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Pandemic-Driven Tech That Will Become the New Normal In Insurance

In the early days of the pandemic, entire industries scrambled to find ways to conduct business while also adhering to social distancing and other measures necessary to protect public health. Nearly two years later, many of these adaptations have become routine. Some have even presented new opportunities for business, including insurance.

Digital transformation, already underway pre-pandemic, accelerated for insurers in the pandemic. Several of those adaptations are now common, expected and likely to stick with property and casualty insurance for the long term.

Is Remote Work the New Norm for Agents?

A pressing need for social distancing and other virus control measures pushed a large percentage of insurance workers to remote work. This includes not only employees of insurance carriers, but also agents and brokers who spend most of their time working with insurance customers.

At first, the change caused a great deal of disruption to work routines and home lives. As agents, brokers and insurance professionals adapted to remote work, they learned to accept, embrace and even enjoy it.

One Vertafore study, for example, found that only 15 percent of surveyed insurance professionals said they want to return to full-time in-office work. Eighteen percent want to work remotely full-time, and 67 percent prefer a hybrid work approach.

Insurance professionals are likely to continue relying on remote work even after the pandemic ends, and they’re not alone. “At least 16 percent of American workers will switch from professional offices to working at home at least two days per week as a result of COVID-19,” write Harvard Business School researchers Christopher Stanton, Zoe Cullen and Michael Luca. While the researchers warn that the change will come with challenges, they also note that many workers find benefits to a remote work arrangement.

Insurance agents and other professionals have embraced remote work. To address differences among teams and company needs, insurers will need to communicate with their teams to determine what balance of remote and in-office work best suits their needs and capabilities.

Remote work for agents and other professionals is likely to stay with insurers well after the current pandemic. After all, few industries are as prepared to reap the benefits of remote work as insurance.

“We’re already well-positioned as an industry to capitalize on a more flexible, responsive business model,” writes Sharon Emek, president and CEO of Work At Home Vintage Experts. Done well, remote work can support in-office work, increase productivity and give employees, agents and brokers more power to support customers.

Cloud-Based Platforms Become Home Base for Insurance

Cloud computing, already a topic of interest pre-pandemic, took off once pandemic-related shutdowns were announced. “We’ve seen two years’ worth of digital transformation in two months,” Microsoft chairman and CEO Satya Nadella said in late April 2020.

For many insurers, cloud computing was not a switch their company suddenly decided to make due to the pandemic; rather, they were already using cloud-based solutions for various parts of their business before 2020. In fact, the overall trend toward cloud use had been an upward one for several years prior to the pandemic.

When the pandemic hit, cloud-based computing became the alternative of choice for many industries, including insurance. It did so for several reasons. Cloud computing improved business resilience, made remote work possible and pushed advances in the use of AI, virtual reality and similar tools, writes Gaurav Aggarwal, vice president, global lead cloud, app and data security, at Avanade.

One study from the IBM Institute for Business Value found that insurers are rapidly turning to cloud-based platforms and systems. For instance, “81% of insurers are using cloud-based technology for their claims management systems, with over one-quarter using cloud exclusively,” write study authors Christian Bieck, Wendy Newlove and David Kwon.

As artificial intelligence, machine learning and similar tools become more commonplace, they’re also becoming more common features of cloud-based insurance work. Because AI and machine learning work best when exposed to vast datasets, they’re a natural pairing for cloud-based systems that connect seamlessly with the Internet, rather than residing within the four walls of a single organization.

Insurance has been historically slow to embrace new processes and technologies, particularly as the industry’s expertise is in considering and addressing risk. The pandemic forced many insurers to balance their natural caution against a pressing need to keep their businesses operating despite a significant change in the daily order of customers’ and employees’ lives. To make this change, many insurers put their efforts into expanding the cloud-based tool sets they already had.

Insurers weren’t alone in needing to make a rapid change, nor in choosing the cloud to do it. “Sectors that tended to be slow on the uptake of new technologies, such as government and education, were forced to accelerate their cloud usage so they could maintain operations efficiently during the lockdowns,” says Melanie Posey at S&P Global Market Intelligence.

For insurance, launching resources into cloud-based platforms and other tools is likely to be a long-term decision. Not only have these cloud tools made pandemic business possible, they also open up a host of new opportunities, such as cultivating digital ecosystems.

Building a Digital Ecosystem

Cloud computing and cloud-based platforms have become a home base for insurance companies. They have also spurred another digital transformation: the ability to build digital ecosystems.

Digital ecosystems allow insurers to collaborate with non-insurance partners to provide a single cohesive, end-to-end experience for customers. Because these ecosystems are flexible, they also allow for greater innovation in other directions, depending on the insurers’ goals.

One of the most exciting aspects of digital ecosystems is the opportunity to innovate in order to create an environment that best reflects an insurer’s key goals and build stronger customer relationships. Such innovation has also become part of the new normal in the face of rapid pandemic-induced change.

“The fallout from COVID-19 has intensified the focus on innovation. When growing your business face-to-face is restricted, you have little choice but to fall back on technology to maintain existing relationships but also to access new markets and grow your customer base,” says Joyce Chan, Hong Kong-based Clyde & Co. corporate insurance partner. The ability of such innovation to help reduce costs while supporting growth makes it particularly appealing, she notes.

One major site of digital innovation is in expanding insurers’ capabilities beyond their traditional focus on risk and coverage. Insurer ecosystems, for instance, may involve working with non-insurance partners to reach new markets by making coverage available at the exact moment the customer needs it — an arrangement that benefits both insurers and their customers.

Yet the COVID-19 pandemic made clear that “digital transformation was never about the technology,” as one IBM study puts it. Rather, concerns about digital transformation were often concerns about how the human workforce would adapt to the changes. Now that those changes are becoming increasingly normalized, concerns have shifted to boosting skills and resiliency among the human workforce in order to find the right balance between technological and human contributions to the insurance business, according to the study’s authors.

Few insurance professionals entered the field hoping for the chance to rebuild insurance in the face of a global pandemic. When the crisis hit, carriers, agents and brokers proved resilient in finding new methods to carry out business and connect with customers. These new ways offered a host of opportunities, which the industry will continue to seize in the future.

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