We know preparation is everything behind every successful activity. The insurance industry, probably more than any other, is used to thinking in terms of catastrophe. In every economy, insurance provides vital resilience in the event of the unforeseeable, giving people and businesses the power to move forward through problems that would usually stop them in their tracks and – hopefully – reach the other side stronger than ever.
Natural disasters, snap recessions, climate change, pandemics: in challenging times, insurers help whole industries back onto their feet, just as they help individuals after property loss or damage. Sometimes, though, those events reach a magnitude where the preparedness of the insurance industry itself is put to the test.
In moments of crisis like the one we’re all currently living through, our ability to offer our customers resilient data access and efficient digital processes while keeping our workforce safe and maintaining customer support and service levels can make or break.
The costs of being unprepared
In recent months, we’ve witnessed some significant consequences arise as the wave of crisis hits systems which are insufficiently prepared for black swan events like this. Of course, this is not unique to insurance – and in fact, some examples from just outside our own industry might be best placed to show the kinds of issues that we’re facing.
One story you may have seen back in early April was the widely-reported call put out by the Governor of New Jersey for qualified COBOL programmers. With the state’s unemployment processing capacity running on forty-year old systems, the influx of claims caused by COVID-19 overwhelmed their ability to keep up. While some reporters understandably had fun with the strange-sounding revelation that, in this day and age, we’re relying on decades-old computer systems, the consequences for New Jersey residents are serious indeed.
In the UK, equivalent systems saw their biggest monthly increase in claims since records began in April, and we’ve seen reports of delays in processing as a result. On both sides of the Atlantic, legacy systems which don’t have the scalability or agility to cope with extreme situations are compounding the problems people are experiencing in this crisis.
The private sector, of course, rarely has to deal with a volume of requests on the scale of the UK’s benefits system – but here, too, we are seeing how preparing only for the foreseeable can create issues. In a recent interview, the president of the French agents’ union for Allianz was bravely quoted as saying that the company’s remote working solution couldn’t cope with the demands of the crisis. He described a lack of necessary IT equipment and software licenses being the reason behind severe consequences on customer outcomes and staff morale. When processes fail, performance deteriorates and Allianz will not be the only insurer dealing with these difficulties.
At the same time, however, institutions’ digital self-serve offerings are providing a vital life-line, taking up the slack where telephone banking falls behind. Personally, I recently deposited two cheques using my bank’s app and my phone camera, rather than going to an ATM (and potentially coming into contact with people).. I reflected that this kind of joined-up digital service, which would have been astonishing just a few years ago, is now commonplace – and may be the reason many organisations are coping as well as they are with the current situation.
Collectively, as a society, we are getting a rapid immersion in how to interact digitally and virtually, and that’s going to significantly accelerate the digitisation of the insurance industry. The insurance industry is going to need to invest more because consumers will demand it and because there’s going to be tremendous cost pressure.”
The true front line of this crisis, of course, is not happening in our industry, but in the hospitals and community care efforts where medical staff are turning the tide on infection. For professionals in insurance, finance, banking, and IT, there is a chance to learn lessons about how openness, agility, and digital enablement can create resilience and perseverance, even during disasters that nobody could have planned for.
Tony Grosso, SVP Global Marketing and Communications at EIS Group