A crisis like Covid-19 affects all business sectors. For insurance, the demand to deliver tailored solutions across multiple
service lines on a local, national and global scale has certainly increased. The cataclysmic shifts of day-to-day life have triggered a game-changing course correction that will redefine “business as usual”.
Insurance is a resilient industry and could be the key to help businesses bounce back from the economic impacts of the pandemic. Recent data from the Swiss Re Institute suggests the sector will bounce back to pre-pandemic levels before the end of 2021.
Working with some of the world’s largest carriers for almost two decades, we have helped our clients respond to global trends and ‘ride out the storm’ year-on-year. At Gallagher Bassett, we have outlined the insurance industry’s key trends for 2021.
Here’s what we expect is on the horizon next year.
Data, digitalisation and artificial intelligence
Data-driven automation, artificial intelligence and machine learning will remain vital for the industry to meet the level of personalisation customers expect from their policies and overall experience. Large carriers and TPAs are already using artificial intelligence to automatically classify and extract data from the claims management process. For example, some insurers are cross-referencing call centre recordings with chatbot data to gain insight into customer sentiment and service quality.
Despite digital and automated claims processes driving efficiency to lower operating costs, a sector focused on experience will continue to emerge to manage policies and claims not fit for machines. The industry is applying data analytics to identify pain points in customer interactions and help make the customer interaction process more fluid and personalised. For example, some may prefer a fast, highly-personalised service whereas others may desire a high-touch and solutions-orientated approach.
Impact on affordability
While New Zealand has experienced a soft market for the last five to seven years, the market is now hardening. It is pushed on by low interest rates, growing risks and large claims. A hardening insurance market will put pressure on capacity and therefore, impact the price and affordability of premiums. That said, the current state of the market should not significantly impact customers who have developed a long-term strategy to manage and mitigate risks.
Regulatory changes ramp up
Governments and financial regulators relaxed the rules at the height of the pandemic, but the insurance industry should start to see delayed or deferred legislative changes brought into effect from early 2021. New Zealand’s new code of professional conduct for financial advice services will come into force from March 15 2021 and set standards of competence, conduct and client-care for the whole financial advice industry. The regulatory focus will be extremely important post-pandemic as customers become more cautious about their health and financial safety.
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