2021: Three Realities About Insurance

Have you had your fill of beginning-of-the year goal setting? Instead of bold predictions for 2021, or pondering on what we learned from last year, maybe we can just frame it as looking at a few undeniable truths about this moment in time. Here are three realities about the insurance world in Q1 of 2021:

The impacts of COVID-19 will make insurance less profitable for a time.

How long, nobody knows. The pace of economic recovery remains yet to be determined but rises in unemployment and other financial hardships paint a grim picture. A recent survey by a major insurer showed that nearly half of respondents were concerned about keeping up their car insurance payments, and roughly a quarter had concerns about keeping up with mortgage or car payments. Budgets for businesses and consumers will be tight for the foreseeable future. Focus shifts to customer retention and weathering the storm.

Shifts in behaviors and associated risks will change insurance situations.

Consumers will expect to see their behavioral changes reflected in policies and rates. Many drivers are only putting a fraction of their normal mileage on their vehicles. Shouldn’t their car insurance be lower? How does adding a home office affect one’s home insurance? Businesses will ask the same questions from their side: If our office building has less people inside, isn’t our risk of workplace accidents much lower? Expense will be part of what dictates worker attitudes and company policy on working-from-home.

Imagine the questions the pandemic creates for insurers of health and life. A public health crisis creates countless new considerations for risk pools: long-haulers, folks with underlying conditions, age factors, and anti-vaxxers. The dust hasn’t quite settled on all these new scenarios; it’s tough to make any blanket predictions without a glimpse of life after the vaccine.

Digitization across the industry will continue at a rapid pace.

Last spring there were claims that the pandemic would have us experience 20 years of technology advances forced into a single year. It’s tough to measure that, but year-end reports show that digital engagement for insurance customers in 2020 grew by four times the pace it had been growing the previous several years. Consumers are more likely than ever to shop for a policy, pay their bill, or file a claim through an app or online interface. Comfort levels with technology increased across generations, some through forced adoption.

The pandemic opened numerous digital doorways. Several states passed legislation that allows for all-electronic wills. Banks and mortgage companies adapted by easing some the restrictions surrounding in-person signatures for transferring property. Life and health insurance policy sellers have done the same with electronic and voice signature capabilities.
With change being constant, this year will continue to see technical innovations to ensure the industry meets the needs of tomorrow’s customers, carriers, and the distribution channel.

John Flueckiger, Vice President of Global Sales, Management Research Services. [email protected]