In the early days of the outbreak of Covid-19 and the weeks following the lockdown all over Europe, Egon Zehnder gathered leaders in the insurance industry across Asia, Europe, and Africa, to share their experiences and discuss how they could leverage each other’s learnings during this crisis and how to best move forward. On the back of this rich discussion, Egon Zehnder facilitated a second round-table just a month later, for leaders to take stock of their response to the pandemic and reflect on the future of their businesses as we start to come out of the lockdown.
From the onset of the lockdown, insurers globally had the same question on their mind – what will the new normal look like? When governments asked the industry to send their workforce home, leaders were faced with tackling clear operational hurdles such as moving thousands of people onto their remote platforms, keeping employees motivated and engaged, and securing jobs for the long run.
With the sudden move to remote working, the insurance industry has had to find new agility and creativity, which has in turn over the last few months, created a new culture and an opportunity to shift mindsets, in particular around digitalisation.
One multi-regional leader provided a particularly relevant example, saying that in the 3 months of the crisis so far, they had achieved more progress than in the previous 3 years of transformation work. Following years of attempting to build connected regional platforms, the crisis has created a unity around a single problem, allowing this insurer to boost electronic sales capabilities and make unprecedented progress in this area.
Digitalisation, and insurance as a technologically enabled industry was not viewed as obvious. Now our clients have discovered we are a digital company
This internal shift for the insurance workforce has also extended to interactions with their clients. For instance, in China, the industry has launched remote selling end-toend, and engaged their customers through social media platforms such as WeChat and Tencent, a totally previously untested way of connecting to a customer base. This shift in communication was credited across the board, to a new customer mindset. Prior to Covid-19, consumers were sceptical about digitalisation, preferring to interact on their policies and claims face to face, rather than on the various platforms that had been created.
Emphasising that this is of course still a journey of learning and discovery, leaders agreed that a way forward is emerging and that the combination of internal culture change combined with the external mind-set shift, will lead to new business models and strategies. Insurers are now looking at strategies around not only what they are selling, but also how they are selling; using the former offline model in conjunction with the new online expertise that they have developed. Furthermore, in addition to looking at new ways of acquiring customers, insurers are having to deal with the retention of current policy holders, who in the face of the crisis are applying greater cash conservation.
Our clients now see we are a b2c company, instead of a b2b2c. This is a good start, now let’s accelerate this change!
Part of the future-ready strategies that are being implemented is around further developing existing tools and platforms in line with the shift in the business model. For instance, while most insurers already had online systems for claims, as one leader explained, the usage was only around 30%. Within a month of the lockdown, usage of the online tools and platforms increased to 70%. Another example of the technological success associated with these new realities has been the increase in telemedicine where usage increased by 100 times to hundreds of thousands of users almost overnight after years of trying unsuccessfully to gain traction with their customers. These types of customer engagements which had initially been pushed as alternatives, have suddenly become the main solution for tomorrow, and navigating the future of the industry going forward will be highly strategic.
At the forefront of the crisis, the Insurance industry’s resilience has been tested in multiple ways – financially, operationally, in its regulation, and on its reputation. Perhaps one of its largest and potentially far-reaching challenges is managing public perception in the midst of this uncertainty. What emerged clearly from the conversation was that expectations and public perception of the insurance industry vary widely by country and region. As one Head of France for a large multi-national insurer put it, we are in a situation where the population expects the insurance industry to suffer from the crisis. The idea that insurance could be profitable in these times is unfathomable, and the industry is decried in the media by the government and politicians as having a duty to shoulder the entire cost to the country. This feeling was echoed by insurers in the UK, currently grappling with how to navigate becoming a target, while trying to get a positive message out to their customer base.
Insurance is one of the rocks in these times, but people are questioning why it is so solid? The industry needs to survive in the same way that banks need to survive for the economy to survive.
Insurance was created to be here for the long term, going through difficult times is part of the fabric of the industry. However, the expectation gap between what insurance is for – the many paying for the few – and the assumption it can pay out to every business in the world has created an existential issue about the future of insurance and the perception in the marketplace.
One of the great ironies of trying to manage customer loyalty and fulfil public expectation has been the unexpected pressure some insurers have put on others. With non-compete laws in place to protect clients, insurers are not able to speak to each other about the solutions they are offering the public, or align on the type of external communication they want to put out as an industry. As a result, while some insurers with products less affected by the pandemic such a motor insurers have been lowering premiums, this has adversely put pressure on the rest of the market to provide equal benefits and commitments to rebuilding the economy.
Despite so much consensus as to what the main issues and opportunities of today were, our various insurance leaders were left with a few questions unanswered. Which of the economic scenarios that are being projected is the likely one? Will customers stick to these new technologies? Will customer behaviours continue to change, or will they revert to what they were previously? What type of recovery will we see? Will insurers be trusted more or will they have lost the trust of the public?
These are the unknowns on the minds of the industry, with the answers likely to emerge over the next weeks and months. One thing is clear, to address these questions and be ready for them, the rock that is Insurance, viewed as stable, immovable, and safe, will have to flex new muscles, and prove its ability to be agile, flexible, and come out of this stronger.