The critical role of insurance technology in the time of COVID-19
Business owners and individuals do their best to plan ahead for situations that may arise unexpectedly. Insurance plays a key role in this preparedness by enabling us to protect our professional, physical, and financial well-being. But what happens when the insurers we rely on to manage and pay claims, and ultimately safeguard our families and income, aren’t prepared for sudden changes that impact their business operations? Over the past several years many insurers have invested in rapid response teams to address catastrophes. Unfortunately, these teams weren’t prepared for the invisible force of COVID-19. The pandemic has created a new sort of crisis for insurers that leaves consumers in the dark with limited opportunities to access their policies and important information online.
The challenges brought on by the pandemic have shined a light on the limitations of insurers who weren’t adequately prepared to operate in a fully digital, work from home world. At a time when visiting an agent’s office, or even the post office is not an option, millions of consumers spent hours on hold waiting for answers — answers that could have quickly been provided with an easy-to-use customer experience in a secure online environment. Had carriers not procrastinated investing in modern customer experiences, agile policy systems, and distribution platforms prior to the pandemic, they could have avoided the loss of customer trust and loyalty.
As difficult as the pandemic has been for everyone, it’s reminded us of why insurtechs exist — to drive innovation throughout the insurance ecosystem. While insurtechs have always seen digital transformation as a requirement for meeting the needs of modern consumers, many traditional carriers viewed it as a nice-to-have. Their passive approach to innovation left them unprepared to handle this moment in time. Insurance carriers are now scrambling to accelerate modernization efforts while insurtechs are thriving.
In an effort to retain their valuable customers, legacy software vendors are trying to dress up like insurtechs by saying they are “cloud” and “SaaS.” At the same time, insurtechs themselves are becoming an even greater threat, armed with significant public and private capital. Any good executive now has three more things keeping them up at night: ineffective adoption of technology, lackluster digital customer experiences, and insurtechs gaining momentum.
Carriers unable to adapt and accelerate their digital transformation goals will lose market share permanently. The more nimble and digitally-focused competitors will come out on top serving the needs of the post-pandemic consumer who won’t settle for analog, inefficient, and unresponsive insurance experiences when the alternative is so readily accessible. As a result, in the next 12-24 months, the industry is going to see a lot of big players rely on, and even acquire, insurtechs in a scramble to meet the needs of their customers and defend against the rising post-IPO insurtechs.