Group Insurance Post-Covid: The Way Forward
Introduction
As we pass the two-year mark since the start of the pandemic, we all want to believe that Covid is, or will soon be, in our collective rear-view mirror. When the pandemic took hold in 2020, group insurers rapidly pivoted to bolster their online presence, enhance the customer experience, and allocate substantial resources toward remote work. Although the industry did experience some rebound in 2021, particularly in regions where vaccine rollouts enabled more activity,1 future growth and overall organizational stability remain serious concerns. In this week’s blog, we examine some of the immediate strategies and future priorities that insurers are implementing to plan the way forward to regain productivity and sustained momentum.
The Pandemic’s Aftermath
The pandemic’s effect on the insurance industry was notable. From a U.S. life and annuity industry perspective, industry premiums fell almost 8% in 2020, but did bounce back by 8% in 2021.2 The industry will remain challenged by higher mortality rates but may experience growth if companies can continue to accelerate their transformation efforts.3 Group benefits products will likely lead the way.
The Group Insurance Industry’s Response
To counter these challenges, insurers have taken steps to improve the short-term industry environment and align key priorities to address more long-term obstacles.
Manpower
One immediate response has been a planned increase in hiring, due to more business volume and critical staffing needs. A recent Q1 2022 U.S. Insurance Labor Market Study said that nearly three-fourths, or 72%, of companies polled, are planning to increase staff in the next 12 months, particularly for experienced roles in product management and technology.4
Security
Other immediate investments include cybersecurity to counter the rise in cybercrime, especially phishing attacks, as work-from-home environments have made networks particularly vulnerable. More than more than 25% of recent cyber insurance claims are related to remote access being compromised.5
Business Transformation
For more long-term priorities, insurers know that they need to act on the following imperatives for greater stability, vision, and delivery:
- Realign cost structure and sharpening productivity. Insurers will need to optimize their current business models, capabilities, and structure, as well as align costs and improve productivity.6
- Supercharge digital transformation. Insurers should further accelerate their ongoing digital transformation efforts to achieve a strong digital enterprise.7
- Develop new revenue streams. Insurers will need to develop new products that reflect today’s evolving needs, strengthen customer retention, and customer acquisition efforts.8
- Prepare the workforce for the new world. Insurers must enhance employee productivity, innovation, and engagement for an upskilled and involved workforce.9
- Strengthen capital efficiency. For long-term capital management, insurers will require stable solvency, stronger shareholder backing, increased investment funds, and improved return on capital.10
Final Thoughts
The effects of the pandemic will reverberate throughout the global community for generations. For the group insurance industry, Covid was a catalyst for powerful transformation. The resulting operational revisions, strengthened customer relationships, and focus on innovation will highlight a new and exciting chapter in the ongoing evolution of group insurance.
1 “Creating value, finding focus: Global Insurance Report 2022,” McKinsey & Co., February 2022 pg. 7.
2 “Facts + Statistics: Industry Overview,” Life/Annuity Insurance Income Statement, 2016-2020, Insurance Information Institute.
3 Ibid.
4 “Technology, Analytics, Claims Staff to Grow, Says Study,” Kaitlyn Mattson, Digital Insurance, Feb. 16, 2022.
5 “Allianz Global Q&A: Cyber Insurance Trends, Kaitlyn Mattson, Digital Insurance, December 2021.
6 “Beyond COVID-19: Five Key Strategic Priorities for a Post-Crisis World,” PWC, 2020
7 Ibid.
8 Ibid.
9 Ibid.
10 Ibid.
