Are your customers confused by claims? Puzzled by policies? Well, you’re not alone.
We can all agree that insurance is tricky business – especially in the current climate.
The pandemic highlighted that fewer and fewer policyholders have the right coverage in place to protect themselves, their family or business. In some cases, policyholders were shocked to discover that their coverage did not provide protection against the fall out of the pandemic, and in any case the insurance industry now has a perceived protection gap which it must find a solution to remedy.
And that means it’s a false economy. Unless insurers are 100% sure of the value they provide to their customers beyond the end payout, they’re in a constant tug of war with their customers in which they’re reduced to appearing little more than guardians of their clients’ rainy day funds.
With the fallout from COVID-19 severe and ongoing, now is the time for the insurance sector to make lasting change and prove its worth to a society looking to tighten their belts. It’s not about being an added expense for businesses and individuals but, instead, becoming an ally in today’s world.
New ways of working
The exponential growth of the gig economy has been a hot topic for some time. Gig economy workers tend to have few or no benefits and feel an increasing pressure to not take time off – even if it is without holiday or sick pay. And it’s the same story for freelancers and the self-employed.
In fact, IPSE calculates there is a record high of around five million people, just over 15 per cent of the UK work workforce, who are self-employed, of whom freelancers account for half. Moreover, 33 per cent of self-employed people could not survive for more than three months if they lost their income. Not to mention the vast amount of people who, since COVID-19, have been forced to work from home – highlighting the need for individual cybersecurity protection.
For insurers, it’s about staying relevant and adapting to these changing ways of working so that they can develop an offering that resonates with the workforce of tomorrow. Innovative start-ups are already racing ahead here to create flexible and short-term insurance solutions that can be switched on or off as and when is needed – instead of paying a premium for the whole year. If other insurance businesses don’t follow suit, they risk falling quickly behind.
Make the most of your data
This is as true today as it was ten, twenty, even thirty years ago. The difference now is that firms have the technology in place to collate and analyse that data more effectively and, for those doing it right, in real-time. It’s data that will be the difference between your firm falling short in the “new normal” or becoming a firm ally of your client.
After all, the successful insurers of the future will use data to encourage positive behavioral change for their clients and their clients’ businesses. Take cybersecurity, for instance. Instead of creating and assigning a policy to an organisation worried that they may, or may not some day get a breach, why not take a more proactive approach?
Think of insurance as having a front and back end. The front end helps the client to prevent a cybersecurity breach, using data to analyse any weak spots and fight off any cyberattacks in their infancy. The back end, then, will react to the client when a claim is made to resolve the problem and payout.
On the one hand, it means the insurance firm is paying out less and less frequently. On the other, you have established a client that understands the value you bring to their organisation whether there’s a breach or not.
Planning for the future
The toughest challenge for insurers in the post-pandemic world will be to prove they have tangible value. After all, businesses and individuals will be looking to cut back on costs, not invest in new external organisations or policies.
It’s very difficult to explain to someone why it’s worthwhile making arrangements for an event that may never come. By adapting to the future of working and establishing a relationship in which the value of your firm is felt every day regardless of an incident taking place, insurance firms can become trusted advisers for businesses and fundamental to their successes.
By James Harrison, UKI head of Insurance at Dun & Bradstreet