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. As we continue to adapt and learn from this unprecedented situation, we have yet to determine the long-term impact. The insurance industry has already had to make some uncomfortable shifts. Businesses have downsized or closed, and claims against carriers come in from every direction.
While there was no way to predict this type of activity in the market, the insurance industry must adapt in preparation for future catastrophic events.
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. Business owners are now suing insurance carriers for “business interruption.” Some carriers have appropriately excluded this coverage from their forms, but others have found their verbiage to be vague, leaving room for interpretation. To better protect themselves in the future, carriers should carefully review their 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 is far more common now. 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, which used to be reserved for rare occasions, are now part of how agencies onboard, train, and stay in touch throughout the day. Between the elimination of travel and advances in technology, remote work will continue to be a significant part of the insurance industry.
The silver lining with this pandemic is how insurance agencies quickly adopted and adapted to new technology. Owners expedited decisions that used to be deliberated over for months in the interest of preserving the business.
However, the rapid adoption of technology also highlighted the weaknesses in the infrastructure required to support a massive wave of employees working from home. Employees experienced poor wi-fi signals, dropped connections, and dial-up speed upload and downloads. As virtual meetings became more common, this became a huge issue. 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 quickly, many are still patching systems together. For agencies to maintain efficiencies and meet customer expectations, this infrastructure will need to be updated and expanded.
While none of us can be sure when this pandemic will run its course and what the full impact will be, we must make note of these issues as we work to position ourselves for future success.
For more on this topic, check out the full episode of The Independent Agent here.