Time to hit the reset button

The past year has prompt­ed many of us to re-eval­u­ate our con­cerns and pri­or­i­ties. This applies equal­ly to the insur­ance sec­tor, which has a gen­er­a­tional oppor­tu­ni­ty to reframe its rel­e­vance in a world shak­en to its core.

“It’s a chance to hit the reset but­ton,” says Simon Laird, glob­al head of insur­ance at law firm RPC. “We don’t yet know what the post-pan­dem­ic world will look like, but there’s a real sense that this is a chance for insur­ers to choose a new role to play on the glob­al stage.”

The past year has trig­gered fight-or-flight respons­es among many busi­ness­es. There’s increased anx­i­ety, with cus­tomers yearn­ing to feel more secure again, after hav­ing expe­ri­enced such a sharp shock to the accept­ed norms. “The pan­dem­ic has shak­en every­thing,” says Peter Mans­field, part­ner at RPC. “What’s com­ing up in the next decade isn’t the same as what hap­pened in the past decade.”

The coro­n­avirus pan­dem­ic has changed cus­tomers’ pri­or­i­ties; 12 months ago most com­pa­nies would have said bricks-and-mor­tar build­ings were crit­i­cal to their busi­ness. Now many are look­ing at the impli­ca­tions of a growth in home work­ing. Will cor­po­rate data be safe on an employee’s home com­put­er? In a changed world, insur­ers have a choice. They can sim­ply assess and cost the risks or they can help clients nav­i­gate those risks to the ben­e­fit of both insur­er and insured.

Insur­ers have always played a role in risk pre­ven­tion, after all some of the ear­li­est fire brigades were set up by insur­ance cor­po­ra­tions look­ing to lim­it the very event they had insured. Insur­ers may no longer look for fire badges on build­ings, but that same men­tal­i­ty can be seen today. The use of big data trans­lates into insur­ance that can pro­vide real-time advice to insureds by sug­gest­ing less risky places to fly a drone or alter­na­tive routes for car­go ships about to enter a war zone, for exam­ple.

“The ques­tion is whether, and to what extent, insur­ers should get involved with their clients’ choic­es,” says Mans­field. “Mod­ern tech­nol­o­gy enables two-way com­mu­ni­ca­tion. The insured’s data comes one way and insur­ers respond with revised pre­mi­um cal­cu­la­tion; all instan­ta­neous­ly.” The “push­mi-pul­lyu” dis­cus­sion for insur­ers means a con­stant ten­sion between respond­ing to chang­ing cus­tomer demand and pro­duc­ing inno­v­a­tive solu­tions and new prod­ucts to respond to com­mon prob­lems.

This rais­es exis­ten­tial issues for insur­ers. “The pan­dem­ic is con­tribut­ing to hard mar­ket con­di­tions and ris­ing pre­mi­ums,” says Laird. “That makes peo­ple ques­tion the role and pur­pose of insur­ance even more.”

Glob­al trends such as the desire for increased, vis­i­ble envi­ron­men­tal and social respon­si­bil­i­ties have been accel­er­at­ed by COVID and again the indus­try must choose how to respond. “Ulti­mate­ly insur­ers are com­mer­cial beasts, but the ‘pur­pose’ of insur­ance is real­ly impor­tant for attract­ing investors and recruit­ing the right tal­ent,” Laird believes. “Insur­ers have been learn­ing a new lan­guage; no one talked about empa­thy 20 years ago, but it’s part of the cor­po­rate lex­i­con now.”

Insur­ers can also use their unique posi­tion to speak on glob­al issues. “Insur­ers may well need dif­fer­ent peo­ple with dif­fer­ent skills,” says Laird. “In addi­tion to the data sci­en­tists already so much in demand, per­haps there is more need for, say, pol­i­cy nego­tia­tors who can work with gov­ern­ments on big issues such as cli­mate change.”

The future role of insur­ance may be less to do with pick­ing up the pieces from dis­as­ters than con­fronting poli­cies and pre­vent­ing cor­po­rate actions that con­tribute to such dis­as­ters. Cer­tain­ly the sec­tor has glob­al mus­cle that could be turned into an active, pow­er­ful force for soci­etal good, which might in turn bring finan­cial pros­per­i­ty in its wake.
“It’s about insur­ers reassert­ing their place in this new world,” says Laird. “Insur­ance is a pow­er­house of inno­va­tion and progress and even small, incre­men­tal changes can make a big dif­fer­ence. This is the time for the insur­ance ecosys­tem to put itself front and cen­tre, help­ing to lift us beyond the issues that have devel­oped in the past year.”

Simon Laird
glob­al head of insur­ance, +442030606622

Peter Mans­field
part­ner, +442030606918

For more infor­ma­tion please vis­it www.rpc.co.uk/expertise/insurance

Pro­mot­ed by RPC