COVID-19 ripple effects have impacted various industries, with the insurance sector facing its own toll. The effects are wide-reaching, afflicting employees, business operations, client services and the overall financial projections. The following is an account of some key challenges insurers are facing and potential action steps thereto.
Insurers and business continuity
COVID-19 has kept spreading fast and steady and insurers are responding on various fronts wearing multiple hats — as claims payers, employers and capital managers. Each category has its own unique challenge, which resonates not only within the insurance market, but also the economy and society at large.
As insurers aim to secure the health and safety of their employees and distribution partners – like agents & brokers – the penultimate objective is to try and ensure business continuity. Similarly, to the commercial policyholders they serve, insurers are facing the test of time to regularly monitor and adjust their business continuity plans to ensure minimal business disruption. One of the measures adopted is the establishing of cross-functional teams to tackle the organisation’s response, which can only be successfully accomplished through a robust technological infrastructure and comprehensive communication systems.
Insurer’s assessment of their teams’ access to necessary client document files is pivotal to safeguard effective business delivery from any remote locations. IT departments more than ever must ensure the setting up of new cyber-security protocols to permit the safe exchange of confidential information amongst authorised parties.
Many businesses are formulating policies and procedures around remote access to support social distancing. As companies transition more towards remote work environments, IT departments should ensure comprehensive technological capabilities, including:
remote terminals – like laptops;
a safe and secure virtual private network connected to critical business applications;
tools to facilitate audio, video and screen-sharing;
an IT support team to assist employees;
COVID-19 is also disrupting the insurers front-liners, who are traditionally tasked with the initial face-to-face client contact. Intermediaries are highly at risk to encounter same logistical challenges similar to those afflicting their carriers.
Long-term planning and training are two aspects which must be further consolidated, especially in view of possible second wave COVID-19 scenarios. The setting up of proper digital tools may take a while to implement, but in the long-term such measures can better pave the way for more effective strategies.
Post-pandemic, insurers should risk-assess how quick and effective they were to react; such knowledge may lead to further insights towards new work practices to ensure heightened resilience if faced with similar other future business disruptive occurrences.
Future stakes for insurers
While interest rates continue to decline so is the weigh on the entire insurance industry.
The COVID-19 outbreak has also caused substantial volatility within the equity markets. Property-casualty insurers are the most vulnerable as they hold more liquid assets which their financial position may become less tenable in case of catastrophic losses. From a financial stand point, insurers will likely need to adjust their budgets, cash flow predictions and investment portfolios in light of recent developments.
The industry should be prepared for large loss events due to COVID-19. However, insurers are capitalising on reinsuring large parts of their books of business which helps diversify the risk.
Insurance sector jobs in Malta