Novarica held its first virtual Commercial Lines Special Interest Group on May 14, 2020, joined by over 25 insurer chief information officers. Novarica shared its perspective and created a platform for the CIOs to connect and exchange non-competitive information. We had plenty of productive interaction; the 90-minute GoToWebinar flew by.
Novarica opened the session with our insights on the impact of COVID-19 on the commercial lines segment, which kicked off several interesting discussions.
COVID-19’s Product Impact
The impact on commercial auto has depended on the industry class of the commercial insured. In contrast to personal auto, where many insurers are rebating premium, commercial lines carriers are reviewing these risks account by account. One CIO mentioned how charter buses are garaged rather than on the road, reducing exposure. These insureds are endorsing their policies, taking low-mileage discounts, and pulling vehicles off the road.
The increase in deliveries, on the other hand, has added exposures in “hired and non-owned auto.” More employees are using personal vehicles to deliver goods, exposing their employers to potential losses. Insurers are endorsing general liability, BOP, and package policies to address this coverage gap.
COVID-19’s Security Impact
CIOs were also interested in how recent events have impacted security. Cyberattacks are up significantly. Many employees are working from home for the first time, sometimes with personal technology, creating additional exposures. Insurers are deploying dual-factor authentication and encryption approaches in response.
Working from home causes behavioral changes that impact IT security. Employees are more likely to visit websites and click on things that they shouldn’t. Internal phishing tests are quantifying this increase, and threat monitoring is registering an increase in social engineering and spear phishing attempts. Insurers are dialing up employee education and awareness in response.
COVID-19 and Analytics
Significant behavioral shifts and economic upheaval in response to COVID-19 have impaired the effectiveness of certain predictive models. Past correlations may not continue to hold. Some carriers are shifting modeling resources toward other efforts pending a less volatile business environment.
Work from Home
A discussion on terminating work from home (WFH) generated a lot of comments and multiple approaches. Some insurers are permanently converting some locations to WFH and ensuring security by distributing VDI terminals and prohibiting the use of personal equipment. One insurer noted that application performance in the WFH configuration was superior to that in the office, where bandwidth limitations negatively impacted performance.
Another positive impact of WFH is superior team performance. One insurer reported that implementing a new core system was easier because everyone was in a similar situation. Having all employees work from home improved communications and productivity over a hybrid environment in which some employees were remote while others were in the office. Another upside was the elimination of travel costs for the insurer’s systems integrator.
Other carriers have plans to bring employees back to the office in a phased approach due to poor home office environments and workers’ compensation questions. Many are bringing back the whole team in four waves: The first wave in month/week one, the second wave in month/week two, etc.
Virtual Loss Control
Our initial topic ran over, providing us with a limited window for our next topic: The digital gaps that WFH exposed. We did get the opportunity to hear about a fascinating use case in converting analog loss control inspections for high-severity property risks via self-survey, aerial imagery, and virtual inspections via mobile devices.
Conclusion
COVID-19 is a nasty beast, and we all miss the real-life engagement of the recent past. However, many insurers are finding lasting improvements in the ways that they conduct business by leveraging technology. When coronavirus hands us lemons, prohibiting travel and access to the office, many insurers are making “work from home” lemonade.
The next virtual Special Interest Group session that will focus on commercial lines will be on Thursday, August 6, at 1 pm ET. Registration for that event can be found here.
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