Has the Pandemic Changed the Insurance Market Forever?
Businesses around the world are still struggling to come to grips with the pandemic, especially those still unfamiliar with digital and online channels. The insurance industry is no different and has been forced to either innovate or get swept away.
Most big insurance companies and individual brokers are reacting by adding new products to existing policies to account for the pandemic. Niche companies are also filling the space left by major insurers that the pandemic has left.
So how exactly has the insurance industry been changed due to the impact of the pandemic? Here are five ways.
Insurance Companies Will be Driven by Sales from Younger Consumers
In most cases, insurance agencies are designed to be financially robust to be able to pay out when their customers need them the most. These businesses rely on yearly renewals for their revenue rather than new sales. But the pandemic has forced insurance agencies to reach out to new lifelong customers.
In the last few years, insurance agencies have focused their marketing efforts to digitise their sales process to directly sell to a new wave of tech-oriented insurance buyers.
Change in the Types of Insurance Products
The type of insurance products that consumers buy has also shifted to reflect the changing dynamics due to the pandemic. Most customers in the UK relied on their employers for health insurance.
Since the outbreak, however, life and health insurance policies have increased in sales.
These sales reflect the shifting employment status of the younger workforce as many begin to lose their health insurance, a direct consequence of being laid off.
Claims processing has been a pain point for the insurance industry for a long time now. Managing claims requires too much manual input due to the sheer amount of documentation required to spot potential fraud. The pandemic has strained the already ageing logistical process of claims processing, requiring new solutions.
However, the use of automated document processing in conjunction with robotic process automation (RPA) can help to quickly and accurately go through complex documents. This will then be used with machine learning to compare with known patterns of fraud in a matter of minutes.
In particular, claims processing will be changed through the use of social network behaviour for fraud detection.
Underwriting in 2021 and Beyond
Since people are no longer able to meet brokers, provide original documentation, and perform medical assessments, the traditional underwriting process has been effectively undone. However, automation advancements due to AI and machine learning can significantly bolster the underwriting process by taking much of the manual labour out of the picture.
How the Travel Insurance Industry Has Changed
The most affected insurance product has been travel insurance.
The massive reduction in international travel has resulted in fewer sales for insurance products related to travel. Even so, the market for this insurance coverage is likely to make a dramatic recovery as the global situation improves and people realise the importance of protecting their holiday and business trips from unpredictable situations.
At first, many insurance companies made changes to their policy to deny coronavirus coverage. However, these days, they are making more favourable policies to give travellers greater confidence to book despite the disruption due to uncertainties involved with international travel.
Business Travellers Remain a Key Asset for Insurance Agencies
Business travellers are more likely to purchase travel insurance. The platforms they use to purchase insurance are also changing significantly. For instance, most business travellers are likely to purchase travel insurance through a travel comparison platform like Expedia instead of the airline or hotel site they’re booking their travel through.
In the months and years to come, the pandemic will shape and mould the insurance industry in unpredictable ways. There’s no doubt that it has been a challenging time for insurance brokers, but it also spells opportunity, as it allows them to formulate new products and policies to account for unpredictability.
Writen by: Nick Fraser on 2021-05-13
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