13 May 2020

Why a Strong Digital Backbone is Critical for P&Cs in Times of Crisis

The novel coronavirus has created a crisis situation in which a strong digital approach is essential for insurance companies. Yet a pandemic isn’t the only situation in which a sound digital infrastructure can benefit an insurance company and its staff.

By building robust digital assets and having the capabilities to use them, insurers become more responsive and flexible in any crisis situation. They are better equipped to manage risk and meet customers’ needs as a result.

Staying in Touch With Customers and Handling Claims

A crisis like the current coronavirus, which is managed by quarantines, shelter-in-place orders and social distancing, poses challenges for customers. They need help with claims, but may be reduced to remote communication only—with their insurer and with everyone else.

A strong digital backbone allows P&C insurers to maintain customer communication and handle claims more effectively both during and after a crisis.

Unify Your Teams

Many insurance companies operated for decades in silos. Each department’s work proceeded independently, without reference to tasks being carried out in other departments even if those tasks dealt with the same customer or claim. Much of the work was done manually, in ways that were difficult to digitize and even harder to share between proprietary digital systems, says Colton De Vos at Resolute Technology Solutions.

Already under siege before COVID-19, the siloed approach has become a major liability during the current pandemic.

“The legacy model of providing services through separate functions, that is marketing, distribution, claims, etc. managed by different people with different goals, is no longer going to work,” writes marketing consultant Sam Makad.

Rather, insurance companies will need to rely on the cross-communication tools they already have and build in new capacities for unified efforts in every area, from underwriting to claims management and customer retention.

Doing so allows the insurance company to be the expert in the room when it comes to handling customers’ claims. The customer may be nervous or confused, but the insurance company is informed and collected — even if its own teams and resources are scattered.

Consider a Customer Perspective

Not all attempts to improve digital capacity pay off in improved customer relations. These failures often occur because the insurer applied digital improvements to discrete functions of the business without considering their effect on the customer’s journey.

While insurers may have sound reasons for thinking of their business in discrete terms, this perspective “overlooks the fact that from the customer perspective, the experience is often a single journey,” according to Tanguy Catlin and fellow researchers at McKinsey. For instance, while the insurer may see an agent and a claims adjuster as two wholly different roles, both are “the insurance company” to the customer.

To round out digital success, focus on results as experienced by customers, as well as impacts on the company’s teams. Such a perspective is particularly valuable during a crisis, when customers may be frightened, frustrated or lack access to key information.

Maintaining the Flow of Business

During a crisis, insurance companies play two roles. They’re often on the front lines of crisis management as they help customers address losses, risks and claims. Yet as employers, they may also be responsible for protecting the health and safety of their own employees from crisis-related harm.

The right digital tools can allow insurance employees to work remotely, protecting their health and safety without compromising work quality.

Fast-Track Digital Transformation

The current crisis has forced us to rethink both our personal and professional lives. Businesses, too, are quickly reimagining the way they conduct day-to-day affairs.

“It’s been imperative to digitally transform our places of work and education to be able to operate effectively,” observes business and technology advisor Bernard Marr, author of “Artificial Intelligence in Practice.” For insurers to stay one step ahead of the competition, digital transformation is essential.

While crises often spur caution, investing in digital transformation now may be exactly the right risk to take. “Now more than ever insurers should keep investing forefront in their minds so that they can be prepared for the future,” says Laura J. Hay, global head of insurance at KPMG International.

While different insurers will prioritize different aspects of digital transformation, Hay recommends looking at a few key areas. These include the ability to fully support remote work for staff, to reinvent customer service and similar departments that rely heavily on human workers and to make more data and applications accessible by placing them in the cloud or on platforms that can be accessed from any workspace.

Use Technology, Be Human

A strong digital setup means insurance managers and team leaders can keep staff on track without exposing them to additional risk of catching COVID-19. Yet the tools themselves should be supplemented by a deeply human approach to leadership, writes Grant Freeland, senior partner and managing director at Boston Consulting Group.

Expanding this human element to customers can boost customer confidence and retention as well. A robust digital presence allows for better communication and transparency, which can provide customers with a sense of relief during a crisis as well as with key support.

“When customers are separated from the people and the processes that create value for them, they come away feeling like less effort went into the service. They appreciate the service less and then they value the service less as well,” says Ryan Buell, associate professor at Harvard Business School.

Building stronger digital connections can increase transparency and boost customer confidence both during and after a crisis. It demonstrates an ethic of care that customers and the public value highly during tough times.

“Caring about others is one of the hallmarks of leadership, regardless of the business you’re in,” says Freeland. Building an ethic of care and compassion allows workers to stay focused and manage risk. It can also help teams transition to a post-crisis world, handle lingering anxieties and upheavals and build a better company.

Best Practices for Building a Digital Backbone

A crisis may not feel like the time to try new things, especially when social distancing and similar orders make it difficult to gather the staff necessary to make an onsite change. Insurers can, however, take several steps to plan, test digital options and expand their existing capabilities.

Observe and Embrace Already-Growing Trends

Historically, crisis points contain the seeds of tremendous growth and innovation. World War II, for example, changed the way U.S. culture treated women in the workforce and also led to innovations in engineering, electronics and antibiotics that transformed the work and home lives of millions. The fruits of these innovations were reaped in the decades following the war, but the seeds were sown during the crisis itself.

In today’s world, many of the seed innovations for post-pandemic prosperity are digital. Artificial intelligence, already embraced by some insurance companies, offers several opportunities for risk management and business growth during and after an active pandemic response.

For example, AI-enabled platforms can connect remote workers with colleagues as well as workers with customers. The combination of AI and big data can help companies better understand consumption patterns and provide the personalization customers desire, say François Candelon and colleagues at the BCG Henderson Institute.

Insurance companies that observe and embrace digital trends like AI, insurance ecosystems and big data analysis improve their ability to protect workers and conduct business today. They also position themselves for growth once the COVID-19 crisis has passed.

Look Ahead

During a crisis, our perspective tends to be on the here and now. While a focus on the moment can help us survive an imminent threat, it is not ideal for building a path out of the crisis or for rebuilding a new future.

“Crises often mark strategic inflection points, and a necessary focus on the present should not crowd out consideration of the future. The key questions become, what next, and with what consequences and opportunities?,” Martin Reeves and colleagues write at the BCG Henderson Institute.

In a crisis, the right tools and preparation make all the difference. Although building a digital infrastructure during a pandemic is challenging, insurers that attend to their digital needs now improve their ability to manage risk and respond to customers effectively.

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