The COVID-19 impact sends InsurTech investments through the roof

 By: Omar Abdulhafiz

Make no mistake, the COVID-19 crisis of 2020 is one of the biggest shockwaves in the history of business as a whole. And if we were to pinpoint the single most remarkable impact it had on business, it is that COVID-19 has pushed virtually every last major sector forcefully toward investment in digital transformation. The insurance sector, naturally, is no exception.

One aspect of this impact can be seen in the big fluctuation in InsurTech investment during the first half of 2020. According to a Deloitte report published earlier this year, InsurTech investment plummeted between March and April, but it skyrocketed between May and June (see figure below).

Source: Deloitte

In the coming sections, we shall briefly explore three main aspects of this impact that has further catalysed insurance providers’ investment in InsureTech.

Operational enablement

With the fast-paced changes undergoing during the current global COVID-19 struggle, operational innovation is becoming a higher priority than it has ever been. According to a recent article by KPMG, “operational enablement is a key focus of carriers’ innovation efforts.” They are more than willing to summon the help of InsurTech companies that can enhance and improve their operations to cope with the rising challenges.

Some of the most notable areas insurance companies across the major insurance sectors are seeking to improve include digital customer interactions in distribution, customer service, and claims management.  Additionally, they are working to find innovative ways to enhance their underwriting processes by utilizing new data sources and decision models. 

Process automation

Not far from operational enablement is the need for process automation. This is especially important for facilitating the duties of call centre operations. One especially notable area that comes to mind in this regard is Health Insurance. In times of emergencies like these, Insurance agencies’ call centres tend to get inundated with clients with healthcare facilities requesting insurance permission for all types of medical procedures, medication, or other, mostly financial, inquiries. This issue is thoroughly touched upon in a report by Deloitte that came out in April this year.

Digitalized remote workforce

It is quite astonishing how abrupt and unforetold disruptions can turn long-term wishes into inevitable solutions that must be rolled out and adopted in a very short window of time. This phenomenon in its brightest clarity when talking about the urgent need to shift quickly toward a remote work environment that engulfed vast swathes of the business world around the world. And of course, insurance was one of the most affected industries by this urgent situation.

Insurance in the New Normal

As we can see, the COVID-19 pandemic has driven the world into uncharted waters where the need for well-planned digital transformation has become more urgent than ever, and in a very short time. Frederik Bisbjerg, chief digital acceleration officer at Noor Takaful, an insurance company based in Dubai, wrote an interesting article on this matter. According to Bisbjerg, “COVID-19 has left the world in uncharted waters and in many areas forced a digital acceleration of companies’ product and service delivery processes and distribution channels.” This, in turn, has caused what he refers to as a “paradigm shift” where the old ways of working, or the long-held beliefs that some tasks require physical presence are decaying at a fast rate. Instead, there’s a fast-growing need to shift further toward a more virtual model of work. Furthermore, Bisbjerg contends that “the insurance customer is no longer the customer the industry has been used to.” He explains that the customer of today is getting used to carrying out most of their transactions remotely. This is either because they have to, due to lockdowns and social distancing, or simply because it is more convenient for them. Either way, what this means is that coping with changing customer trends and habits is an essential part of any successful digital transformation plan.

Either way, what this means is that changing customer trends must be met with equally adaptive solutions that help businesses, especially insurance agencies, adapt to the new normal if they wish to find a place in an increasingly competitive and volatile market.