The unforeseen scale of the COVID-19 pandemic has exposed how certain business practices have been inhibiting the adoption of digital technologies in the insurance industry. Prior to lockdown, the success and relative value of major technology investments were judged in the context of other business initiatives. Preconceptions about customer buying behavior and/or the absence of a change mindset meant that many insurers pursued an incremental-only digital transformation strategy. COVID-19 has changed this mindset, ushering in an urgency for insurers to ramp up distribution abilities and accelerate service cycles, without compromising service quality. Enterprises with a strong COVID-19 response strategy are better positioned to weather this crisis, and even grow their business in these uncertain times.
For organizations pursuing a 3-phase crisis response strategy, implementing best practices as a part of pandemic planning will strengthen their COVID-19 response strategy.
5 Best Practices Insurers Should Follow for a COVID-19 Response Strategy
- 1. Build operational capacity and resilience
Increasing operational capacity is critical for retaining current customers and surviving the current crisis. In order to adapt to the shifting market dynamics and build resiliency, insurers must leverage digital tools and technology to gain and sustain a competitive edge. For example, insurers can prioritize automation of customer onboarding and swift responsiveness to customer queries. IDC’s Financial Services research on APAC has found that 40% of customers would drop their current provider if they experienced any delays in service fulfillment. By increasing the availability of support and support agents, and leveraging digital platforms like WhatsApp or Facebook, insurers can alleviate the risk posed by long wait-times. Similarly, financial advisors, agents, and brokers should be equipped with the tools and technologies they need to speed up the process of servicing client inquiries, processing policy applications, and more.
Some key technology investments that insurers should make as part of their immediate crisis response strategy include tools such as video conferencing, chatbots, and interactive voice-based assistants. Such technology investments will enable enterprise teams to optimize critical processes, stay agile, offer self-service options, and be responsive and productive in spite of the constant volatility of the COVID-19 pandemic. This will also help insurers establish digital leadership and gain a competitive edge.
- 2. Secure customer trust and loyalty by focusing on hyper-personalization and exceptional customer experienceToday’s digital customers consider hyper-personalization a given and expect exceptional experiences in every aspect of their lives. IDC’s Financial Insights research has shown a high demand for simple and niche insurance products that are easy to understand, straightforward to process with minimum intervention required from advisors, and customized according to customer preferences.
From this perspective, it’s not so surprising to learn that more than 50% of customers have shown a willingness to share their personal data in exchange for personalized or value-added services. More importantly, these value-added services enable insurers to increase customer touchpoints and continuously engage with customers. For example, free medical checkups or discounts on medical treatments make customers feel that insurance is a personalized service, not just a standard product.
- 3. Explore new business models and growth areas through emerging technologiesOne of the key challenges faced by insurers is that existing legacy systems and applications limit channel diversification and the range of digital solutions that make it possible to meet customer expectations. In the wake of COVID-19, the need for insurers to embrace highly efficient processes and practices has only intensified. Insurers must leverage digital technologies if they want to look beyond survival, drive new revenue channels, and gain a competitive advantage.
In particular, APIs (Application Programming Interfaces) and microservices that enable software systems to pivot from monolithic to modular-based architecture will represent a key determinant of success in the digital future. These technologies will help insurers develop new business models, distribution channels, and lines of business, as well as explore growth areas within the partner ecosystem. Moreover, by putting a greater emphasis on agile software development practices, insurers can achieve faster turnaround time and improved quality of products and services that can better cater to changing market demands.
- 4. Protect and grow with the workforceProtecting the mental and physical health of the workforce with a range of wellness and engagement programs is essential for addressing employee anxieties arising from COVID-19 and the resulting shift in working conditions. Insurers must promote a culture of inclusion in the organization, on top of offering customized, need-based support to employees as and when required as part of employee wellbeing initiatives. Moreover, the shift from work-from-the-office to work-from-home requires collaboration among and within different teams in order to optimize the productivity of both the individual and the team in delivering on client commitments.
As part of pandemic planning, insurers should consider utilizing remote-access learning platforms to educate their employees on how to effectively use collaboration tools and leverage technologies to deliver faster and better. Such training programs could also develop employees’ interpersonal skills, which in turn play a key role in the organization’s overall growth. During times of crisis, insurers must retain their pillars of strength –their employees– if they hope to be able to rise up and swiftly adapt to changing market conditions and customer demands. Furthermore, insurers should take additional measures to deliver a great ‘employee experience’ to guarantee higher retention—the loss of talent during a time of instability deals a huge blow to the organization.
- 5. Establish ‘digital trust’ against cyber-risks and non-complianceInsurance companies should strengthen their security frameworks to enable employees, third-parties, partners, and alliances to access their corporate networks in a more secure environment. IDC’s financial insights research finds that almost half of customers have faced fraudulent incidents. Furthermore, considering the spike in adoption of by customers, insurers must implement robust fraud prevention and detection frameworks within the organization.
Insurance companies have always been at the forefront in assessing and defining measures to calculate risk. With pandemic planning in mind, insurers should adopt a risk assessment strategy that extends beyond insurable risks to include operational risks as well. Moreover, to win the digital trust of their customers, insurers need to pay attention to how certain tools and platforms are collecting data and ensure that the data is protected and being used properly. They should take measures such as continuously monitoring data governance & compliance, implementing multi-factor authentication when accessing information in order to promptly detect security breaches, and establishing response strategies to immediately counter any potential mishaps.
Future-ready Requires Preparing for the Unexpected
During crises or emergencies such as the current COVID-19 pandemic, insurers must of course first address the short-term impacts on customers and the organization. However, it is equally important to develop a long-term strategy to seize new opportunities. By implementing these 5 best practices across the 3-phases of the COVID-19 response strategy, an insurance company can truly become a future-ready digital enterprise.
To learn more about how insurance companies can overcome the impact of the COVID-19 pandemic on business, and become digital insurers of the future, hear insights from IDC, Microsoft, and Kotak Life in our recent webinar: Enabling Partners, Sales, and Customers.