy disputes over infectious disease-related coverage, to consumer protection as more sales and claims handling, go virtual.” Other pandemic-related challenges include business interruption, worker’s compensation, and solvency concerns.

Moreover, insurers must also be aware of compliance issues that are unrelated to COVID-19 such as;

Responding to systemic and racial discrimination.
Providing affordable coverage to policyholders areas impacted by climate change.
Cybersecurity and data privacy.
How insurers can operate AI systems.

Interestingly enough, artificial intelligence can also be used to manage compliance. As an example, AI can analyze data to quickly identify systematic issues before they become a problem.

AI can also read and interpret complicated compliance documents and deliver them into actionable insights, as well as reduce risk and human error. Solutions like TrustLayer actually allow you to create and implement compliance goals for any information that needs to be verified, such as real-time proof of vendor coverage.

6. Customers will continue to demand empathy and personalization.

It’s no secret that insurance customers want more personalized offer and customized soliutions that meet their unique needs. Examples include persinalized offers, reccomendations, pricing and messages.

And, now more then ever, insurers most also display empathy. Customers have been through a lot within the last year. They’re anxious and struggling with issues ranging from their health to finances. As such, it’s important insutuers give them peace of mind and make them feel heard. Remember, you serve people, not policies.

Thankfully, you can use technoloy, like AI and machine learning, to educate your customers by providing transparent pricing and coverage. What’s more, this technology can learn more about your customers behavior and provide 24/7 support through chatbots.