Historically, few insurers have had the ambition for their in-house IT infrastructure to be a source of competitive advantage. But as cloud-based systems have become more prevalent, early-adopters may now be reaping the benefits as competitors with older systems struggle to embrace the flexible and remote working model needed at this time.
With most insurers having limited surge capacity, call waiting times have extended. Some insurers spent the first three weeks of lockdown just trying to procure and courier hardware to resolve remote access issues.
Christine Korwin- Szymanowska, partner at Strategy& PwC, said: "Without the infrastructure from office life and established workplace social networks, management teams have been challenged with finding new ways to engage and motivate their employees.
"This pandemic is serving as a catalyst for insurers to reassess their operations, technology infrastructure and physical locations, as well as revisit their strategies. With employees being forced to work remotely, insurers are reassessing their cyber defences and ensure data security is robust. COVID-19 heralds a new era for the Chief Operations Officers of insurance companies."
The future
Given the sheer size of the costs at stake, there will be disputes and legal actions around the interpretation of some exclusions and extensions, such as ‘denial of access’ clauses.
Andrew Kail, head of financial services at PwC said: "Pandemics will now feature much more prominently in insurers’ and clients’ future risk assessments. In the longer term, this could lead to tighter wordings, more appropriate ratings, and an increase in monoline pandemic coverage. Any widespread reassessment of established policy wordings will also present a shift in the industry.
"Insurers are targeting more comprehensive contingency planning, to reassess what the so-called ‘worst-case scenario’ might entail, and to model financial implications of other similar potential events they might previously not have considered."
In the medium to long term, operating models must evolve to meet new challenges and capture emerging opportunities. Lower returns on long term investments will increase competition in already crowded markets.
Options on the table insurers are seriously considering include divesting to remain afloat and ambitious diversification into new markets and products.
COVID19 Future of Insurance Report
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