The Impact of the Pandemic on the Insurance Industry

The Impact of the Pandemic on the Insurance Industry

We have certainly seen a fair amount of changes in our world due to the pandemic, but there is more to come.  The long-term impact is yet to be determined as we continue to adapt and learn from an unprecedented situation.  The insurance industry has already had to make some uncomfortable shifts. Businesses have downsized or closed, and claims against carriers are coming from every direction.

While there was no way to predict this type of activity in the market, the insurance industry will continue to adapt in preparation for future catastrophic events.

Coverage Forms

Restrictions and lockdown related to the pandemic have had a detrimental effect on businesses.  Many have reduced operations while others have shut down altogether, creating severe income losses and layoffs.

As a result, there is a surge of lawsuits hitting the courts with business owners suing insurance carriers for “business interruption.”  While some carriers have appropriately excluded this coverage from their forms, others may have found their verbiage to be a little too vague, leaving room for interpretation.  To better protect themselves in the future, carriers will likely be carefully reviewing forms to eliminate ambiguity around business interruption or other losses resulting from a pandemic.  Even as this seems like a reduction in coverage, it clarifies the exclusion of coverage.  Taking time to carefully word and better define coverage will provide agents the opportunity to communicate pandemic exposures better.

The Prominence of Remote Workplaces

While remote work has been around for a long time, it was not near as common now as it is now at the very beginning of 2020.  In compliance with COVID-19 restrictions, businesses needed to send employees to work from home as soon as possible.  This transition was a more straightforward fix for some insurance agencies. Still, others had to make quick moves to implement appropriate technology to keep employees serving customers outside of the office.

As much as it might have felt awkward and clunky initially, employees have become accustomed to the remote work style.  Virtual meetings, once a foreign idea, are now a regular part of agency communication.  Chat functions and online training tools reserved for rare occasions now are part of how agencies onboard, train, and stay in touch throughout the day.  Between the efficiency of eliminating travel and the technology readily available in the market, remote work environments are here to stay and will continue to be a significant part of the agency force from now on.

Industry Infrastructure

The silver lining with this pandemic is how insurance agencies quickly adopted and adapted to new technology.  Decisions deliberated for months (or even years) leading up to mandatory shut-downs were expedited in the interest of preserving the business.

However, the rapid adoption of technology also highlighted that the infrastructure required to support a massive wave of employees working from home was weak.  Employees attempting to run all their normal systems plus virtual meetings experienced poor wi-fi signals, dropped connections, and dial-up speed upload and downloads.  Service providers had to install significant upgrades to their central systems to support the sudden influx of users.  While some communities could remedy these issues in short order, many are still patching systems together.  For agencies to maintain the efficiencies that meet customer expectations, the infrastructure that supports online technology will need to continue to be updated and expanded.

While none of us can be sure when this pandemic will finish running its course and what the entire impact will be, the items above will be things to make note of as we work through the recovery phase and position ourselves for future success.

For more on this topic, check out the full episode of The Independent Agent here.