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04-12-2020 Blog: Insurance Industry Demonstrates Resilience in the Face of a Global Pandemic

Insurance Industry Demonstrates Resilience in the Face of a Global Pandemic

April 13, 2020 | Manish Khetan

According to BCG, “As the world mobilizes to mitigate the impact of the coronavirus, uncertainty abounds. One thing is clear, however: the COVID-19 outbreak underscores the need for business and society to be resilient and prepared — qualities that will be in demand long after public health has been restored.”

The COVID-19 pandemic is putting strains on businesses and individuals well beyond the scope of workforce health considerations. The full financial impact for insurers and insureds is unclear as we all navigate uncharted territory. The nature of insurance is to help individuals, businesses, and society become resilient in the face of risk so that they can recover quickly and with as little loss and pain as possible. But uncharted territory also brings new risks.

Nevertheless, across the industry, from healthcare to life to property and casualty segments, we see insurers supporting their policyholders during these challenging times. Healthcare payers are waiving costs related to COVID-19 and some P&C insurers are suspending non-payment cancellation actions. Insurers are taking care of their teams as well — for example, by extending employee leave when needed.

Mobilizing the Insurance Workforce

As in many parts of the world, insurers are observing guidelines from authorities, arranged for their teams to work from home if possible, and are coming to grips with the ways and nuances of remote working environments. With social distancing being in effect for much of the world until at least the end of April (and conjecture we may still be dealing with pandemic circumstances in the summer), the conditions of a temporary norm or maybe a new norm are unfolding daily. We have all just begun to test our organizational preparedness and functional resiliency. For now, the insurance industry seems to be in reasonably good shape regarding operations and services.

In order to help their policyholders, many insurers are also relying on their partners to be prepared and resilient as well. At Xceedance, our initial reaction to the evolving pandemic and its downstream consequences was to ask the fundamental question: what are the right actions to take now? Through this lens, the answer was clear. Be proactive and do everything we can to safeguard our team members across the world, and enable work-from-home capabilities quickly and efficiently — so we can serve our insurer clients productively, as they attend to the needs of their policyholders. We saw this approach as a test of agility and resilience throughout the value chain of our clients and our organization.

With offices in the U.S., Europe, Asia, and Australia, Xceedance moved quickly across regions to respond to the various recommendations and requirements from local authorities; In general, we were ahead of the oncoming outbreaks in various geographies. Starting in early March and before shelter-in-place requirements became stringent, we mobilized teams that were able to swiftly transition to working from home. Then, we focused on getting everyone else working from home, to comply with local social distancing instructions. Meanwhile, we also needed to address a host of external-facing requirements, such as ensuring secure connectivity for remote teams and maintaining service-level agreements, to minimize disruptions for the operations of our clients worldwide.

As an outcome of our organizational preparedness and resiliency, in some cases, we are actually taking on additional projects to support our clients during this challenging time, as they require critical support and backup for their dispersed workforce.

Growing Risks and Increased Claims

While insurers and their partners are coping operationally, the global pandemic is creating new business risks and increasing claims volumes. For example, Moody’s predicts a spike in cyber-security breaches with coronavirus-themed phishing attempts, malware risks, and disinformation campaigns and attacks that may degrade the healthcare response to COVID-19. Life insurers are moving slowly on new policies to limit coronavirus risk. And, in the midst of a dual threat of increased payouts and investment losses, a variety of mitigation scenarios are being scrutinized in all areas of P&C insurance. Additionally, the impacts on insurers will trickle down to a wide range of solution providers and other partners, indeed the entire insurance ecosystem. So, there is much to transpire and absorb in the context of the industry’s long-term resiliency.

The Way Forward

Often, inadvertent positives can materialize from trying times. Many insurers are now bound to revisit and reprioritize the scope and scale of digital transformation projects, in part to become more resilient in core operations and service delivery. Insurance regulators are looking at the current business landscape in a time of global disruption and evaluating changes to support more business being conducted online.

I’ll conclude with a couple more perspectives related to industry durability. AM Best believes the insurance industry is more resilient today to financial market downturns than it was during the 2008-2009 financial crisis. Lloyd’s confirms that its 330-year-old commercial insurance market is in a strong position to respond to the impacts of COVID-19 as well as support its customers and business partners.

At Xceedance, we believe the capacity for adaptability, recalibration, and inventiveness in the face of new circumstances embodies the resilience needed to support organizational endurance and growth. Insurers and their partners will work through this pandemic crisis and emerge stronger on the other side, to continue doing what they do best to protect their policyholders and society from risk.

Manish Khetan is chief operating officer at Xceedance.