The world economy is currently trying to survive the worst-hit pandemic of the era. Covid-19 has affected businesses all around the globe. Based on the nature of businesses, some are thriving, some have already hit the bottom, and some are doing fine.
The impact of Covid-19 on insurance companies does not apparently fall into the category of the ‘worst hit’. But it is significant enough to have shaken the entire sector. Majorly because the insurance industry is intertwined into people's lives closely. And everything related to their lives affects the insurance business.
The Impact of Covid-19 on Insurance Companies
The worldwide lockdown and economic slowdown have created a hole in people’s budgets. With lower incomes and increased expenditure, it has become impossible for them to escape the financial crisis. This has directly pushed the insurance companies to remodel their strategies to retain customers.
- In the wake of worldwide lockdown, for every function of an insurance company, it has to rely upon the digital channel. Be it selling new policies to settling claims, the companies who already devised their digital presence were able to cope with the sudden change. While those who had not focussed on building a digital architecture have had a setback.
- The number of claims increased because Covid-19 surged up medical centre visits. The expenses on medical treatment escalated when the visits were made to private hospitals instead of government one.
PwC’s June COVID-19 Consumer Insurance and Retirement Pulse Survey revealed that-
- 15% of survey takers say they are likely to purchase life insurance due to the impact of COVID-19.
- 37% fear that the pandemic may bring future financial impact on their retirement plan.
- However, there is another side of this coin too. People are feeling compelled to buy health insurance considering the chances of catching coronavirus and the need for getting treated and quarantined for as many days as it would take to recover. Hence, it has increased the incoming business for health insurance companies.
- One of the insurance segments- the vehicle insurance industry has been saved from exaggerated claims payments as due to lockdown people are hardly using any vehicles.
- Claims are at a halt at the moment but are expected to surge in the future, so do the premium rates.
- One of the major impacts has been seen in the functioning of insurance companies. With employees working from home and lack of technological integration at-home devices have been creating havoc making it little difficult for insurance companies. This, in turn, disrupts regular work of the company's functionalities.
How Insurance Companies Are Coping With The Impacts?
Till now, the majority of insurance companies around the world have managed to get through the crisis well. It has been possible due to the transition to digital platforms that they had made way earlier than this pandemic.
The crisis, however, revealed the gap that needed to be gauged in technology and network. Many leading companies are sailing through this effectively and the insurance industry is evidently saved from the downfall.
Few of the strategies that have been adopted by industry leaders are:
- Financial instability has forced people to reduce their insurance coverage or cancel their policies during this time of the pandemic. To deal with this, insurance companies are offering payment relaxations, discounts, and even increased insurance coverage.One interesting impact of Covid-19 can be seen in increased pet adoption rate around the globe. The lockdown left many stray animals abandoned. This led to an increase in the pet adoption rate out of humanity and empathy for animals. It called for a huge opportunity for insurance companies. ||
- Seeing the increased pet adoption rate, many insurance companies are offering free pet insurance. This is being considered as an investment in converting potential customers into regular ones.
- Insurance companies throughout the globe are investing this time and resources into upscaling their digital game. They are focussing on digital media marketing strategies to leave a long-lasting impression on their target audience.
- One of the most stirring changes that the insurance companies, like other companies, had to deal with is the work-from-home culture. Internal and external communication and team management have been redesigned immediately to cope with the situation and minimize the negative effects of it.
- Along with all the above-mentioned strategies, insurance companies are now investing in the future and preparing their businesses to withstand situations like this.
The fuss created by COVID-19 pandemic is not easy to muddle through. However, the insurance industry has been coming through this quite effectively. The game-changer adaptation has been online presence and investment in the latest technologies for seamless execution of insurance functionalities. You can also connect with an automation solution provider to improve the way your company is functioning and prepare it for future setbacks.