By Jimmy John
A survey conducted by the Insurance Institute of India (III) has revealed that COVID-19 will have a long-lasting impact on the insurance sector, which will have to accelerate digital transformation and reskill the workforce to stay relevant and competitive in the future.
The survey looked at the current challenges facing insurers from the crisis and how companies plan to maintain their operations in the disrupted environment. The survey was carried out in the midst of the lockdown from data provided by 62 respondents. The respondents were current and retired senior industry professionals.
The survey looked at the current challenges facing insurers from the crisis and how companies plan to maintain their operations in the disrupted environment. The survey was carried out in the midst of the lockdown from data provided by 62 respondents. The respondents were current and retired senior industry professionals.
Likely to be the worst disaster for insurers
The COVID-19 pandemic was ranked the worst disaster to hit the insurance industry worldwide. The survey revealed that the fear of high healthcare costs for the treatment of COVID-19 is likely to see a surge in demand for health insurance now and in the immediate future. With businesses being impacted all over the world, there is likely to be increased demand for business interruption insurance in the future.
Insurers to focus on ERM and BCP
The sudden lockdown and the compulsions of remote working has ensured that enterprise risk management and business continuity planning are priority areas for insurers. Adequately managing capital resources is the next priority. A majority of those surveyed felt that because of financial difficulties and falling disposable income, in spite of the urge to buy insurance, there would only be gradual growth of the industry worldwide. Many also predicted negative growth for the industry post the pandemic.
Growth of online distribution channels
The vast majority of respondents felt that online distribution will increase considering the need for social distancing during the pandemic. With the emphasis being on contactless dealings, the role of agents, brokers and the company’s sales teams in the distribution of products will decrease and not cease.
Regulator’s role in pandemic
A majority of those surveyed felt that in view of the operational and financial difficulties faced by insurers the regulator should be lenient and also relax certain operational norms.
Industry post COVID-19
Most people surveyed felt that there would be positive changes in insurance related behaviour globally. Changes in buying behaviour would partially affect some lines of business. Most felt that the insurers’ appetite for risk taking will decrease and underwriting will become stricter while claims settlement would become simpler. Also because of capital crunch and stressed balance sheets, insurers will increasingly rely on enhanced reinsurance support. Adjusting to remote working will be the greatest operational challenge, beyond the core business challenges, for insurers, post COVID-19.
Asia Insurance Review
