COVID-19 and the urgency of digitalization in the insurance sector
The COVID-19 pandemic has had a major impact on almost all economic sectors, and the insurance sector is no exception. As the pandemic unfolds, customers are increasingly focused on preserving their health, but as the social and health environments improve, the direct impact on the insurance market is becoming increasingly clear.
As the consequences unfold, insurers must start preparing for the future, accelerating the digitization of their operations and the planning of business opportunities for the future. For this turn to be effective, according to the analysis available in Oliver Wyman, which was based on the Chinese market, where this situation is already more advanced, it is expected that the different lines of business in the insurance sector will be impacted to varying degrees over time and that the direct impact is widely experienced in three moments.
At first, it is anticipated that new business will decline in most lines of business, as potential customers may lose some revenue and be hit by financial difficulties.
In a second step, there should be an increase in insurance claims, after insurable events following the pandemic.
The third step may be an increase in demand for insurance products: after the pandemic, people are likely to become risk averse and take out insurance to protect themselves.
Based on the analysis provided in Oliver Wyman: Covid-19 Considerations for insurers in Asia, the pandemic will affect the different lines of business and products – especially in the health area. In the future, increased awareness of mortality and health risks should result in an increase in demand for health and protection products in different markets.
In addition, if at the beginning of the pandemic,the sector’s path was to respond to the needs of customers and employees, accelerating the digital transformation of some insurance companies, at the present moment, it becomes evident that the pandemic has clarified the importance and scope of digital distribution channels and demonstrate how they allow you to respond and meet customer needs where and when they need it. With the context of the pandemic, the urgency of transforming some processes – such as the digitization of contract formalization, for example – became clear and the success of insurers will be directly related to the way they respond to their clients at the moment they need, adapting the business model to a post-COVID-19 world. We are sure that everything will be fine, but it is also certain that this will not happen if we do not change.