By Ellen Carney, Principal Analyst, Forrester Research
The effects of Covid-19 on consumers, businesses and insurers will be just one aspect of the far-reaching and severe impact the virus has already had on all of us. Along with a new lexicon – “social distancing”, “hot zones” and “flattening the curve” – and the sudden relevance of acronyms such as PPE, Covid-19 will also change the insurance industry irrevocably over the coming decade. Here are six changes we’ll see over the coming decade:
• A bigger shift to contract – and robots – employees upend workers comp. The rise of the gig economy has changed how small businesses recruit, lowering demand for workers’ compensation insurance. Covid-19’s hit on employers will dramatically accelerate the shift from workers being employees to contractors, especially for small businesses. But it won’t be the only change in workforce composition wrought by the coronavirus. In industries such as construction and local logistics, tireless and immune robots and drones can lay bricks, hang drywall, and deliver groceries and take-out meals. They can work in close quarters without fear of sickness or overuse injury. And since they’re not on the payroll, these indefatigable workers don’t get factored into workers’ comp premiums.
• Digital services get put to the test – and many pass muster. Customers see technology as the path to make their lives easier, better and more efficient. And many insurers used the heydays of the last decade to invest in AI-powered and mobile digital services such as chatbots and mobile photo claiming features that answered questions fast and shifted claimants into adjustors. But because engagement with insurers was often rare, customers didn’t download or learn to use these services, often because they were clunky and frustrating. But in the new era of social distancing and call centre wait times wrought by Covid-19, consumers may have no alternative but to use mobile FNOL features or chatbots if they don’t want to sit on hold. To make the use of these helpful digital tech tools more sustaining, promote them in IVR hold messages, get your call centre reps to pitch them, and show them off as part of the sales process. When customers can successfully find and use them, they’ll return.
• Usage-based insurance booms as consumers question traditional coverage. Lockdowns and shelter-in-place policies have put a big dampener on miles driven. With out-of-work consumers worried about how they’ll pay rent, never mind insurance, they’ll be questioning why they should pay for car insurance when the vehicle is sitting idle in a parking spot. Worse, even in good times, one in eight American drivers were driving without insurance, putting insured drivers at risk. While some carriers are proactively pitching low-mileage plans, new work-from-home and big economic pressures will spur new consumer, insurer, and regulator thinking about usage- and mileage-based coverage.
• Survivorship/beneficiary management becomes part of the account opening and onboarding process. A welcome trend in the business of life insurance and even banks over the past five or so years has been a change in the tenor of messages regarding beneficiary and survivor services – and the death claim. Not that long ago, insurers treated this as an administrative exercise – fill out these forms, send us these docs. Now, financial services firms are injecting empathy, offering concierge services to help families and executors navigate the account closing and settlement processes, investing in new skills such as social work or medical backgrounds, and offering regular empathy training. And just as 9/11 spurred a drive to keep beneficiaries updated, Covid-19 could change the account-opening process, spurring frank conversation about getting things in order now, along the lines of Fabric’s “Think Like A Parent” message.
• Household and business cashflow reshape insurance payment plans. Every year, the US Federal Reserve publishes its annual economic wellbeing report, and in 2019, it asserted that four in ten Americans could only cover a $400 emergency expense by carrying a balance on a credit card or borrowing from friends or family; 12 per cent said they couldn’t pay it by any means. That grim state of household cashflow just got a lot worse. Insurers are stepping up with premium deferrals and “contact us and we’ll work out a plan” messages. But household and business cash flows ebb and grow even in good times. We’ve been on the lookout for insurance payment plans that emulates Selective’s PaySync for years now, but have come up dry. But these economic headwinds might be just what drives an offering like this for personal lines, property and causality and individual life insurance.