COVID-19 is such an unprecedented situation that it’s almost impossible for anyone to predict how it’s really going to impact the business community. However, for insurers in the UK we are starting to see some indications of where this could bite, both in terms of the economic and the operational. With the FCA also setting out what consumers should expect from insurers during this time it could be a careful balancing act for organisations in this industry when it comes to protecting the interest of consumers and those of the business.
COVID-19 and the insurance industry
Insurers already operate with a focus on issues such as health and business continuity. However, as the COVID-19 crisis has unfolded this has had new relevance internally as well as when it comes to consumers and policies. The health and safety of employees and their distribution partners in the agent/broker community is now paramount. It has been necessary to adapt to the requirement for teams to work from home, to review communication so that employees, distributors, and clients can be kept up to date and to ensure that the business has a strategy in place to deal with the COVID-19 situation as it continues to evolve. These four key issues are some of the most significant affecting insurers in the UK today.
1. Business continuity
Physically enabling all employees to work remotely at short notice presents significant challenges, from access to systems and networks to cybersecurity provisions for those not working in the office. It may require new remote access policies, as well as investment in a wider range of collaboration tools and an IT team available to assist staff with queries that arise from home working during the outbreak.
2. Client service
Agents, brokers and financial advisors face many of the same issues as insurers themselves and this can have a knock on impact with respect to client service and also attracting new business. Those insurers that have already invested in digital capacity are likely to find it easier to effectively service clients and develop the business during this time. It’s important for intermediaries to review how they maintain contact with clients, as well as the methods used for prospecting for referrals, and how clients experiencing financial issues can be supported.
3. Financial future
While claims are likely to be limited by policy wording it’s the wider impact on businesses that could hit the financial future of insurers the most. Global slowdown in GDPR and economic woes could mean that prospects for growth and profitability in insurers’ underwriting and investment portfolios are significantly reduced even once the crisis itself has passed.
4. Meeting FCA expectations
The FCA has issued guidance making it clear that it expects firms to be fair and professional, to avoid misleading communications and to recognise the circumstances that customers may find themselves in. It has said, “We would not expect to see a customer’s ability to claim affected by circumstances over which they have little control.”
COVID-19 is going to have a big impact on insurers but how broad that really is remains to be seen.