Almost a year after the first outbreak of the COVID-19 virus in Europe, the pandemic has turned out to be a catalyst for insurers to reassess their operations, technology infrastructure and physical locations as well as to revisit their strategies. On the basis of our conversations with insurance clients, we believe there are five overriding strategic priorities that, if addressed properly, will help insurance companies to emerge from the crisis stronger than before.
Coming through the crisis stronger than before: the five key priorities for insurers
Risk analysis and crisis planning are at the core of the insurance business. With policyholders – individuals and businesses – suffering as a result of the crisis, regulators and legislators expect insurance companies to live up to their responsibilities. Those that do not will likely face enormous reputational consequences. Getting it wrong is not an option. So far, insurance companies have weathered the crisis exceptionally well, largely thanks to investments they had already made in networks, applications, laptops and more. But the pandemic has also exposed various gaps and vulnerabilities (PwC, 2020).
The big questions facing leading carriers now revolve around how to prepare the organisation for the return to the office in this ‘new normal’, identifying the mid to long-term implications of the crisis and responding strategically. Several related questions are emerging within boardroom discussions and strategic planning sessions. Depending on the nature of each particular insurance business, exploring these questions will require considerable scenario analysis and option planning. On the basis of our conversations with insurance clients, we believe there are five overriding strategic priorities that, if addressed properly, will help insurance companies to emerge from the crisis stronger than before. These should not be new priorities – any good strategy should have included some or all of them already. However, COVID-19 has ramped up the urgency of these competitive imperatives.
Figure 1: Strategic priorities during the COVID-19 pandemic
Investing in the future of insurance
Central to every insurer’s purpose is ensuring trust in the insurance undertaking. After COVID-19, trust will need to be earned in a world more focused than ever on sustainability. Society will expect sustainable business practices to be fully embedded in every aspect of your strategy, so you should purposely incorporate these considerations in your planning.
The insurance industry is facing enormous challenges as a result of COVID-19. It is time for carriers to develop new business strategies, prioritise investments, rethink which industry verticals and customer segments to target, and develop products, services and pricing strategies for those prioritised segments. Doing so can help drive revenue.
Out of every crisis comes opportunity for competitive reinvention and differentiation. Today’s strategic rethink provides a catalyst for accelerating operational transformation, developing new business models and connecting more closely with customers. We believe that these five priorities offer a valuable starting point for capitalising on these opportunities.
