Insurers want to spice up monetary and operational resilience
COVID-19 is causing insurers to focus their efforts on both the financial and operational resilience of their businesses face economic challenges created by the virus.
It’s no surprise that insurance prices are rising as the industry assesses the magnitude of the risks and losses associated with the pandemic. US ccommercial insurance The prices rose by Almost 10 percent in total compared to the same period a year ago, This is the biggest quarter-to-quarter shift since 2003. It will help insurance companies keep their balance sheets more stable.
This is a normal “market hardening reaction” as the unit price of the risk increases across the P&C lines. To some extent, this is also a cyclical response as prices tend to come under pressure when there is loss trends pretty stable or low, and the market hardens as risk and loss increase. This is one way the industry is returning to profitability and we will certainly see higher prices as the market continues to harden due to the scale and risks associated with COVID-19 and catastrophic events.
However, air carriers must also look beyond financial resilience and focus on their operational resilience as the effects of COVID-19 are sure to test this. Within a few weeks, the pandemic forced insurers to deploy and reconfigure their workforce for remote operations so that their operating and technology infrastructures had to function radically differently.
Long-term operational resilience
With such dramatic changes in such a short space of time, insurance carriers must first review their operational resilience in terms of risk, safety and costs and then adapt them to the new reality.
Because the market has changed so much this year, insurers will have to reconfigure their existing ledger to reflect these changes. The small commercial insurance market, for example, is fundamentally different than it was in February.
Imagine a restaurant owner who is much more reliant on delivery services today. Does this owner really understand the associated changes in risk exposure? Does the restaurant need new and / or different cover?
Aside from market shifts in existing coverage, the widespread impact of COVID-19 is causing customers to consider products that were once considered rare or esoteric.
For example, the event cancellation policies are getting a lot more interest. Customers became aware of this when Wimbledon received a large payout after canceling its famous tennis tournament. This is an area with great potential for new income.
Similarly, parametric insurance, which pays damages in response to the occurrence of a specific event, rather than covering the actual damage, is also receiving new attention. A parametric guideline was actually offered to cover business interruptions in the event of a pandemic, however nobody bought it. No wonder that interest in this and similar products is now much greater.
Migrate to the cloud now
Each of these factors together can help increase operational stability. However, long-term reliability is not possible without a faster migration to the cloud. It is now a must-have and the foundation to facilitate digital workforce operations, improve data security, bring new and improved products and experiences to market, and implement structural cost reductions.
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