2021 has been, undoubtedly, a year without precedent. The pandemic has taken its toll in different business sectors, shutting them down one by one and forcing companies to reconsider their strategies before the entire business is lost as Deloitte supports in their research about the impact of Covid-19 on the insurance industry.. Through these pressuring moments people started valuing health and safety more than everything else and, therefore, it’s plain to see that the companies who adapted fast enough not only remained profitable but thrived through this period of uncertainty.
In the insurance sector, KPMG states that the impact of COVID-19 on global insurance markets is largely felt through asset risks, capital market volatility, and lower premium growth prospects. The expectations are that most COVID-19-related losses will be picked up by reinsurers, so insurers’ technical performance and profitability are unlikely to face a down trend. In addition, The UN’s research shows that Developing markets, through their riskier asset allocation, are more likely to experience a higher decline ratio in return on equity than big markets. The impact will vary depending on the products and types of coverage offered by the insurers.
Having all this information, it begs the question: is the insurance industry ready for another pandemic?
Well, it depends. Some markets will be hit more than others. The ones with higher resistance to change will suffer most, whilst the fast-paced ones will benefit, address, and solve the pain points of the market.
Past two years of pandemic have forced the players in the insurance sector to get creative with their approach, especially during the lockdown phases.
A trend towards business digitalization with more and more features offered by insurance companies is starting to form in some markets as we can see, for instance, that companies have already started to implement features like remote risk inspections for property/ business risk insurance with easy to fill survey questionnaires that allow risk engineers to do their job remotely and just as, if not more precisely than when traveling on-site, with improved time efficiency.
Quick response for the immediate challenges in partnership with insurtechs
With deregulation and tech innovation, insurtechs are innovating fast which forces the whole industry to innovate at a faster pace. As the figure below indicates, insurer executives plan to increase their technology investments. Insurance as a service helps insurance companies adopt new technologies quickly.
Source: Deloitte
Being ready for another pandemic or any other challenges that your business faces is something that you can decide. The reason is that some insurtechs offer their services in a specific area of insurance, such as underwriting, claims processing, and fraud detection. Using such services can help incumbents compete with innovative insurers that can:
- Conducting an appropriate risk assessment with technology driven underwriting processes. Therefore, they can set a lower premium, which gives them a larger market share, as price is the main criteria of insurance cıstomers.
- Ensure customer engagement with fast claim processing.
- Gain a greater strategic movement area in pricing thanks to effective fraud detection.
Virtual i Technologies helps insurers to assess risk more effectively thanks to their intelligent platform [VRS]™ Virtual Risk Space. By using advanced analytics, the platform makes hidden risks visible and reduces the likelihood of inefficient pricing. [VRS]™ Virtual Risk Space also eases the claims process, with policyholders able to send real-time damage information such as videos, photos, and location with their smartphones to complete the first notice of loss (FNOL).
