(CU)_With the insurance industry involving multiple complex business processes, such as the renewal of new policies, administration of existing policies, addressing customer inquiries, processing claims, and much more, it is not surprise that the COVID-19 pandemic poses a series of challenges for insurers to maintain their operations as usual.
Multinational professional services network KPMG published a report on an analysis of operational challenges faced by insurers during the COVID-19 pandemic.
One of the key outcomes of the disruptions caused by the pandemic is the mass shift to remote working. According to the report, in most countries, nearly 90 per cent of the workforce are now working from home, with only a fraction of staff on-site for critical jobs that cannot be done remotely.
It also points out that in countries such as China, where the virus was first detected back in 2019, although a noteworthy number of staff have begun returning to office, however, they do so on an alternating A and B team patterns.
Although there were bumps at the beginning, the setup is now largely working well, with insurers having sufficient hardware and remote connectivity systems standing up. This rapid remodelling however means that there is a need for clear, effective and frequent communication from leadership, which is essential for the staff to be informed and understand their priorities.
Another big challenge faced by insurers is the huge spike in customer contacts, may it be about travel insurance, critical illness, business interruption or other issues, customers overload insurers with queries. For example, in the United Kingdom an insurer told KPMG that there has been a staggering 1000 per cent increase in customer inquiries, claims and complaints during the pandemic, particularly related to travel and health insurance.
In order to respond to these queries, insurers first had to inform customers that they may contact them by phone with only the most urgent inquiries, while they may route everything else online. Moreover, insurers had to move as many of their staff into claims as possible, even if that is not their usual job. On the other hand, with the decrease in claims in areas such as motor insurance during the pandemic, some of the specialist teams also had to be adjusted, as they had to transfer staff out of areas which have less claims into hotspots like travel.
Amidst such chaos, insurers with more advanced digital claims, underwriting and administrative processes are in a much stronger position than others, the report noted. Those who do not have such facilities or those who rely on unpolished technology workflows are likely to be struggling more. Along with the surge in customer contacts, insurers also have to keep in mind that their own staff numbers may drop if more employees fall sick with the virus. According to the report, in badly affected countries, there have been estimates that available workforces could shrink by 30 – 40 per cent in a worst-case scenario.
All of these factors raise another key issue of potential fraud, particularly fraudulent insurance claims. There have been reports around travel claims, where customers who have had their trips cancelled by their travel agent or airline, come to their insurer and fabricate an illness to try to secure compensation. On the other hand, remote working has also prompted a significant rise in hacking attempts by bad actors who attempt to obtain customer data, siphon off financial information, or exploit vulnerabilities for various purposes. This means employees should be given clear guidelines on best practices and remote connectivity protocols, in order to avoid these risks.
On top of all these challenges, we also see a rise in social responsibility, with insurers stepping up to help their policy holders in new ways. For example, some insurers provide grace periods for premium payments, some waive off certain parts of their claims processing, while others reduce the number of documents required. However, this requires insurers and their operational processes to adapt and adjust according to the circumstances.
Despite such challenges, the insurance sector appears to be holding up well, although pain points do show at times. According to the report, how much worse these challenges become depends on the efficacy of the actions taken by insurers to address them, as well as how severe will the pandemic would become in the coming days.
