How COVID-19 Is Driving an Innovation Revolution in Insurance

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Insurance is about providing a safety net when the worst happens. During the COVID-19 pandemic, the meaning of “the worst happening” has changed. Unfortunately, insurance won’t get you back to work, help you get back your social life, or tackle these tough economic times. However, during the ongoing crisis, itcan still provide peace of mind.  

Still, insurance can only serve customers if it also adapts to current challenges. In many respects, this pandemichas spurred the insurance industry to action. In recent months, the way to provide solutions to customers has changed, and old methods may now feel prehistoric. Normal has been redefined.  

Insurers are accelerating sector-wide innovation to meet changing customer demands. Yes, COVID-19, the subsequent lockdown and economic recession are forcing insurers to develop faster, but it is not the catalyst for the turnaround.  

Deeper Connection with Consumers 

In a world of “the customer knows best,” there has always been a distance between insurance companies and consumers. In the modern world, this kind of disconnect is unsustainable. Customers now have more knowledge than ever, allowing them to ditch insurers and move to another carrier if a product does not meet their expectations. 

In recent years, insurers have adapted to a modern world of communication from chatbots handling basic queries on a website or supporting teams who are on-hand across various channels. With the onset of the crisis, the in-person channel was completely removed, and insurers were left handling larger volumes across other lines.  

Finding ways to improve customer-driven support has been an essentialpart of coping with the demand.  

Changing How Products Are Delivered 

Speaking of customer demand, consumers’expectations of the insurance coverage they purchase has shifted. In a world where connectivity is widespread, the idea of simply paying for a block of insurance is becoming increasingly out of step with what customers want. COVID-19 highlighted the changing trends.  

In a situation where people use their vehicles less and many face income disruptions, it makes sense to provide usage-based insurance. What good was travel insurance when the pandemic kept most people from travelling? Insurance companies in Canada were already adopting the idea of selling insurance as a pay-as-you-go product; the pandemic has shown this model may be here to stay.  

Customer Data and Digitalization 

Digitization is something insurers have sought for years, and many accuse the industry of lagging other sectors. By fully embracing digital, companies can streamline and connect with customers. Data may be the most significantsingle benefit of digitization, allowing insurers to use data analysis to inform their business model.  

From now on, consumer-supplier touchpoints will mostly come through digital interaction. That’s not to say humans will be removed from the chain altogether, but instead, human roles may become more focused to serve customers better.  

As the insurance customer base increasingly comes from a connected world, expectations will hinge on being able to obtain customized solutions easily. Consumers want to access information quickly and buy products that suit their individual needs. As data-driven models evolve, analytics will play an important role in providing tailored insurance.  

Access to different data sources will allow insurers to know more about single customers and create solutions designed for them.  

Greater Data Exchange 

Data will not only play a role in the business-to-client chain; insurers are finding it also has a profound impact on business-to-business channels. Insurers sharing data helps assess risks and costs more accurately, allowing products to be priced more effectively.  

On the consumer side, persuading customers to engage in data exchange is one of the biggest challenges insurers face as they enter an era of technology-driven service. Consumers have traditionally been reluctant to share personal information, hindering data analysis. As barriers slowly fall, insurers must continue to show they can safely handle and store customer information.

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