Insurance brokers have felt the impact of Covid-19 swiftly and keenly.
From dealing with slow home office internet speeds and the demands of junior “co-workers” home from school to managing clients who are suffering financial hardship, they have had to adapt swiftly in uncertain times.
“Overall, the brokers I’ve spoken to are coping reasonably well,” Melanie Gorham, chief executive of IBANZ, said.
Brokers having to work from home during the lockdown period was the biggest change to hit the industry, she said, and it came with both benefits and challenges.
Many member firms had the ability for work-from-home as required, she added, noting remote working en masse and for an extended period of time was a brave new world that happily had worked out well – for most of the time at least.
“Some brokers have even commented on how much faster the computer response is from home,” Gorham said.
“[However] security of remote access is obviously a matter for review.”
A number of brokers had limited capacity for remote working before the pandemic so had some initial teething problems or had to find alternate ways of doing things if they encountered unexpected issues, Gorham said.
Overall, the reaction from brokers to working from home was mixed, she said.
“Those with children or dependents they are caring for and support through schooling found it particularly challenging to keep working as well,” she said.
“There has been talk of issues with a lack of devices to share with, a feeling of crowding or not being able to fund a quiet space. And of course, bandwidth.”
Other brokers have fared a little better under lockdown.
“There are brokers who have found lockdown works well as they have what they need and no dependents to cater for,” Gorham said.
“The key is appreciating everyone is different and so are their personal circumstances. Being conscious of this enables the teams to pull together.”
Isolation has been a factor, so daily meetings or frequent catch-ups were being undertaken to keep everyone connected and maintain the sense of being part of a team, she said.
“Trust is another point, a leap of faith that can be difficult to take – remote working has forced this on many, now that we are out of face-to-face contact in offices,” she said.
“But in general, this seems to be working well - better than some had expected.”
Gorham said she had observed several immediate changes to the industry due to the pandemic.
“Covid-19 has had the short-term effect of increased contact with clients and greater communication between brokers and insurers, focussing on solutions for their clients during what can only be described as extraordinary times,” she said.
“Many members have acknowledged a willingness from New Zealand insurers to understand clients’ challenges and issues, and work with brokers to provide assistance, appreciating that a one-size-fits-all approach isn’t likely to work.”
Some members had spoken of their relationships with clients strengthening as they work through problems and possible solutions with them.
Brokers were also taking part in more and more regular meetings to stay in touch with each other and to talk about the constantly changing landscape in the post-pandemic business sector, she said.
But what next for brokers and the way they work?
That was difficult to say, Gorham said, noting it was difficult to predict the long-term effects of Covid-19 on the industry.
“There is a lot of conjecture on what the impacts could be, but currently it is too early to be able to determine what they would be,” she said.
“There is almost a holding of breath as countries around the world relax their restrictions, and New Zealand will be no different, with a lot riding on the experience from lowering to level 2.”
The one point that has come up is the value that some place on working from home, including wanting to see flexibility to continue to do so after the restrictions are lifted, Gorham said.
“The lack of interruptions is a factor for some; saving in travel times for others; and the convenience of being able to stop for a break and return to complete work later, are all reasons,” she said.
“It will be interesting to see if there is a change to workplaces as a result. There will be indirect implications to increasing work from home including on office space, transport and businesses local to the workplaces.”
For Hamilton-based broker Vicki Squair, the lockdown period has meant not seeing her clients in person and lots more emails, phone calls and Zoom conference calls.
“I am definitely missing those face-to-face catch-ups with clients,” she said. “It is more enjoyable and more productive - Zoom is just not the same. And being stuck in front of a computer all day isn’t that much fun, really.”
Of course, it is not just brokers who are affected by Covid-19 but their clients. There have been escalating job losses during the lockdown period and many policyholders have suddenly found themselves in uncharted financial territory.
That was a big challenge that brokers needed manage going forward, Squair said.
“Helping clients find ways to keep their insurance in place when they are stretched financially is the main focus right now,” she said.
There were several options available to clients if they suffered a loss of income, Squair said. While the policy depended on the specific insurer, they could include a premium waiver, premium deferment, a policy suspension or a reduction or adjustment in cover, she added.
But one silver lining to come out of the whole Covid-19 crisis might be a renewed appreciation of the insurance industry, Squair said.
“These events tend to help people understand how important insurance is,” she said.
“One they are back on track financially; many people want to discuss insurance options that they hadn’t rated so highly before.
“I’m sure the insurers will review their risk exposures and profiles, and some will make adjustments, but that is something they are doing all the time anyway.”
It is a sentiment echoed by the Insurance Council of New Zealand, which says the industry acted fast and early to “actively support” its customers facing increased financial hardship as a result of Covid-19.
“Since March, our members have ensured they are fully open for business and have worked to keep New Zealanders and their assets protected by easing the financial pressures they faced,” said Tim Grafton, ICNZ chief executive.
The industry was “acutely aware” of the financial pressures Covid-19 was placing on people.
He pointed to a range of measures being implemented by insurers to support the “changing needs and challenges” of customers.
They include: changes to excesses to reduce premiums; extending credit terms to brokers out to 120 days so they can extend the
same terms to the end customers (meaning the insurer goes on risk for four months without premium income); continuing cover
for vacant properties including construction sites; and exercising flexibility around WOFs and vehicle registrations to allow insurance to stay in place.
It was important to remember, Grafton said, that while some risks had changed due to the lockdown, risks had not disappeared.
“While motor collision claims are certainly down, vehicles are still subject to risks even when parked, such as theft or vandalism,” he said.
“Similarly, it is wrong to think that house insurance risks decrease with everyone at home,” he added.
“And actually, many risks increase…half of all fires start in the kitchen, which are definitely being used more, and the risks of property damage also go up.”
It was also worth noting that extensive steps to support customers had been taken at a time when insurers themselves are coming under financial pressure, Grafton said.
“All these measures have been done when insurers’ income has also been heavily hit by the collapse in equities, record low interest rates and looming business closures coupled with few new businesses opening,” he said.
This was matched, he said, with the higher levels of solvency that insurers must maintain above any other business to meet regulatory and policyholder obligations.
“In this way, our members can balance the needs of those in genuine hardship with their obligation to be there for all its policyholders should the worst happen, like an earthquake or major flooding.”
The coming months would bring many new challenges to insurers, brokers and their respective customers, Grafton said.
“Should a customer find themselves facing financial hardship, we urge them to contact their insurer or broker, who can talk them through a range of measures to ensure their cover best meets their current needs,” he said.
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