Harvey Quinn, Client Executive at AdvantageGo considers the future challenges facing the insurance marketplace in light of the pandemic and the vital role technology will play in helping insurers meet their growth objectives
Lloyd’s announcement that it will consider combining its physical underwriting floor in the City of London with some online elements came as no surprise.
With the ongoing pandemic forcing many businesses to continue working remotely, and with social distancing still enforced in many parts of the globe, it was only a matter of time before organisations would come out declaring new working practices.
Direct Insurance Group in the UK was the first to do so when it recently announced it would become the first insurance group to formally commit to a remote working policy for all staff. It’s fair to say that Coronavirus will forever change how business is done in the global insurance sector and possibly in other industries.
Overall, the insurance industry quickly adapted to working remotely, and April renewals were completed without major disruption. What was considered a temporary working environment is fast becoming the potential new reality for many of us in the insurance industry.
In speaking to several customers, none are considering returning to the office before September, and a few have said they will most likely return in the new year. Just about every insurance publication has switched to virtual events for the rest of the year, and no one is taking the chance of organising in-person events for the rest of 2020.
The sector is facing a radical new way of operating, which may become permanent, and reliance on technology is now more vital than ever before.
Commenting on the pandemic, John Neal said, “I think we all believe that the new post-lockdown world, whatever that looks like, will be even more driven by digital technology and data.”
There is a valid concern that certain nuances of negotiating risk, often managed in-person, will be in danger if the insurance industry is to rely solely on technology when doing business. I agree. Some elements within risk management just can’t be replaced by technology and work better when done face-to-face.
I firmly believe that once this pandemic is over, the industry will return to the office, albeit in a more reduced capacity, perhaps, but it would be negligent to regress to our old working practices.
Pivoting to succeed
The insurance industry has been committed to its digital transformation plan for years, but it took Covid-19 for the industry to pivot entirely to technology to transact business. Although the market has done a sterling job of running operations in these challenging times, the profusion of software and tools in the industry can be overwhelming and confusing.
More than ever before, insurers are under heightened pressure to continue to do business, write new policies, settle claims, and ensure that people’s lives are put back together during this global crisis. Also, the US has just entered hurricane season, and with the continuation of the Coronavirus pandemic, there is the potential that Covid-19 will compound challenges for insurers if there is a major hurricane this year.
McKinsey recently analysed all top-performing insurers, and its findings clearly show that operating results have the most significant impact on overall financial performance. Within operating results, loss ratio generates much more variability than expense when comparing top and bottom quintile performers.
First-quarter 2020 results showed several large carriers missing their earnings target, and with Evan Greenberg, Chubb’s CEO stating that he expects coronavirus to inflict upwards of $100 billion in losses for the industry, many carriers will focus even harder on the core principles of underwriting excellence and profitability.
Having the right tools and insurance software will become the key differentiator to thrive in the new normal. Digitisation of insurance processes has accelerated amid the pandemic, and there is no turning back.
The adoption of new technologies such as new placing platforms potentially makes it easier for a broker to indiscriminately distribute all submissions and enquiries to all underwriters, which means underwriters are now deluged with submissions. Technology progress needs to be mapped on both sides of change. Underwriters need the right capabilities to keep up and make the best use of these advances.
To perform optimally and be successful, underwriters need a tool that provides the capabilities to operate in the new online world efficiently. There are more than a dozen electronic placing platforms, inconsistent formats of submission and enquiry, new sources of data, evolving risks and markets, plus the competition, that underwriters need to manage today while working remotely.
The velocity of decision making to select and underwrite the best risks, and the agility to swiftly pivot to address evolving risks and markets will mark the leaders in today’s reset economy. Automating low-value tasks while delivering analytics-enriched insights are the two foundational pillars that will enable underwriters to focus on revenue-generating activities.
The AdvantageGO Underwriting platform has been created specifically in partnership with underwriters and can be deployed quickly without large scale rip and replace disruption. Systemising processes while consolidating all underwriting tasks into one system, ‘Underwriting’ proactively delivers new business insights and risk-specific knowledge.
When combined with an underwriter’s intellectual property and existing data assets, underwriters can begin to create new products, understand risk at new levels of granularity and proactively and efficiently manage their pipeline and business plans with the ability to quote accurately and quickly.
If you would like to talk to Harvey Quinn about the issues he raises in this article, CLICK HERE, leave a message and youTalk-insurance will pass your enquiry on.