Insurers can be a port in the storm for people during uncertain times, but they must shift their narrative and reimagine their offerings.

More than six months since the coronavirus pandemic thrust the world into lockdown, things continue to be anything but normal. It’s true, the global health crisis has caused tough times for everyone, but it’s also demonstrated our resilience and adaptiveness.

Our favorite restaurant foods and groceries are brought straight to our doors. Many schools are staying closed, but online classrooms are open for learning. Even music performances and concerts have gone virtual, thanks to Twitch and Fortnite.

From health care to hair care, retail to real estate — industries have undergone rapid transformations in business and service models to adapt to this new reality.

Insurance providers, too, must accelerate change to prepare for radical shifts in the way we now live our lives.

Insurers have long grappled with the most effective uses for the new, broad data capabilities and technologies we now have — and the need to prioritize systems that shape safer behaviors and communities. Insurers can, and must, embrace data and InsurTech to ultimately improve safety for everyone in the post-coronavirus world, from protecting our homes to minimizing risks on the road, not to mention improving our physical wellbeing. To do so, insurers need to once again provide certainty in an uncertain world while also looking at how to make insurance “preventative” instead of “reactive.”

A port in the storm

Since the beginning, the insurance industry has supported people and businesses through crises and disasters, providing a safe harbor to steer out of harm’s way when in choppy waters.

But the insurance industry was caught off-guard by the coronavirus. From business interruptions claims to class action lawsuits over auto insurance premiums, the fallout from the global pandemic has poked holes in the hull of insurance’s promise to be a port in the storm.

Whether seeking transparency around the cost of risk or providing an ecosystem of other benefits, consumers are looking for more from their insurance — and insurance companies aren’t always meeting these needs. Prior to the health crisis, 77% of auto insurance buyers were either actively shopping or experienced an adverse event that triggered shopping for a new provider, according to a recent survey by J.D. Power. Fast-forward to the pandemic, and now half of auto insurance customers plan to either reduce coverage or switch to another carrier to reduce costs.

So, what can insurers and their partners do now to correct course?

Just like so many other industries, insurance has been slow to change and embrace new digital capabilities and transformation. One big reason is that insurance has centered around safety only as a reaction when something bad happens.

To strengthen the ability to provide safe harbor in a post-pandemic world, insurers must now rally around data and technology to not only reduce costs or help people in the event of the unexpected but also encourage customers to develop safer habits. Beyond helping people recoup monetary damages after a car accident, insurers should leverage connected technologies to notify drivers of poor habits behind the wheel or let their family’s know via real-time notifications when they reach their destination safely. By doing so, insurers can not only provide real value again during these uncertain times — the industry can evolve its offerings to become part of our proactive, consistent well-being. 

Reimagining a safer world

In medicine, doctors say prevention is always the best cure. In many ways, insurers now hold the prescription to a safer world. 

Broad data capabilities exist for insurers to draw lessons from the pandemic in real-time, as they adapt to best support customers in uncharted waters and shifting tides. Smartphone telematics are a new resource that can be used specifically to build safer customer habits — think not only driver behavior feedback with smartphone notifications powered by artificial intelligence and machine learning — but also notifying families and alerting dispatch for help right away when an accident does occur. More than a “digital witness” — insurance technology today should act like a “digital sentinel” and play a proactive role in keeping consumers safe. 

Insurance should also tap into the vast power of data networks — such as connecting household sensors with security — at a time when access to information about well-being is more important than ever. For example, preventing a homeowners’ claim during this pandemic is crucial. Now more than ever, the home is our sanctuary. Damage to the home from water, fire or theft can be catastrophic — as families have fewer places to go in the event their home becomes uninhabitable. What does this mean for insurance? 

Home insurers are now partnering with security companies such as ADP, providing discounts on these services and making sure the policyholder has an incentive to own sensors. These sensors continue to become more sophisticated, providing insights about the home to prevent things such as water loss, fire damage, theft and more. By prescribing policyholders the right technology to keep the home safer and provide peace of mind, insurers are unlocking preventative safety and cost efficiencies for all parties involved (insurers, securers and policyholders).

Emerging stronger after the pandemic

Embracing InsurTech promises insurers not only the opportunity to stabilize from the global health crisis, but also reimagine their insurance offerings for a post-pandemic world. 

Imagine for a moment what it must be like to be a frontline worker during a global health crisis. Every day, men and women are putting themselves at risk to keep essential services — such as groceries, package deliveries, healthcare and much more — up and running. Yet even in progressive “pay-as-you-drive” auto insurance models, they’re penalized for driving themselves into harm’s way to keep our communities chugging along. 

Even though there are fewer cars on the road today, people are driving even faster and more carelessly than before. Once again, the needs of essential policyholders are not being met by the insurance models of old. And once again, insurance now holds the prescription to a safer world if the industry is ready to embrace change. 

Driving telematics and behavior-based insurance models hold the key to both fairer policies and safer driving. Using new smartphone and onboard technologies, drivers can receive real-time feedback on their actions behind the week to keep them safe as they’re driving. In this model, policyholders aren’t rewarded with lower costs for driving less, but for actually being safer drivers. For policyholders, that could mean better understanding weak driving behaviors and improving them, or peace of mind that their teenagers are being safe behind the wheel. For insurers, that safe driving, in turn, could be rewarded with lower costs. 

Just as the world is grappling with how to deal with coronavirus, providers need to rethink the role of insurance and shift from reaction to prevention. Today, the business model for insurance revolves around retention — and fairer, tech-powered pricing models are the new retention strategy. That means using broad data capabilities, telematics, technology partners and more to provide more preventive safety resources along with peace of mind for policyholders.

By doing so, insurers can reframe the conversation and create a new category for insurance that not only provides safe harbor but actually helps make the world a safer place.

Source: Reinsurance News