Page 22 - Insurance Times April 2020

Insurance industry canlook positively at have to take up tasks of efficiently, yet, diligently managing
claims, reviewing business continuity plans, taking efforts
this crisis situation as an opportunity, to keep the customer confidence intact, maintaining
draw lessons from the crisis and work on investor confidence, adhering to regulatory prescriptions,
making insurance industrymore and managing litigation, if any. Covid19 would be a game
sustainable. Something good comes out changer for many businesses including insurance. The
industry willneed to shift to exposure based pricing from the
of every crisis. experience based method. Product design and pricing would
have to be more actuarial based. Inefficiencies and gaps
a global pandemic could cause large losses across a variety with respect to technology, systems, products, processes
of different business lines and in different geographical and human resource inefficiencies will have to be plugged.
locations. There could be cross accumulations due to Would the connected global economy useful in handling the
property losses business interruption claims, marine losses, crisis for insurance industry?
workers’ compensation claims and even liability claims.
Covid 19 coronavirus pandemic has provided a lesson that
The major challenges that insurers will have to some disasters maynot remain localised, canengulf the
address on priority are: whole world and can last for a very long duration hampering
 Planning for smoothening the financial impact including the economic growth. While it is a fact that the connected
effects on results of operations, and Managing capital and global economy is the root cause for the pandemic not
solvency being contained in one country/ location it will also allow

 Being ready to adapt to, possibly, lower premium insurers across the world to gain from the collective
volumes due to lower level of economic activity knowledge sharing taking place across the globe while
managing the effects of Covid19 pandemic. The globally
 Understanding the gaps and making adjustments to the connected industry might, if need be, be able to consolidate
product features/ introduce new products through mergers and acquisitions especially in response

 Taking steps to keep consumer confidence intact while tothe capital, solvency and liquidity challenges faced by
adjusting premiums to cover unexpected losses in future certain stressed institutions. Global connections could also
help in having a more informed action plan for a quick
 Improving communications, both internal and external recovery for insurers and unified regulatory actions for
so as to enable the organisation to function effectively from
remote access during similar stressed times in future so as insurance supervisors in different countries. Possibly, the
to shape employee effectiveness and maintain client process of consolidation among regulators/ supervisors for
confidence by demonstrating a good corporate culture different financial services and establishment of a super
regulator could speed up as well.
 Investing in Enterprise Risk Management, modifying the
worst case/ stress scenarios and redrawing business There are two choices in crisis situations: fight or flee. Here
continuity plans comes the concept of “the fourth industrial revolution” in
 Reworking third party service provider contracts and picture. Because of the global connectivity and application
evaluate their business continuity plans of different technologies, the world did not come to a
complete halt in spite of long duration lock downs. ‘Work
 Strengthening the number of alternate work sites as well from home’ which was a phrase earlier used mostly in
astraining and enabling theworkforce to work from home. Information Technology industry became a norm during lock
Also ensuring maker – checker system for transactions down period for many other industries. Insurance industry

 Investing more in technology, qualified and action is no exception. This pandemic could accelerate induction
oriented human resources and training of technology into businesses and many of the ways to
function are likely toundergo a major transformation now.
 Tightening cybersecurity as operations in future would Many ‘new normals’ willshape up disrupting many activities
be controlled from multiple locations and devices through and ways of conducting business. Insurance industry
remote access. Also, Undertaking systems audit and canlook positively at this crisis situation as an opportunity,
undertaking tests using security tools to identify and deflect draw lessons from the crisis and work on making insurance
possible threats. industrymore sustainable. Something good comes out of
As and when the disaster eases, the insurance industry will every crisis.

22 The Insurance Times, April 2020