Crisis Manifesto: How Insurance Will Change Post-COVID
COVID-19 has rapidly changed the landscape of the insurance industry. While it’s been known for some time that the risks insurers are meant to cover are becoming more severe and unpredictable (from pandemic to climate change), the industry has been slow to adapt to change. Overnight, COVID-19 has exposed the industry’s innovation gaps – and with them, revealed new opportunities for growth.
Crisis Manifesto: How insurance will change post-COVID – a special innovation opportunities report by Highline Beta examines how COVID-19 is accelerating industry-wide paradigm shifts and what’s needed to thrive after the pandemic.
Based on industry research and interviews with startup and corporate stakeholders, this report will show:
- How the insurance market has shifted as a result of COVID-19
- Why digital transformation is essential for success
- How Insurtech startups and companies can work together to solve emerging challenges faster
- New potential areas for growth
Recovery and transformation won’t be easy, but smart companies will need to embrace change and external partnerships quickly in order to survive.
- New Landscape and New Concerns: COVID-19 has radically reshaped many areas in insurance – significantly impacting all business lines. Unseen levels of business interruption, travel restrictions and event cancellations have created new liability questions in commercial insurance with uncertainty around how to proceed with claims. By contrast, heightened awareness of mortality and health risks amidst the pandemic and widespread job losses has led to a surge in demand for life and health insurance products. Read up on lessons from 30+ startups turning some of these new concerns into products.
- Changing Customer: People’s lives all over the world have been disrupted. There’s a trend to de-globalize and close borders, significantly impacting supply chains, global trade, and industries such as travel, food, retail, entertainment and tourism. Insurance companies must now ask themselves who their new customer is and what new demands are going to emerge during this time.
- Shorter Time for Action: Insurance companies may need to act quickly in the face of uncertainty and with incomplete data. Big decisions are on the table: how do you move your business forward, assess the roadmap for the next few months and beyond, and reposition your business? Identifying risks and coming up with plans will involve stress-testing a multitude of plausible scenarios, without the troves of data that the insurance industry is used to leveraging.
- Digital Transformation Now: The impact on traditional business models, oriented to broker-driven, face-to-face interactions that lack full digitization has been significant. Insurers must learn how to offer their services digitally now. Focusing on customers’ digital needs and partnering with tech innovators to build compelling new solutions and customer experiences will be paramount for the industry to succeed in this shifting landscape.
- Efficiency is Essential: Efficiency will become more critical than ever before. Operational efficiency has not historically been a strong suit of insurance, but now to keep costs down and meet profit targets in weakened economies, insurers must invest in efficiency — from processing claims and managing the back-office to improving processes and tools.
- New Market Opportunities: COVID-19 is rapidly accelerating innovation in the insurance sector. Insurance companies historically felt their primary purpose was to help customers recover from loss. However, new risks have emerged, and with new risk come new opportunities. New potential areas of opportunity include cyber insurance, usage based insurance, parametric insurance, business interruption, mental health, and new products via partnerships.
- Insurtech Partnerships Key to Success: The silver lining in post-Coronavirus is an opportunity and urgency to reinvent and reimagine traditional business models and processes. Companies will need to develop new partnerships and leverage collaborations with the InsurTech ecosystem in order to close gaps and build trusted solutions at light speed.
COVID-19 has exposed enormous innovation gaps in the insurance industry.
In order to survive, big insurers need to behave more like startups. They need to build ventures in-house, partner with tech innovators, adapt quickly and invest in solutions.
The future of successful insurers will rely on a willingness to embrace strategic alliances, listen to new consumer needs and act decisively in uncertain times.