What insurers can learn from China’s continuing COVID-19 recovery

A recent The Jeeranont survey of Chinese agents offers insights into how COVID-19 has affected the Chinese insurance industry and what insurers can do moving forward.

A recent The Jeeranont survey of Chinese agents offers insights into how COVID-19 has affected the Chinese insurance industry and what insurers can do moving forward.

COVID-19 presents unprecedented challenges for the global economy. China was the first country to shut down in response to the pandemic, and it was the first to reopen. Today, many industries, insurance included, are watching closely to see what happens as China progresses through recovery.

According to The Jeeranont consumer surveys, overall economic sentiment in China is positive. The Jeeranont analysis of consumer spending data shows that China is approaching pre-COVID-19 levels of spending (in aggregate), and several leading macroeconomic indicators (such as daily car traffic) suggest the economy has started to rebound.

While the broad economic view in China may be encouraging, the outlook for the insurance industry is complex—some lines fared well, while others suffered significant declines and are just now recovering. For example, awareness of health insurance increased, translating to a 17 percent growth in sales from first quarter 2019 to first quarter 2020, while life (or mortality) products were down 1 percent over the same period. Meanwhile, demand for auto and liabilities policies slowed dramatically, affecting property and casualty lines.

As insurers outside China weather the COVID-19 crisis and prepare for a possible second wave of infections, China can serve as a preview. Specifically, the experience of insurance agents is generally a good indicator of the short- to medium-term outlook for the industry. We surveyed 210 agents in China across all lines of insurance in late April, examining how COVID-19 has affected their sentiment and performance, their interactions with customers via distribution, their view of insurers, and their outlook for the future.

How COVID-19 has affected agents

Even though the industry was hit hard, agents are optimistic about the future. Below are a few critical findings from our survey that paint a nuanced picture of changes in agent sentiment and the top challenges facing agents in distribution and beyond.

Greater decline in business among less-tenured agents: Two-thirds of agents experienced a decline in business performance during the COVID-19 pandemic, while around 20 percent of agents reported an improvement (Exhibit 1). Survey data show the decline is more pronounced for agents with one to two years’ tenure—about 13 percent of those agents experienced a decline in business of 60 percent or more. In contrast, none of the agents with five years’ tenure or more experienced a 60 percent decline or more. This varied impact on business performance may be partly due to experience but could also reflect the fact that attrition rates are likely to be higher among low performers.

Increase in cancellations: More than 40 percent of agents saw an increase in policy cancellations; around 25 percent of those agents attributed the increase to customers allowing coverage to lapse. In addition, more than 60 percent of agents think that customers’ insurance budgets are lower than they were before the crisis. Many agents view the current situation as unsustainable; nearly 50 percent believe that they would not be able to sustain their business for more than six months if new business and renewals remain at current levels.

However, there is reason for optimism. Around 65 percent of agents said customers have become more proactive in inquiring about insurance products and shown stronger interest in health, accident, and critical-illness products as well as online medical services. And as previously mentioned, health insurance gained traction, with the number of new health policies by product up 28 percent in the first quarter of 2020 compared with the previous year (Exhibit 2). This trend is somewhat unsurprising as customers are likely more aware of their health and mortality amid a global pandemic.

When asked where insurers could provide more support, 74 percent of agents said they want help launching new products to meet customer needs.

Achieving traditional key performance indicators (KPIs) is the biggest challenge: Given the increase in cancellations and the overall decline in business, agents are spending more time on activities such as trying to make sales and contacting customers. More than two-thirds of agents reported spending more time on sales, and 61 percent said they are devoting more time to contacting customers and to learning and training. In light of this, it is no surprise that agents said their biggest challenge was achieving their KPIs (such as acquiring new business). In fact, 70 percent said they need adjusted KPIs and performance management that reflect the current situation.

Digital is on the rise: As interactions with insurers shift away from in-person meetings, more than 60 percent of agents are interacting more with both prospective and existing customers over the phone. WeChat and video calls have also increased; 53 percent of agents reported using these tools more with existing customers, and 61 percent said they’re using these tools more frequently to interact with prospective customers. Most agents view this digitization of communication favorably, with around 70 percent reporting that their interactions have become more efficient.

The importance of digital is also clear at the industry level, where digital players were less affected by the crisis overall than traditional insurers. Some digital platforms recorded huge increases: WeSure, for example, added 25 million active users during the pandemic.3 Unsurprisingly, 70 percent of agents surveyed said they want more digital tools to help them sell and engage with customers.

Most agents are confident of a recovery: Despite the challenges facing them, most agents are confident of a recovery and seem optimistic about the insurance industry’s prospects. One-quarter are “very confident” in the recovery of their business postpandemic, and an additional 69 percent are “quite confident”; just 6 percent professed to be “not confident.”

The survey results uncovered some good news for insurers—almost 60 percent of agents said they would not consider switching to a different insurer or career in the next six months, and just 1 percent said they were actively considering a move. This optimism may seem surprising given the business declines many are experiencing.

How insurers can support agents going forward

Agents increasingly find digital platforms an effective medium for communicating and doing business with customers. And customers are becoming more comfortable with using digital channels. As such, we anticipate permanent change in this direction. Based on the findings from the survey as well as our own observations, we see three areas worth pursuing for insurers that want to help agents navigate the next normal.

Developing the next generation of hybrid digital agencies. This new distribution model means agents could work with a full set of digital capabilities that enable seamless interactions with customers across channels. Insurers could provide agents with enhanced remote-working capabilities so they can meet customer-protection needs virtually. For example, they could enhance dynamic digital tools with product illustrations (that is, illustrations or icons that help users navigate a product and tap into its full value) as well as screen-sharing and videoconferencing to foster better communication between agents and customers. Insurers will also need to meet all regulatory requirements, including identity verification and signature collection.

Continuing to invest in digital tools and advanced analytics. The COVID-19 crisis has accelerated insurers’ investments in digital capabilities at an unprecedented scale. These investments will help agents prepare for a possible second wave of infections and potentially reduce business disruption. Further, we have observed that these tools result in large efficiency gains for insurers (that is, a reduction in overall costs for the organization) by allowing agents to spend more time with customers and less time completing administrative tasks. Insurers should continue to check in with agents and monitor their use of digital tools and advanced analytics models so they can meet evolving needs.

Exploring new products and services to meet a wide range of customer-protection needs. Consumers are proactively asking for help to bridge their protection gaps. Insurers need to embrace agile product development and ensure they are addressing the broadest range of consumer needs while arming their agents with tools to provide those products via digital channels. Value-added and nonpolicy services, such as remote health advisory and diagnosis, could be powerful new offerings for agents to have in their arsenal.

The COVID-19 pandemic has been a catalyst for insurers to accelerate digital transformations and improve customer centricity. As insurers and agents around the world navigate the crisis and move into recovery, they can turn to China for insights. One thing is clear: insurers will need to change how they support agents to help them become more resilient in the face of the pandemic and prepare to thrive in the next normal.

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The Jeeranont

How insurance can prepare for the next distribution model


How North American claims organizations can respond to the coronavirus


Insurance resilience in a rapidly changing coronavirus world

Image by Adeolu Eletu

How insurance can prepare for the next distribution model

As the COVID-19 crisis evolves, it will continue to affect insurance distribution around the world. Insurers can prepare by building a strategy focused on near- and long-term implications.

The COVID-19 pandemic is profoundly affecting how people engage with one another across industries and geographies. Physical distancing and other quarantine measures have shifted activities once considered critical to have in person to digital and remote channels. This change will affect insurance distribution—both in the near term, as physical distancing measures continue, and in the longer term. Indeed, society’s relationship with technology and remote interactions is continuously evolving and accelerating as we move toward the “next normal.”

Many insurance companies have likely already taken steps to address short-term or immediate impacts of COVID-19—moving employees to a remote setup and expanding online customer service channels. Now, insurers are focused on the next set of challenges, including how to reimagine distribution in a more remote world. An April 2020 survey of German insurance agents (conducted four weeks into lockdown) found that about half of the agents saw a more than 40 percent decrease in new business.1 And a May 2020 survey of US agents found a similar effect: almost 50 percent of agents cited remotely building new customer relationships as the biggest challenge during COVID-19.2 Meanwhile, online insurance aggregators and direct channels are reporting similar, if not greater, volume.

To address these challenges, insurers will need to rethink their distribution model across three dimensions: customers, sales force, and enablers (such as investment in data and digital tools). Doing so will empower them to prepare for the unpredictable.


How distribution is changing

Physical sales forces and intermediaries are responsible for the majority of insurance distribution across geographies and lines of business. While the share of business conducted via these channels has been shifting during the past decade as some customers migrate online, they remain the primary channels across life, commercial, and personal lines property and casualty.

But continued physical distancing is having dramatic and immediate impacts on insurance distribution.

Shifting to digital tools. Agents accustomed to in-person interactions are rapidly recalibrating to provide uninterrupted service to clients who may be facing severe health or economic challenges. These agents are also rethinking how they build relationships with prospective clients as most rely on in-person meetings. In our January 2020 US agent survey, about 90 percent of life insurance agents’ sales conversations and nearly 70 percent of their ongoing client conversations were conducted in person.3 In a follow-up survey in May, less than 5 percent of agents had any in-person conversations. A late-April 2020 survey of European insurance executives found that some 89 percent of respondents expect significant acceleration in digitization, and most also anticipate further shift in channel mix. The COVID-19 pandemic has increased customers’, agents’, and insurers’ desire for comfort around digital- and remote-interaction models and tools.

Moving toward self-service. Client demand for self-service in the current environment has only accelerated the importance of digital. A recent consumer survey in Spain found digital access in insurance has increased almost 30 percent since the pandemic began. But the same survey also found the level of customer satisfaction with digital delivery in insurance was the lowest compared with all other sectors. The number one reason for dissatisfaction was “hard-to-use tools.”4 Thus, insurers will need to invest in expanding and improving self-service tools to better support customer and agent satisfaction.

The goal is to return the business to scale fast, especially as knock-on effects of the virus become clear.

Transitioning offline processes online. Agents are currently navigating legacy products that sometimes require offline execution, such as physical signatures and medical underwriting. Our January 2020 US agent survey results show that almost 50 percent of agents were dissatisfied with the level and function of signature capabilities at their primary carrier. Many customers, meanwhile, currently do not want to engage in a physical medical-underwriting process for fear of contagion. Insurers must then rapidly find ways of digitally underwriting the business—such as making better use of external data, relying on statements of good health, and adjusting fluidless thresholds to expand the number of customers who can forgo a physical medical exam—or risk losing it.

Changing distribution strategy in the near term

By now most insurance companies are thinking about how they should prepare during the near term to be ready for the next normal; many of these steps toward digital distribution are unprecedented. Their focus is mostly on digitally enabling sales forces and enhancing the use of data and analytics—especially for lead generation—to support customers.

Insurers can differentiate themselves in the evolving distribution landscape during the next several months by moving quickly to pilot, test, and learn rather than focus on multimonth strategy efforts; getting started is better than waiting for perfection. The goal is to return the business to scale fast, especially as knock-on effects of the virus become clear. Insurers should focus actions across three areas: customers, sales force, and enablers.


Take care of your customers

To understand how customer preferences have changed, insurers can use zero-based design to rethink existing processes, experiences, and products to be more appropriate for the next normal.5 This may mean simplifying products for remote sales; for example, our research has found that many traditional insurance products are too complex for digital sales (even with instructions). More broadly, understanding how to re-create the effectiveness of an in-person, advice-based relationship between successful agents and their customers in a virtual environment will be key. Insurers can look to advances in telemedicine—which have seen a dramatic uptick in recent weeks—with roughly half of their customers intending to continue using the service after the crisis subsides.6 Telemedicine tools (such as video for conducting appointments and photo- or screen-sharing) can help re-create complex, advice-based conversations virtually while also protecting consumer privacy and security.

Take care of your sales force

To prepare the sales force for the next phase, insurers can focus on three imperatives.

Launch a remote-only distribution force. Interest in remote distribution forces has increased in recent years and is even more relevant now. Remote sales forces have economic advantages from an insurance perspective: they generally allow agents to serve significantly more customers than traditional agents, resulting in lower commission costs per sale. Further, remote forces also allow insurance companies to own their sales messages more directly, enhancing their ability to respond cohesively in a crisis. Indeed, insurers can quickly update relevant scripts and talking points and more closely manage performance to ensure compliance. Insurance companies that have effective hybrid distribution forces may not need to worry about investing in a stand-alone remote sales force in the long term. By using internal sales desks and hybrid agents (that use both in-person and digital channels) or wholesalers, insurers that do not yet have remote or hybrid sales forces can transition remote capabilities to their skilled field sales teams that are likely more experienced in closing deals and building relationships.

Emphasize joining a team. While there is much discussion about teaming between insurers and agents, our January 2020 US agent survey found about 20 percent of life agents have never worked with any team, despite evidence that agents in teams are significantly more productive. COVID-19 has showed the value of some system redundancy (that is, multiple agents able to access information on one client) to ensure continued operations should agents become sick. Furthermore, teaming brings together agents with different product expertise, which helps sales forces better serve diverse customer needs.

Insurance companies should ensure their commission system supports teaming by allowing split-commission payment or other incentives for joint work. Insurers also need to make sure different agents can access the same customer data and collaborate through customer-information-sharing tools. Finally, investing in virtual training on teaming best practices, sharing the findings with agents, or asking top agents who already work in teams to share their insights with others in their network can also help support this endeavor.

Expand distribution partnerships. As the current environment places an even greater pressure on making sales, now could be a good time to think about insurance marketing organizations or affinity relationships. Expanding distribution partnerships could help the sales force provide products to more customers in need while maintaining sales volume in a time of crisis. This approach becomes increasingly important as a virtual-agent model increases the pressure on agents to add value.

Invest in enablers

Investing in digital distribution now will have several important benefits for insurers, including increasing resilience through a potentially prolonged or multiwave crisis, responding quickly to current and future customer and agent demand, and increasing agent productivity. Agent appetite for digital tools has never been greater; our May survey on US agents during the crisis found that 44 percent of agents rated either agent digital tools or customer tools as the number one capability insurers can invest in to support them right now. Insurance companies can support agents in this area.

Before investing in digital, insurers should assess and identify gaps in the ideal customer and agent journey for their specific business. The findings will help them develop an agile road map tailored to their strengths and vulnerabilities so they can begin closing those gaps.

Another important enabler in distribution is data. Insurance companies typically have massive amounts of data locked in legacy systems or in paper file cabinets. The faster insurers build out capabilities to mine data so that they can identify and respond to customer trends, the more resilient their distribution mechanism will become. The value of data-driven lead generation has become increasingly clear in recent weeks as the typical in-person lead generation approaches (including in-person networking events and community events) of many agents are no longer an option. To tap into the value of their data, insurers can build advanced analytics models to identify lifetime value-based customer segments within their current portfolio.


They can then build additional models for each segment to identify customers at risk of churning or lapsing as well as customers who might be candidates for cross-selling or upselling opportunities. The data can then be integrated into call lists to help agents (local or remote) focus their attention on the highest value leads. Insurers should also build a feedback mechanism to further refine the model building via qualitative input from agents as well as conversion data.

Our January 2020 survey also revealed almost 30 percent of agents said their biggest challenge right now was lead generation, with just under 60 percent of agents willing to pay between 0.5 and 2.0 percent of their gross income for quality leads. Only 20 percent of agents have seen an increase in leads coming from their insurance companies in April, suggesting an opportunity for insurers to invest in data and proactively fill that need for agents.


Planning for the longer term

Beyond the shorter term, insurance companies must consider three actions as they reevaluate their longer-term distribution strategy and lock in distribution shifts toward digital.

Decide on the optimal go-forward channel mix. In-person agent forces will remain an important part of the distribution landscape in the years to come, especially in life and large commercial. But insurance companies need a setup that includes digital- and remote-sales-force options to serve customers who prefer digital or remote interactions. Having this flexible workforce increases resilience in the face of an unknown future. Setting up a remote agency can be done quickly through a pilot-test-and-learn approach, getting remote agents to interact with customers, and refining process based on feedback.

Identify required modifications and new technologies to support the next normal. Leading captive-distribution insurers that see tech and digital as core differentiators or the essence of their value proposition should clarify their desired adjustments to their existing tech setup. These modifications are especially important when enabling the agent channel to operate in a more digital postpandemic world. Tools to increase digital prospecting and build trust in initial conversations are key to helping agents replace their typical offline interactions. To develop the tech road map to the next normal, insurers should work with agents to identify the biggest obstacles that currently impede productivity and rapidly develop the most viable product solutions to close those gaps. Our agent survey identified signatures, application and submission forms, and client onboarding as processes that agents most want to see digitized.

Be ready to make strategic M&A decisions to augment distribution. Fintechs and insurtechs are likely to be more open to conversations with insurers with large balance sheets because of the financial impact of the crisis. Insurance companies should proactively identify gaps in their distribution ecosystem as well as potential partnerships and acquisitions that could offer avenues to new customer types (such as digital natives), new product types (such as broader protection products), or new geographies.

Changing the distribution operating model will take time to implement, since it not only means employing new tools and assets but also requires substantial capability building that affects other parts of the value chain, such as products and claims. The distribution leaders that will lead in the next normal will be the ones beginning work on the longer-term imperatives today.

Image by Matt Duncan

How North American claims organizations can respond to the coronavirus

Claims leaders have to take action to manage uncertainty and prepare for the future—here is where to start.

No one knows exactly how the COVID-19 pandemic and its long-term implications will unfold. The outbreak is already presenting enormous challenges to families, communities, and nations, along with businesses of all kinds and the global economy.

When it comes to the property and casualty industry, the pandemic will slow growth, strain profitability, and pose new operational challenges—that much is clear. We have already seen these effects begin to play out in North America, and as we look to the impact in Asia and Europe, we expect these challenges to continue.

Claims leaders are taking swift action to protect their employees, with many enabling more than 90 percent of their workers to work remotely. They are also mobilizing staff in new ways as their outsourcing providers shut down, rapidly deploying automation technology, and addressing slowdowns in some of their critical business areas. For example, mail delivery may be slower than usual, closed courts are delaying typical dispute-resolution methods (mediation, arbitration, and litigation), and medical-treatment time frames may be extended.

Claims organizations have faced crises before, particularly localized catastrophes such as Hurricane Katrina and Hurricane Sandy. Now they must respond to the COVID-19 pandemic, focusing on their employees, their customers, and the path forward. Carriers should continuously improve processes and operating rhythms to help employees work remotely, engage internal and external stakeholders effectively, and manage various parts of the claim process (including inspections, dispute resolution, and medical treatments). A set of recommendations for claims organizations focuses on two priorities:

  • actions to protect the core business and build resilience over the next three to 12 months

  • strategic moves to emerge stronger and smarter as the economy recovers


Near-term actions to protect the core business and build resilience

Claims leaders can play a vital role in helping their colleagues and customers stay safe and positioning their organizations for the future. We expect COVID-19 to affect claims differently in each line of business, but carriers can take many of the same actions to build resilience across the board.

Start with employees

As employees shift to remote work, carriers should focus on helping people work effectively in a new environment and prioritize their health, well-being, and morale. Developing new processes and implementing more frequent check-ins can help people feel resilient and engaged in times of disruption. Additionally, leaders should ensure that employees have the tools and technology they need to do their jobs from home as they adjust to a different way of working. In all lines, sudden shifts in claim volume may require carriers to update forecasts, identify gaps in claims-handling capacity, and adjust staffing models accordingly. To close staffing gaps, carriers may need to cross-train people and find those in project-based or nonessential roles to assist in claims handling in areas where demand may spike.

Implement new operational strategies

Reporting could become more complex, and companies could miss opportunities to characterize and isolate the impacts of COVID-19. Carriers should develop a COVID-19 catastrophe code for all lines to clearly segment related claims and enable analytics to quantify impact based on pre-pandemic forecasts and actuarial models.

Claims leaders can play a vital role in helping their colleagues and customers stay safe and positioning their organizations for the future.

In addition, claims leaders can proactively manage volatility and set up multidisciplinary teams to address COVID-19 issues specific to a line of business. These teams could help coordinate processes across the organization (involving government affairs, actuarial, underwriting, and law) and carry out a number of important tasks—for example, closely managing business interruption and related issues.

Understand possible claims impacts on each line of business and take action in the near term

The impacts of the COVID-19 pandemic will vary across lines and types of coverage. Here are some of the changes claims leaders should anticipate, along with corresponding actions.

Auto. Early reports show a significant decline in traffic volume and car accidents, with states reporting a decrease in accident volume of 50 to 80 percent.1 Claim frequency and severity should decline in proportion. However, as some small businesses increase delivery services to serve those sheltering in place, new claims in commercial auto could emerge. Carriers can shift auto claim handlers’ capacity to meet more pressing business needs and should seek to meet their customers’ needs—for example, by modifying policies to add new drivers and adding coverages to protect business owners. Many are also offering reduced premiums to their customers because of heavily decreased policyholder mileage and fewer claims as people stay home; those rebates currently total $10.5 billion.

Property. We expect business-interruption claim volume to rise, including civil authority and contingent business interruption, with a corresponding increase in coverage litigation. As this is a rapidly evolving situation, claims organizations will need to monitor the regulatory, legislative, and litigation environments. While the industry generally does not provide business interruption coverage where there was no direct physical loss, Massachusetts, Ohio, and New Jersey have proposed legislation to mandate that insurers cover losses related to government-ordered shutdowns. At the same time, carriers are experiencing a resulting spike in volume and requests for coverage determination, straining claim handlers and call-center workers. Customer self-service and automation can help ease that strain.

Workers’ compensation. Our industry experience has shown that workers’ compensation claim frequency tends to decline in economic downturns—but ultimately creeps back up. The current crisis is unique, of course, but we anticipate that overall claim frequency could fall as millions of people shelter in place and millions more are unemployed.3 Nonetheless, workers’ compensation carriers may see claims activity due to COVID-19 in several areas:

  • Certain high-risk professions that help respond to the pandemic, such as healthcare workers and first responders.

  • Increased claim severity and extended return-to-work durations as injured workers cannot receive needed surgeries and treatments because of overloaded medical systems or fears of infection from going to a medical facility. Carriers can identify providers with telemedicine capabilities to avoid disruption in medical treatment and offset a potential increase in durations.

  • Ergonomic injuries resulting from changing work environments and people working from home. Carriers may wish to proactively prevent these injuries by providing policyholders with insights into ergonomics or equipment that could support employees working from home.


As always, workers’ compensation carriers will need to pay close attention to compensability and the medical validity of injuries, but they will also need to increase their vigilance around fraud.

General liability. Claim frequency is likely to decline in the short term as people spend more time at home and less time in business locations. However, carriers may see certain companies and professions face bodily injury claims resulting from potential exposure to the virus. As with any claim, insurers will need to assess and verify the facts of loss to understand the extent of the exposure. Claims in active litigation could be delayed as courts shut down, but swift resolution may benefit customers and claimants. As a result, carriers should invest in and pursue virtual methods to guide dispute resolution.

Professional liability. We expect higher claim frequency in select claim segments such as directors and officers (D&O), trade credit, event, and healthcare professional liability. Claims in D&O may arise if shareholders or customers perceive that management has been negligent in planning for and responding to COVID-19. As the pandemic progresses, increases in healthcare professional liability and medical malpractice claims may result from increased exposure to infection as well as capacity and equipment shortages in healthcare systems.

Disability. The frequency and severity of disability claims may rise in response to changing regulations; New York and other states have changed policies to provide family leave specifically due to COVID-19.4 And as in workers’ compensation, claim severity may rise if surgeries and treatments are delayed.

Strategic moves to emerge from the crisis stronger and smarter

In addition to near-term actions, claims organizations will need to improve efficiency and outcomes over the long term. Dedicating resources to those two imperatives can help carriers not only manage the current situation but also emerge from the crisis better prepared for the future. We recommend that carriers make five strategic moves to secure that future.

Respond to rising claim litigation severity. Especially when coupled with the effects of COVID-19, trends such as social inflation—that is, increased insurance claims cost due to social attitudes and litigation expectations—could lead to increased claim severity. Insurers should focus on implementing a best-in-class litigation process and performance management. A consistent litigation strategy supported by balanced scorecards of metrics to manage internal and external counsel performance will be more important than ever as litigation volumes increase in unexpected ways and dispute resolution is handled virtually.

Harness predictive analytics to improve claims outcomes. Claims leaders that can tap their troves of claims data could create predictive models that significantly improve claims outcomes. For example, they may conduct more effective return-to-work monitoring and create better guidelines for workers’ compensation and disability. Alternatively, they may improve early intervention—for instance, identifying claims likely to jump in severity, such as claims that evolve from short- to long-term disability. Others may focus more keenly on medical management or use predictive models to route litigated cases to the right attorney.

Accelerate digital and automation transformations. Digitizing and automating processes can make end-to-end claims journeys more efficient, protect against future outsourcing interruption, and better manage responses during claim volume spikes. Carriers can start by enabling customer self-service for routine inquiries or implementing natural language processing to extract sentiment and nuance from customer or claimant emails, which would evolve into automating medical record ingestion and medical bill review. These actions can help carriers mature into straight-through claims processing.

Prepare the workforce for a digital future. The pandemic-triggered shift to virtual working and subsequent increased need for customer self-service and digitization will accelerate a change in the role of the claim handler. As artificial intelligence and automation become more significant in the claims process, the function of the claim handler will shift from technical adjudication to value creation. And as carriers shift work to remote environments, they should identify the skills needed for their future-state organizations, help valuable employees acquire those skills, and when necessary, look outside the organization for people who can fill gaps.

Reassess the network of service providers. Many vendors and small businesses may be under significant financial strain as they try to adopt a new virtual working model or shift focus to more immediate needs of the crisis. This could mean repair shops go out of business or preferred providers can no longer treat patients. Carriers may need to rebuild a more resilient and flexible preferred network, shifting their preferred medical providers to those more comfortable with telemedicine.


Like many other times in human history, we will learn much from this crisis. Claims organizations will be able to reflect on the moves they made and how they were able to support colleagues and customers. Building on these lessons, claims leaders can put their organizations on a stronger path forward.

Image by Nathan Ansell

Insurance resilience in a rapidly changing coronavirus world

There is no question that addressing the humanitarian challenge of COVID-19 is the first priority of every government, business, and individual around the world. We’re seeing enormous energy invested in suppressing the virus and saving lives with rigorous social measures and millions of heroic healthcare professionals and first responders putting their own lives at risk.

As the situation evolves hour by hour and day by day, it is difficult to predict its consequences with certainty. One certainty, however, is that the pandemic brings both balance-sheet and operational challenges to the insurance industry. Following are some of the most acute challenges that we are observing and anticipating for the near future across the global life and property and casualty (P&C) sectors:

Pricing, product, and balance-sheet disruptions

  • Drops in interest rates forcing adjustments to new-business pricing and putting significant pressure on in-force blocks with rate-sensitive guarantees, particularly those written before the global financial crisis of 2007–08

  • Risk of credit migrations leading to further balance-sheet challenges (for example, declining reserve ratios) and broader instability in financial markets (for example, disruption of normal money movements)

  • Possibility of variable annuities with equity-linked guarantees breaking their hedges if the equity markets decline further

  • Potential for reduced appetite for higher-value policies in a subsequent recession


Operational disruptions

  • Disruption of new business and underwriting due to widespread dependence on paper applications and lost momentum in field operations caused by physical distancing

  • Policy-servicing disruptions, with customer queries about parameters of coverage exceeding call-center capacity

  • Performance erosion in the absence of robust work-from-home (WFH) capabilities

  • Increased cyberrisk due to employees accessing systems from their home networks


Yet the crisis also presents an occasion to think hard about fostering and accelerating innovation, delivering improved customer experiences, fundamentally changing the cost structure, and upskilling and reskilling employees for the future. In addition, it reasserts the industry’s relevance as a safe harbor in times of uncertainty.

Successful COVID-19 responses from Asia have taught us four important lessons: go for pragmatic and fast solutions rather than perfect solutions (speed is a strategy unto itself), adapt a new digital way of working to engage agents and customers, stay close to customers and provide them with valuable information, and seek innovation in products, distribution, and customer reach. This article is meant to provide global carriers’ decision makers with a map to tackle immediate challenges while balancing the fiduciary responsibility of positioning the business for the future. We focus here on enablers for building resilience.

Tactical and strategic levers for life and P&C carriers

Based on our global experience, especially in Asia and Western Europe, we believe that navigating this new world and emerging in the “next normal” requires a comprehensive and ambitious response across five stages—resolve, resilience, return, reimagination, and reform. In this article, we consider a broad set of tactical and strategic levers for insurers across these stages—including innovating the product portfolio, driving channel migration, accelerating the move to fee-based earnings, making in-force management a strategic priority, rethinking the cost base, and upgrading talent and ways of working.

Resolve: Starting with no-regret moves

In the early days of a crisis, much of the focus has rightly been on mitigating risks for employees and ensuring operational continuity. In the most successful instances, carriers have been able to do both using the following playbook.

Expand work-from-home arrangements to all possible functions. Many insurers have already expanded work-from-home (WFH) orders to as much of the company as possible. Doing so helps to protect the health and safety of employees during the pandemic, provide continuity through the crisis, and build a strategic capability for the future. Where capabilities already exist, WFH arrangements can be scaled up with the use of clear policies and expectations and the tools and resources (high-speed internet, server/application virtualization, rapid training, and so on) employees need for collaborating internally and externally while adhering to local shelter-in-place (or similar) requirements.

For functions that typically do not allow for WFH arrangements, introducing the right workforce management behaviors and operational discipline can support productivity as well as the mental health of employees. Individual function and line leadership can turn to proven remote-working models, such as adopting daily check-ins and checkouts and frequent touchpoints in place of typical in-person staff meetings and team huddles to identify and resolve issues. It is important to rapidly establish norms for the use of collaboration tools and protocols for confidentiality and data protection to contain the risk imposed by the migration of the work environment to individuals’ homes. Several enterprises in China offer helpful lessons for adapting the workforce to WFH arrangements.

Prepare IT for critical-services capacity and heightened cybersecurity needs. 


IT preparedness for security and bandwidth needs has been a bottleneck for some firms setting up WFH capabilities. Across the insurance industry, some carriers have shelved their remote-video capabilities to reduce bandwidth usage on their virtual private networks. By stress-testing their capabilities and adjusting capacities urgently, IT leaders can ensure continuity during the crisis, as well as reduce security risk. Further, IT leaders need to be aware of new cybersecurity threats that WFH arrangements present and consider several steps, such as accelerating the monitoring of collaboration tools, networks, employees, and end points.

It is essential to rapidly deploy an ambitious, top-down resilience plan across five stages, while engaging the full gamut of levers across the value chain.

Resilience and return: Weathering the crisis

Given the uncertainty about the duration of COVID-19 in individual markets, a clear priority is the development of contingencies for the possibility of extended impact, including the potential for second and third waves of the virus. Building these contingencies requires taking a hard look at initiatives that will improve both the use of resources and field productivity.

Get a cross-enterprise handle on cash flows and both internal and third-party capacity. Carriers should prepare for decreased demand for products and resulting expense overruns. “P&L control towers,” which monitor and manage premium and revenue inflow, as well as spending on procured products and services, can flex more dynamically than standard business units or procurement departments typically allow. Similarly, “HR control towers” manage employee upskilling and reskilling needs, as well as the recruiting pipeline, while balancing capacity for claims handlers and other positions with spiking demand.

Accelerate digital engagement across the customer journey. As billions of people shelter in place, the importance of digital interactions takes unprecedented priority. Insurers that have developed mature digital functions in sales and distribution, service and retention, and claims are well positioned to weather the crisis—and those that haven’t must act fast to catch up:

  • Sales and distribution. There has never been a better time to encourage sales forces and intermediaries to abandon paper and move everything—from digital lead generation to binding agreements—online, enabling reps and agents to remain productive without putting them in physical risk. In the face of COVID-19, Chinese insurers rapidly adopted video and messaging apps to enable an end-to-end customer journey that facilitates customer authentication, face-to-face digital meetings, and application completion and execution. In some cases, technology is enabling wholesalers to see 30 to 50 percent more prospects on a weekly basis. By moving entirely online, carriers can also accelerate remote and digital agent recruiting and onboarding.

  • Service. In moments of distress, carriers would do well to increase the focus on the customer by designing and migrating to new customer journeys and automated digital service channels for all steps of the value chain. Carriers can eliminate paper forms entirely by using existing technology, such as video claims appraisal, self-serve profile changes, and a messaging-app-based first notice of loss. Leaders can rapidly expand digital-channel adoption not only for standard requests but also for new requests arising from the crisis (for example, to check coverages in lines of business affected by employee wellness, life events, or work stoppages).

  • Claims. Carriers could start by adopting and scaling approaches to deliver simplified and convenient claims service, including increasing reliance on video-enabled adjustment for lines that cover physical damage. In the intermediate term, carriers can replace the manual process of uploading medical records and reviewing bills with automated feeds, as well as use natural language processing to gain insight from customer and claimant emails. Doing so will help claims organizations mature toward more straight-through processing, starting with simple claims, such as property damage auto claims or medical-only workers’ compensation claims. Accelerating such transformations can drive structural efficiencies in end-to-end claims and protect against future outsourcing provider interruptions and spikes in claim volume.


Strengthen collections and fraud detection. Given the economic slowdown, which is hitting small and midsize businesses and consumer segments the hardest, collections chargeoffs and fraud will likely spike in the coming months—similar to what the industry experienced in the past two recessionary cycles. Life and P&C carriers should take preventive steps to minimize operational disruption and develop and implement strategies to manage credit-risk exposure. They might increase sensitivity to early-warning systems, for example, or pilot a contingency strategy in the event that call-center capacity is depleted by more than 50 percent.

The crisis will test a carrier’s brand and customers’ loyalty, so strengthening collections needs to be balanced with retention of at-risk customers. Carriers can consciously provide lenient arrangements to delay or spread out payments for loyal customers or specific product lines with higher risk of attrition.

Reimagination and reform: Emerging from the crisis

As regions exit the most critical crisis period, a “new normal” will set in. However, the lasting impact on the population and economy will be dramatic, affecting the demand for insurance for years to come. While taking that into account, carriers will at some point be able to focus again on longer-term strategies and initiatives.

Drive structural improvements. Since the 2007–08 financial crisis, the cost structure in insurance, as a percentage of premium, has deteriorated, indicating that the industry as a whole has not prioritized productivity improvement. Once carriers have stabilized operations and started reimagining their processes and customer journeys, they can take real, urgent action to embed the changes within their core operations and beyond. A transformation office reporting to the CEO (discussed in the next section) can be empowered to set bold targets, leave no stone unturned to identify opportunities, marry transparency with individual accountability, and adopt incentives that reward superior performance. Banking, telecom, and consumer products have all successfully demonstrated the value of taking a zero-based budgeting and operating approach to drive structural improvements across the entire cost base. The insurance industry will soon look to do the same.

Future-proof the organization. As the crisis resolves, carriers can take a comprehensive approach to redesigning their operating models, to both reduce dependence on legacy operations and increase resilience during future events. This approach could include exploring geographic disaster recovery, site operational risk protocols, supply chain resilience (for example, business process outsourcing and vendor redundancy), and workforce flexibility. Finally, carriers may also consider introducing new products suitable for a recessionary economy, such as higher-face-value life insurance policies without a medical exam and basic and more price-competitive small-business insurance.

Organizing for resilience: A practical way to get started

Despite the significant uncertainty created by COVID-19, carriers cannot afford to wait and observe how the situation evolves. It is essential to rapidly deploy an ambitious, top-down resilience plan across the five stages, while engaging the full gamut of levers across the value chain. To execute and balance immediate action with flexibility to tackle evolving challenges, insurers can mobilize resources organized into three teams: a disruption office focused on resolve and stabilizing operations, a strategy office dedicated to resilience and return, and a transformation office to reimagine, reform, and embed the changes (exhibit).

Disruption office: Stabilize operations (weeks 1–4):

Carriers that haven’t already done so should consider launching a disruption office, possibly led by the chief operating officer, which would be an integrated “nerve center” to ensure the adequate discovery of risks, coordinate the portfolio of remedial actions based on scenarios and triggers, and deploy sufficient resources where and when needed. The core objectives of this team would be to work through bottlenecks and keep the response moving while allowing autonomy for core operations to maintain continuity and for strategists to think about the future road map.

An effective cadence would include specific, rolling 48-hour and one-week goals to achieve near-term priorities and a dashboard to track progress and manage threats in real time. The team’s focus would span the spectrum of stakeholders—employees, customers, and the business. The following are some of the common actions carriers are implementing to stabilize their operations:

  • Employees: Rolling out measures to tackle the changing environment and communicate the carrier’s support—for example, more flexible working times, childcare subsidies

  • Customers: Ensuring that customer-care units are reachable; keeping customers informed of capacity constraints; deploying self-service, automation, and additional capacity to tackle personnel shortages in service-critical functions; and minimizing customer-data risk of cyber exposure

  • Business: Ensuring business continuity by immediately stress-testing solvency; modeling cash-flow, P&L, and balance-sheet impact in three or four scenarios; and identifying potential triggers of significant liquidity events. They also are adjusting new-business pricing, taking into account new economic variables, and (most applicable to life insurers) considering removing some products from the shelf entirely.

Strategy office: Reimagine processes and journeys (weeks 1–8):

A strategy center can be used to implement a top-down, fresh perspective on the future operating model. The center can be led by the head of strategy or someone in another role who is well equipped to understand the current operation but is also a visionary who will create a truly transformative road map for the new normal that can be rapidly deployed as the organization stabilizes.

This strategy team can apply a zero-based approach to reimagine processes and customer journeys. The approach considers the minimum (zero-based) budget, staffing, and external spending required to maintain baseline operations, from sales and distribution to in-force servicing. Processes can then be built using analytics, automation, and sourcing best practices to design a more resource-efficient alternative that also offers improved customer experience. These efforts will make possible several of the digital journeys discussed in the previous section.

Transformation office: Embed the changes (weeks 4–16+):

As a carrier stabilizes, it will be able to mobilize the broad participation of the organization during the crisis to embed the new normal into the fabric of the company. Doing so requires the carrier to set up a robust execution engine, led by a chief transformation officer who drives the weekly cadence of decision making (not process) and creates radical transparency—of impact, interdependencies, resource needs, trade-offs, and roadblocks. Coupling this engine with a common methodology and language for evaluating impact and a digital program-management platform will help the carrier understand the maturity and progress of each initiative.

Second, the carrier can fundamentally rebase expectations of its people and footprint, starting with an evaluation of what it was able to achieve while operating in an entirely remote manner and with capacity constraints. Leaders are now learning, on a whole new level, what their teams are capable of—and it will be important to ensure that those breakthroughs aren’t lost in a transition back to the physical office. Leaders can roll up what will probably be a large number of initiatives emerging from the strategy office into an integrated plan, against which they will be able to measure performance and set budgets going forward. Doing so would help avoid siloed or watered-down execution. In addition, carriers could formalize the remote-working model, cross-train their workforce, and embed flexibility into the operating model to ensure that they will be better poised to respond to future crises.

Of course, sustaining the new operating model requires an informed plan that focuses on organizational health and culture. The plan could be informed by an assessment of the elements that have bred the carrier’s success, such as alignment with a shared vision, shared goals, and incentives at every level as well as clear roles and transparent performance.


First and foremost, insurance leaders need to manage the immediate threat to people’s health and well-being and be sensitive to those customers most affected by the crisis. To exit the crisis with a more customer-focused, efficient, and resilient organization, insurance leaders need to plan ahead, engage the gamut of strategic and tactical levers discussed here, and use radical transparency to advance change. Insurers can sustain momentum and make long-lasting changes even in the challenging times ahead.

The Jeeranont

Issued by The Jeeranont Company Limited is authorised and regulated in the USA by the Financial Conduct Authority. UNITED STATES OF AMERICA