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In the same way that the world is watching governments across the globe respond to the COVID-19 crisis, it will be watching the insurance industry to see how effective it will be in helping minimize the damage. As the entity that individuals, businesses and communities turn to in times of economic strain, the insurance industry finds itself under great pressure to demonstrate its value.
Insurers are in an extremely precarious position making them susceptible to multiple risks including financial, cyber, reputational and litigations risk, just to name a few. According to McKinsey, the global insurance industry is intertwined with a broad spectrum of economic activities, as such, insurers – unlike other businesses – must respond to the COVID-19 crisis from several fronts including as employers, claim payers and investment managers.
As employers insurers are faced with the need to balance between the continuity of their business and the employee welfare. Deloitte recommends that the first concern for insurers be protecting the health and safety of their employees and distribution partners. With the work-from-home policy now in full force a crucial step would be to ensure the seamless transition to working from home for its employees.
Success requires putting in place a remote working policy as well as providing employees with the necessary tools and resources to remain productive while working from home. It is also necessary to open up multiple channels of communication – email, phone, intranet etc – to keep social interactions going and employees updated on any new development including policies and procedures that might impact their work or personal lives.
As claim payers, insurers should expect to be flooded with inquiries and claims as the crisis becomes worse. This will definitely put a strain on their systems as customers face long waits at thinly staffed call centers. And as discussions veer towards what is or isn’t covered, friction between the insurer and the customers is bound to escalate.
Depending on how this conversations go, the insurer faces a reputation risk as well as litigation risk. Coming off as being neglectful or dismissive of customer and employee concerns or safety might open insurers up to litigations. Insurers thus need to preempt such situation by putting in place a solid communication plan to proactively communicate with customers responding to inquiries and providing timely updates for positive impact on customer experience and building good will.
According to McKinsey, COVID-19 has caused significant downside for global markets matched only by the dot-com bubble burst and the global financial crisis. The World Bank reports that the growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020
As investment managers, in response to the current financial market volatility, insurers need to review and if necessary revise their forecasts, models and assumptions for business planning and analysis. Here as well, insurers need to put in place a solid communication plan to keep investors updated on their approach, changes in the various products, and remind them on the need to remain focused on the long-term portfolio goals.
Beyond these, Turnkey Africa has identified 8 ways in which COVID-19 will impact the insurance industry. This include;
In a subsequent article to be published next week, we address this 8 areas as we seek to share some insight into how insurance companies in Africa are being impacted by this crisis and outline some of the options of responding to the current situation and minimizing its long-term impact on business.
Turnkey Africa Limited is a leading Pan-African insurance technology and services provider. We develop, supply and manage end-to-end insurance software solutions and services for the insurance industry.We exist to open up possibilities for our clients to capitalize on new market opportunities and changing customer demands.
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