The COVID-19 pandemic is forcing insurers to rethink their organizational models and adjust to a digital new normal. Insurers are adapting to virtualized work and revamping workflows that previously required in-person, on-prem interaction.
Insurers also have to keep up with agent, policyholder, and employee expectations. Many insurers have some digital capabilities that have helped with these needs. Still, the industry was behind on creating multi-channel engagement and seeking help with digitization efforts from third-party vendors and startups—even before the current crisis. What do those relationships look like now, in the middle of a pandemic?
Not a Great Time to Buy or Sell
Insurers are grappling with new workforce realities: enabling remote work capabilities that may not have existed previously, canceling travel plans, and revamping their disaster recovery and business continuity plans. What’s more, regulatory pressures are mounting, and the economic outlook is uncertain. Some states are pushing for the insurance industry to cover business interruptions that the pandemic has caused; this will consume insurer attention, resources, and possibly capital, even if it never comes to fruition.
Many insurers are pumping the brakes on new innovation initiatives and vendor relationships while they course-correct their organizational models. It’s unlikely that insurers will seek any new technologies or partnerships outside of their immediate needs.
But a Great Time to Show Value
InsureTech startups may be able to stay afloat by providing value-added services to insurers outside of their primary platform or toolset. They may be able to lend their expertise in areas like AI or predictive analytics. I recently talked to a startup that is doing ad hoc consulting work for insurers, helping them fine-tune predictive models to predict outcomes with greater accuracy based on the current pandemic.
Startups may provide insurers relief from some of the paper-intensive, in-person processes that the pandemic makes difficult or near-impossible. They may also be able to provide data, analytics, and digital capabilities to enable self-service and ultimately create a better end-user experience.
One example where this is happening by necessity is in life insurance: Many insurers are suspending parameds to maintain sales during social distancing. Principal is using medical data from startup Human API to underwrite individual disability policies after suspending lab tests and physical exams through May 31. More examples of startups with potential value to insurers are available in Novarica’s report InsureTech for Insurers: 200 Startup Profiles.
An Automated Future?
Insurers are already rethinking processes and systems that rely on humans. The pandemic will likely accelerate moves from on-prem to cloud-based systems, an area in which startups have substantial expertise. Many insurers will also end up replacing manual and paper-heavy processes, given the short-term restrictions on face-to-face meetings.
Down the road, the investments insurers are making today could free them up to focus on areas like straight-through processing, optimizing products for online sales, and increasing paperless workflow and efficiency. It’s too soon to say, but this shift in priorities could eventually renew attention to innovation initiatives and startup partnerships.
More information on how insurers and technology vendors can prepare for disaster recovery and business continuity is available in Novarica’s recent brief, Business Continuity Planning and Disaster Recovery. Novarica has also published numerous blog posts, executive briefs, and articles related to COVID-19; a full roundup is available here.
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