The Covid-19 pandemic has become a historic event that will be remembered forever. It is still too soon to quantify its economic impact, but there will certainly be consequences of great magnitude.
For companies in the insurance industry it is crucial to use this time to conduct an early analysis and rapidly adapt both business and operating models to this new world and new culture.
We anticipate the present situation will have negative effects on insurance entities that decide to remain inactive in terms of incorporating a comprehensive digital vision into their business models. The competitive advantage will go to those that do make decisions, have the courage and vision to understand the resulting changes and adapt to make the most out of them.
In recent years we have observed a sharp increase in the desire and pace to undertake digital transformation programmes in insurers. In many ways, Covid-19 is forcing firms to fully embrace this approach and continue to do so in the aftermath of the pandemic.
A recent survey from Accenture shows insurers that have fallen behind when it comes to innovating their business may lose up to 37% of their income by 2023. This shows how vital it is for companies to accelerate investment in technology solutions and digitise processes. It is becoming clear not only which companies have made the decision to face up to the challenge, but also which have started the process and which have not.
It is not an easy path. Insurers in Latin America using this opportunity to enhance their business, have had to overcome numerous obstacles to implement new strategies and ways of working. They have had to maintain operations, ensure the continuity of their main and essential processes – such as issuance, invoicing and collection – and, above all, adapt human resources tasks to work remotely. The biggest challenge will become more apparent during the mid-term period, since an average 5.3% GDP fall is expected for the entire region – the worst crisis in Latin America history as a whole.
The Covid-19 pandemic has given the regional market a unique pause in time, which has allowed each company a period of self-analysis of their situation and, looking forward, the chance to be quick in the decision-making process and move into a new setting.
Social distancing regulations have been imposed around the world, minimising physical contact and, therefore, promoting the use of digital tools. In insurance, many tools have also had an important acceleration in their use, and the challenge will be to maintain the use of many channels and make the contact with insureds and leads more human through the professional advice and knowledge of brokers.
Latin America has an abundance of insurtechs and that number has increased over the past few years. It is important these insurtechs play a part in the insurance ecosystem, providing technology solutions to automate processes and enable businesses to operate more efficiently.Charles Taylor InsureTech prides itself on being at the forefront of the insurtech boom in the region, which is redefining the business models of the personal lines insurance sector in Latin America and at the same time increasing the sector’s penetration and the volumes of business transacted.
The insurtech boom in the region is also leading to innovative, customised solutions in some of the more specialised, albeit traditional, insurance business lines. This is leading to a change in the social perception of the industry. Carriers are beginning to take advantage of big data analysis to cross-sell and have a 360° vision for each client, which is helping them to improve their relationships with brokers and improve their positions in the market.
What was then seen as the near future and a gradual process has quickly become the present. Technology changed from being important to being essential and having robust, comprehensive systems developed by experts is no longer optional but mandatory.
Doing nothing is not an option. The decisions made now are likely to be critical to the survival of many insurance companies and for a handful of the most innovative companies this presents a platform for growth, disruption and (sub)market dominance. Access to an “ecosystem” of technology, capacity and capability will directly link to an organisations ability to execute – which is where organisations like Charles Taylor InsureTech is ready and willing to step up to the plate to make these changes happen.
Author: Gonzalo Geijo, Commercial Director LATAM, Charles Taylor InsureTech
Published in Insurance Day 21 June 2020