Insurance companies are responding to the coronavirus crisis by adopting premium relief initiatives, offering payment deferral plans and expanding coverages.
The industry is also accelerating its digital transformation strategies, focusing on the customer experience as buying preferences shift online and away from the traditional face-to-face agency model.
At RSM, we have identified three core areas where insurance companies are accelerating the digital transformation to respond to the needs of their customers and shareholders in the wake of COVID-19:
Driving customer acquisition
As risk exposures change as a result of the COVID-19 crisis, consumer demand is increasing for new insurance products like usage-based automobile coverage, Internet of Things-enabled life insurance solutions and cyber-risk insurance.
Middle market insight: Middle market insurance carriers have lagged substantially behind their larger competitors from a strategy perspective in recent years and have little choice but to embrace new technologies.
The accelerated pace of innovation across other industries is fundamentally changing what customers expect from their insurance carriers. As a result, leading companies are leveraging these technologies in simplifying their customer acquisition process while maintaining underwriting quality. In addition, companies are collaborating with technology-based distribution platforms to modernize their user interface and to simplify the insurance buying experience.
ENHANCING THE CUSTOMER EXPERIENCE
For a number of years, the insurance industry has invested in digital tools and capabilities to streamline the end-to-end customer experience, from binding a policy to paying a claim and all communications in between.
But consumer adoption of technologies such as web portals, mobile applications and internet-enabled devices has historically been slow to modest at best in the insurance industry. The current COVID-19 environment has provided a tangible purpose for digital platforms and how they can be leveraged as an integral part of firm strategy in the new economy.
FUELING GROWTH
Revenue growth will be challenging for insurance companies in a post-COVID economy, particularly for personal lines. People are driving less as more companies allow their employees to work remotely. On top of this, with higher unemployment, people have less income, and near-zero interest rates will constrain insurance company growth and profitability.
Innovation within product offerings will be critical for carriers to meet prior premium growth expectations. With the top-line headwinds come shareholder pressures to lower costs and operating expenses to maintain profitability. As much as digital transformation has accelerated in the insurance industry in recent years, middle market insurance carriers have lagged substantially behind their larger competitors from a strategy perspective. Also, middle market companies rely even more heavily on outdated, legacy systems and technologies. Companies will need to adapt in order to ensure their long-term survival.
For current insights and ideas on the effects of COVID-19 to the Canadian market, read The Real Economy, Canada and visit our Coronavirus Resource Centre.
