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6 Big Changes to Insurance from the COVID-19 Crisis

COVID-19 is already shaping the future of how the insurance industry operates in the areas of automation, beneficiary management, and digital services, according to a new report by Forrester.

“The effects of COVID-19 on consumers, businesses, and insurers will outlive the far-reaching and severe impact that the virus has already had,” writes Forrester analyst Ellen Carney. “Along with a new lexicon – think ‘social distance,’ ‘hot zone,’ and ‘flatten the curve’ – and new acronyms like PPE, COVID-19 will also change the insurance industry irrevocably over the coming decade.”

Carney focuses on six primary areas of change:

1. Contract workers and robots will reduce the need for workers’ comp. COVID-19 is accelerating the transition from employees to contractors. In 2014, 69% of small business owners purchased workers’ comp insurance; by 2018, it was only 47%. Additionally, in industries like construction and local logistics, robots and drones are already replacing workers who are currently sheltering in place.

2. The success of remote work will drive companies out of the real estate business. The requirement that employees work remotely during the pandemic has proven the effectiveness of the remote work business model to companies that were formerly reluctant to adopt it. Some large employees are already questioning whether being in the real estate business makes sense, a dynamic that will filter down to smaller office rentals as well. “While loss of rent coverage is an option, not all policies cover it, meaning smaller landlords need to understand just what they’ll be covered for with respect to widespread vacancies,” Carney writes.

3. Digital services are put to the test. Insurers that have invested in AI-powered and mobile digital services like chatbots and mobile photo-claiming features are seeing customers beginning to adopt them. Smart businesses are promoting the use of these features as part of the sales process.

4. Usage-based insurance booms as consumers question traditional coverage. With many workers off the roads, auto insurance coverage is looking like a waste of money. “While some carriers are proactively pitching low-mileage plans, new work-from-home and big economic pressures will spur new consumer, insurer, and regulator thinking about usage- and mileage-based coverage,” Carney writes.

5. Survivor/beneficiary management provides an opportunity for insurers. In the pre-COVID days, insurers treated beneficiary and survivor services as a simple matter of filling out forms. Today, they’re using them as an opportunity to offer “concierge services” to help families navigate through settlement processes. “Just as 9/11 spurred a drive to keep beneficiaries update, COVID-19 could change the account opening process, spurring frank conversation about getting things in order now, along the lines of Fabric’s ‘Think Like a Parent’ message.”

6. Household and business cash flows shape insurance payment plans. With many Americans out of work and waiting for unemployment checks, household cash flows are tighter than ever. Insurers are working with their customers to offer premium deferrals and “contact us and we’ll work out a plan” messages. However, even before COVID-19, four in 10 Americans were unable to pay a $400 emergency out of pocket. Options like Selective’s PaySync flexible payment plan are great examples of how insurers can help consumers with personal lines P&C and individual life insurance.

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