Mike Smart, Sales Director, Duck Creek Technologies, looks back at the effects of the pandemic, how working practices will alter, and the opportunities on the horizon for the insurance industry
If anything, the Covid virus nightmare has been a sharp lesson, reminding us of just how quickly things can change. At a stroke, everything that one took for granted was taken away.
In the world of insurance, for the most part, whilst there were glitches, policies continued to be sold and administered, and claims notified if not all settled for logistical reasons. Few jobs have been lost, and, for example, some of the sharper marketing teams turned the pandemic into a sales opportunity to offer loyal customers the possibility of reduced premiums for not taking their cars out of the garage. One suspects that, overall, the industry will have benefited from significantly fewer claims across the board, particularly personal lines, whilst business interruption books will have been hit harder.
As the U.K. gradually returns to operational normality after the events of the last 18 months, it will be interesting to see how much of the time has been used by executive committees to contemplate the future direction of travel that they as market participants will take.
The effects of Covid are going to be long-lasting – working practices are going to change, and new market opportunities will appear.
Employees will want greater flexibility in their working practices. The lockdowns have illustrated that people can work from home, not ideal for all disciplines but the technology has stood up. One has become accustomed to video conferences replacing in-person meetings, and few people have missed the daily commute, nor the associated expense. Maintaining employee morale and sustaining a company esprit de corps is going to be an issue, as will the amount of empty office space created by the workforce most likely only appearing in the office for a few days a week.
New markets will emerge and specific exposures will be highlighted. As an example, contingency insurance, whilst not new, is likely to become a growing line of business as commercial entities suddenly become more aware of the fragility of their business models. Rates will harden and attract new capacity providers working with focused distribution partners.
It’s reasonable to assume that greater emphasis will also be applied to insurance coverage for specific events such as internet outages. Consider the impact of a further lockdown combined with a catastrophic failure in the internet backbone – a distributed workforce and no ability to transact remotely; the economy would stop overnight.
One of the side effects of the pandemic has been that many individuals have taken stock personally and contemplated their own mortality a bit more acutely. Hardly surprising when one is constantly bombarded with statistics of growing infection rates and a daily increase in the number of people who have died. The consequences of which will flow through into increased business for multiple personal lines, such as term life insurance, as people seek to increase the level of protection in place for their assets.
Clearly, there will be a temptation to treat the whole Covid event as a “blip” and believe that in a few months everything will return to the way it was some 18 months ago. On balance, it’s hard to see how this will be the case; the “cat is out of the bag” in regards to how employees will want to work going forward, which will have a major impact on existing cost infrastructures and people management in general.
Further, the U.K. population has become far more tech-savvy through being forced to use online systems for more than just the occasional purchase, and as a result, more demanding of the quality of service provided. New market opportunities are being presented in both the commercial and personal lines arenas.
For an industry not renowned for being overly exciting, there appear to be interesting times ahead; seismic changes are afoot, and not preparing for or recognising this risks suffering the same fate as King Canute.