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NOW NEXTWhat to do Now, What to do NextCOVID-19:

April 2020

Achievebusiness and cultural resilience in insuranceNavigating the human and business impact of COVID-19 on Insurance Carriers

COVID-19 has turned into a global

crisis, evolving at unprecedented

speed and scale. It is creating a

universal imperative forgovernments

and organizations to take immediate

action to protect their people.

The viruscontinuesto rapidly spread,

to every continent and nearly every

country with tens of thousands of

new cases reported daily.

Navigating the human and business impact of COVID-19 on Insurance Carriers2

North America

Europe

APAC

Global Ins

MSCI ACWI Ind

50.0

55.0

60.0

65.0

70.0

75.0

80.0

85.0

90.0

95.0

100.0

105.0

110.0

D-3

0D

-28

D-2

6D

-24

D-2

2D

-20

D-1

8D

-16

D-1

4D

-12

D-1

0D

-8D

-6D

-4D

-2D

-0D

+2

D+

4D

+6

D+

8D

+10

D+

12D

+14

D+

16D

+18

D+

20

D+

22

D+

24

D+

26

D+

28

MARKET CAP IMPACT FROM COVID-19 CRISIS

Market Insights

• COVID-19 market valuation impact hitting insurers universally and quicker (~35+%) than previous pandemic and financial crises

• Lower 2020 GDP growth (close to 0% for US) and recession (for EU) putting top-line growth of carriers at risk

• Specific lines (e.g. Inland marine, trade credit, workers compensation, disability) and segments (small business) at particular risk

• Further interest rate cuts to near 0% (US, Euro) implying further pressure on insurers’ bottom-line across segments and requiring underwriting improvements

• Growth dynamics at risk in some major lines (e.g. L&A, Commercial Lines), regulatory intervention suggesting product portfolio review (e.g. Business Interruption)*

• Short-term, insurers safeguarding their workforce, ecosystem partners and operations and preparing for the New Normal

The COVID-19 crisis impacts insurers’ top- and bottom-line

Sources: Accenture Research based on Capital IQ data; pressCoronavirus D0 = 21/02/2020,

Source: Accenture Research based on analysis of global publically listed insurers and MSCI ACWI Index (mature and emerging markets), last date item as of March 20th

Ma

rke

t C

ap

In

de

x,

Da

y 0

= 1

00

Days before and after

Outbreak

Market capitalization loss up to day

+28:

MSCI ACWI Index = 31%

Global Ins = 35%

NA = 41%

Europe = 41%

APAC = 24%

* Reuters, U.S. lawmakers push insurers to cover coronavirus business losses, March 20, 2020

This is forcing reviews of liabilities and encouraging new workforce operating solutions


https://www.reuters.com/article/us-health-coronavirus-insurance/u-s-lawmakers-push-insurers-to-cover-coronavirus-business-losses-idUSKBN2173MD

We are faced with a major challenge… but we have navigated crises before

The insurance industry has withstood previous financial impacts and demonstrated resilience.

Insurance institutions have had business continuity planning and tested risk mitigation strategies in place and evolve it with each crisis.

Insurance carriers have experience on how to navigate regulatory/legal challenges to policy exclusions if necessary.

The workforce is physically – not socially – distancing.

Ultimately, the Insurance sector can serve as an important source for strength during the crisis and as a recovery mechanism for industry.


Where we are now

In many markets, security systems and governments’ emergency aid packages provide some coverage for the unemployed but related claims, especially among gig workers, independent contractors and self-employed, will surge. The risk of small commercial bankruptcy is increasing and impacting some insurers.

We are seeing early effects to Insurance economics during “social distancing”

• Operating cost increases from immediate crisis management response (e.g. infrastructure, IT), but also slight gains (e.g. flexible office costs)

• New business impact across segments and lines (e.g. motor insurance due to lower new car registrations; L&A insurance, especially investment-type policies)

• Increased levels of surrenders/lapses and business defaults (both SME and life insurance) impacting insurers’ volumes

• Agents (sales and service) challenged to operate in new remote model

• Increasing claims frequency (e.g. workers compensation, business interruption, travel, supplementary health insurance)

Massive short-term decline in securities’ values and returns and stock market volatility at least throughout Q2 2020; additional mid-to long-term pressure from 0% interest rate environment

The extent of the economic impact is unknown as it is dependent on where liabilities land from regulators and the degree and pace of earnings recovery from reduced interest rates.

Carriers may need to review and strengthen their reserve and capital base for unexpected claims payments and adequate liquidity levels. In a tougher operationally and financially business environment, weaker capitalized carriers may be challenged to meet the mandatory capital adequacy requirements set by regulators.

These extreme circumstances have changed our Insurance workforce and challenged cultural orthodoxies.

There are massive impacts to the aggregate economy, with particular impacts to the service sector, gig economy, and small businesses.


There is a silver lining…

Organizations who have gone digital are less impacted.

We are creating new ways of working that enhance human connectivity and are transforming the workplace from our call centers to our back-offices. Our people and operations are proving their resilience in adapting to a new way of working.

We expect to see some improvements to Insurance economics during “social distancing”:

• Claims frequency and severity reduced in retail and commercial lines (motor, goods, injuries)

• Increased awareness and demand for health and SME products/services

• Continuity or increase in online/digital channel usage and quotations by both consumers and distribution network

• Emergence of new risks to cover new operations (e.g. delivery, curbside, ecommerce)


Insurers need to take actionNEXT[in 6 – 18 months]

Transform the Cost Curve

• Zero-based operating model

• Intelligent operations (including UW, claims & distribution)

• Technology modernization

Scenario-based Growth

• Segment/Product rebalancing (e.g. SME segment)

• Pursuit of new, emerging risks

• Targeted M&A (e.g. mid-size carriers or LoBs/segments)

Re-architecting the Workforce

• Re-skilling for automation and analytics in UW, Claims

• Digital journey optimization, talent for sales, service

• New ways of working (including culture)

Scenario Modelling and monitoring

(Impact on Revenue, Earning and

Balance Sheet)

Digital Technologies and Communications Plan

Infrastructure (e.g. VPN bandwidth, HW provisioning)

Delivery Center Continuity

STABILIZE REMOTE WORK

NOW[in 3 – 6 months]

Digital Employee /Customer Journeys

• Internal HR Covid-19 query response

• Service - including outreach (e.g. market transactions, advice)

• Sales (e.g. agent assist)

• Claims eligibility

Digital Attacker Models: digitally enabled go-to-market models, leveraging new market receptivity

No-regret Cost Reduction (e.g. Third Party Spend, Real Estate)

Workforce Analytics to gain insights into employee productivity


Leaders that can make the shift to a new work-from-home model will be better able to stave off business disruption and potential revenue loss, forge new levels of trust with their workforce, and position their businesses for renewed growth once the pandemic subsides.

Navigating the human & business impact on Insurance Carriers8

9

Actions we can take

Copyright © 2020 Accenture. All rights reserved.Navigating the human and business impact of COVID-19 on Insurance Carriers

Work in an agile way while thinking long-term

Actions we can take –Stabilize Remote WorkEnable the organization for remote work with digital technologies and a strategic communication plan to maintain business continuity

• Quickly assess current technologies to scale and leverage more effectively

• Deploy a suite of collaboration tools to allow employees and partners to more effectively connect

• Stand up a cross-functional response team and develop a change management communications plan to delivery multi-channel communications and support to the community

• Identify how this crisis is impacting your customers and how you can HELP them and build trust for the future (e.g. financial relief, provide additional services)

‒ Add the COVID-19 company response plan on website

‒ Stop automated “business as usual” communications to customers

Expand technology infrastructure and security

• Enable immediate, scalable access integration framework to cloud and on-premises applications

• Scale high speed network and VPN capabilities to handle increased demand; may need to make changes to handle global connectivity

• Increase cyber threat intelligence and security due to increased risk of attack

• Provide consistent “gold standard” security policy and training even from remote locations (domestic and Delivery Centers) on trusted and untrusted devices

Conduct resiliency testing and cross-train workforce for Delivery Center continuity

• Use operations/call center analytics to plan for and resiliency test call volume increases, nature of queries, and location shutdown shifts; address the most critical needs first

• Cross-train workforce, especially in call centers, in critical areas to handle employee absences and increased call volumes; offer employees schedule flexibility aligned to higher call volumes when possible


Actions we can take –NowDigital Employee/Customer Journeys

• Mobilize the internal HR COVID-19 query response to support physical and mental wellness

• Restructure the workforce and processes to focus on customer value management, agility, and workforce automation and optimization (human + machine)

• Grow the role and the trust of insurers with employees and customers through proactive outreach of market transactions, advice, and additional services; expanding into risk prevention

• Strengthen digital communications with customers: ramp-up virtual assistant tools and social listening while shifting to virtual sales channels and enhanced digital capabilities to align to recent consumer attitudes and behaviors

• Digitize Claims eligibility and processing to support automated straight-through claim handling and allow adjusters to focus on complex, high-touch claims

Digital Attacker Models

• Stand-up digitally enabled go-to-market models, leveraging new market receptivity

No-regret Cost Reduction

• Analyze, prioritize, and adjust internal and third-party spend, (including real estate) to focus on recovery and the “new normal”

Leverage workforce analytics to gain insights into employee productivity

• Use cloud platforms for low-cost, high-power analytics

• Discover external and internal insights about employee behaviors, preferences, and dispositions

• Uncover how people work and opportunities to optimize and innovate using existing internal data combined with thoughtful hypotheses

Recover and adjust to the “new normal” way of working


Actions we can take –NextTransform the cost curve

• Combine zero-based design methodologies with agile delivery frameworks to transform the cost curve

• Optimize existing operations and modernize technology by establishing new digital capabilities (underwriting, claims, distribution) to create and enhance competitive advantages

• Modernize incrementally aligning business and technology to realize value in each step of transformation

Recover and adjust to the “new normal” way of working

Scenario-based growth

• Determine future strategy of how products are written and sold: apply even more articulated and transparent policy language about insurable/uninsurable risks and/or build new products for impacted lines (e.g. small and medium enterprises) and how they are reinsured

• Accelerate restructuring of risk and new products including wellness convergence and gig workers

• Strengthen resilience of value chain and ecosystem partners (learning strengths and weaknesses of network) – create new partnerships (M&A, InsurTechs) in vulnerable lines

• Further expand the infrastructure by shifting software licensing to work-from-home models

• Enable end-to-end security with a “Zero Trust” model

• Stress testing of operations, processes, and technologies

Re-architecting the Workforce

• Conduct rapid training for employees and double-down on AI to create a multi-speed human + machine workforce (e.g. underwriting, claims)

• Optimize digital journey opportunities for sales and service

• Deliver personalized omni-channel customer experiences as required

• Agile adoption of digital products and add-on services

• System monitoring to receive early detection and alerts of abnormal activity

• A remote workforce culture that embraces data-driven insights across the organization

• Enhance business continuity plans to optimize workforce, mitigate impact of travel restrictions, and deploy large scale remote workforce culture


To help our clients navigate both the human and business impact of COVID-19,we’ve created a hub of all of our latest thinking on a variety of topics.

Each topic highlights specific actions which can be taken now, and what to consider next as industries move towards a new normal.

From leadership essentials to ensuring productivity for your employees and customer service groups to building supply chain resilience and much more, our hub will be constantly updated. Check back regularly for more insights.

VISIT OUR HUB HERE


https://www.accenture.com/gb-en/about/company/coronavirus-business-economic-impact

Contacts

Kenneth Saldanha

Global Lead,

Industry Sector – Insurance

[email protected]

Jim Bramblet

North America Lead,


[email protected]

Daniele Presutti

Europe Lead,


[email protected]

Naoyuki Shibata

Growth Markets Lead,


[email protected]


mailto:[email protected]




DISCLAIMER: This document is intended for general informational purposes only and does not take into account the reader’s specific circumstances, and may not reflect the most current developments. Accenture disclaims, to the fullest extent permitted by applicable law, any and all liability for the accuracy and completeness of the information in this presentation and for any acts or omissions made based on such information. Accenture does not provide legal, regulatory, audit, or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals.

Copyright © 2020 Accenture All rights reserved.

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