The COVID-19 pandemic will eventually subside, but its impact on all levels of society will continue. We believe the macro-impact on the industry is mainly reflect in:
P&C insurance will be heavily affected by slowing economic growth.
Government anti-pandemic measures such as city lockdowns and traffic controls hit retail, transport, catering, tourism and other industries hard. Enterprise P&C insurance business was also directly affected. Amid slowing macroeconomic growth, P&C insurance for enterprises is expected to be adversely affected by corporate budget cuts. Personal business will also be hit by a short- term decline in people's purchasing power.
COVID-19 has challenged insurers to rethink the way in which they engage with customers, change their working arrangements.
To control the spread of the pandemic, the government instituted measures to restrict mobility and promote social distancing, which had major impacts on insurance agents' daily activities, including customer visits, recruitment, training and day-to-day management.
The COVID-19 has challenged insurers to accelerate their digital transformation.
Insurers have to fast forward their digital transformation and immediately look for means to engage digitally with customers. Insurers will also need to consider how to maintain human elements as part of customer experience while interactions become increasingly digital.
COVID-19 has not only disrupted the momentum but has also added in new challenges in the implementation of these programs concurrently.
Prior to COVID-19, insurers were in the midst of preparing for RBC2 reporting and implementing IFRS 17. COVID-19 has not only disrupted the momentum but has also added in new challenges in the implementation of these programs concurrently. As insurers adapt and change in response to COVID-19, they also need to be making adaptations and changes to their IFRS 17 timelines, or indeed re-plan to ensure they carry on the momentum. Allowing the situation to turn into a 3-6 months IFRS 17 project hiatus may put undue pressure on the project later in the timeline.
Industry need for talent has changed.
COVID-19, the disease caused by the virus, has had a strong impact on the insurance industry as a whole. But the storyline is not the same across the entire sector. Some areas are taking advantage of talent now available due to other industries (such as financial services, for example) freezing hiring or furloughing talent. Meanwhile, other insurance segments are themselves furloughing or decreasing staff.
Nearly half of insurance companies have changed their hiring plans due to COVID-19. More than eighteen percent said they anticipate or are on a hiring freeze. Carriers also said they are more likely to add technology and analytics roles during the pandemic than before.
Prior to COVID-19, the insurance sector was already facing a series of big changes, including the fact that a large population of its workforce is nearing retirement age. According to Federal Emergency Management Agency, only 4 percent of millennials are interested in working for the insurance industry. A preference for the technology industry, a generally negative perception about working in insurance, and lack of knowledge about how the industry functions are among the obstacles most carriers face in attracting new talent.
Meanwhile, digital transformation has changed the nature of work in the industry as well as talent needs. In underwriting and claims, for example, there’s growing demand for those with higher-level skills and a more entrepreneurial mindset to get the most out of analytics, AI, and other advanced technologies.