As the trajectory of COVID-19 takes shape, so too do the strategic responses the insurance industry is taking. With the disease set to peak in mid to late April in most states, three clear themes are taking shape as the insurance industry deals with the aftermath of a global pandemic for the first time in modern history.
Automate, Automate, Automate
As the pandemic swept around the world, the one effective tool countries had in their arsenal to combat its spread was a lockdown – a reverse quarantine to isolate the healthy. This exposed a problem in many supply chains: some countries simply do not have the infrastructure to support a public working from home long term. This has led to numerous interruptions in supply chains and offshore work.
Companies are now looking to relocate that offshore work back to the United States, which leads to the question of manpower. We simply don’t have enough people to accommodate all of the work. Fortunately, there is an answer: automation. Having taken a back seat to machine learning and other forms of artificial intelligence (AI), robotic process automation projects are poised to accelerate. (This is one of the main capabilities Instec is building out in its new underwriting product). Combined with tools to automate repetitive tasks, automating basic rules will allow work that is currently offshore to be relocated back home, eliminating a potential source of failure and increasing the ability to scale.
Take the Long-Term View: See the Opportunity in Times of Crisis
While the immediate economic effects of the pandemic are dire, they are only existential crises to companies on the edge. While workers’ compensation and general liability books are most at risk in the near term, new opportunities are emerging. Some are betting that workers comp will rebound as offshore work is relocated back to America and workers are re-employed. Cyber is set to increase as more of the population works remotely. And home delivery services represent a huge opportunity for commercial auto fleet insurance.
Many companies are laying the groundwork now, not only for these emerging opportunities but also for incursions into competitors’ books for customers who are unhappy with their current coverage. In every time of crisis, opportunities abound.
Replace the Weak Link Before the Chain Breaks
Companies continue to learn the hard way that suites are not the core system solution for everyone. All suites have a weak link, a component that is just not as good as the others. And most often, that weak link is policy administration. While claims and billing can reduce operational expenses, it is policy administration that drives the revenue generation that’s so critical in today’s environment.
We continue to see high failure rates for policy administration projects among commercial insurers. For many of these, the inability of systems integrators to operate onsite during the current lockdown has exacerbated the problem. These insurers are beginning to realize that best of breed solutions with rapid implementation processes will be critical to their ongoing success. And the evolution of APIs and microservices has made this approach easier.
(During these most challenging of circumstances, Instec continues to deliver strategically critical projects. We currently have two 90-day implementations, conducted during the height of the pandemic, that are nearing completion with no slippage).
We will get through the pandemic as a company, as an industry, and as a nation. One thing that never ceases to amaze me is just how creative and innovative America is. Nowhere is that more evident than in the insurance industry, which is more vital than ever to the economic recovery that awaits us. By automating, thinking long-term, and replacing the weak link, among other strategies, many of our clients are building a more prosperous future during this most difficult of circumstances.
Kevin Mason has worked in many aspects of software development since 1981, including roles as product strategist, software development methodologist, project manager, and technology architect for companies such as Cincinnati Bell Information Systems, SHL Systemhouse (now part of EDS), AGENCY.COM, and GENECA. He joined Instec in 2008 and is responsible for development associated with all products. He holds a BA in Political Science, from the University of Iowa and an AS in Computer Science.
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