Changes to societal behaviour post the COVID pandemic will require new risk products but will come at a time when the industry will struggle to have the capacity to deliver them.
Analytics firm GlobalData has warned while there will be little capacity for insurance product development in the short-term, COVID-19 will shape future developments as it alters behaviours.
The firm said the problem for insurers will be that as behaviours change dramatically, they will initially not have the capacity for new products and the cost of claims will hinder their ability to innovate. However, new products are inevitable in dealing with changed circumstances, and will happen once insurers recover from the aftermath of the pandemic.
GlobalData’s Senior Insurance Analyst, Daniel Pearce, explained: “Other areas of business will be put under considerable strain in the short-term. Customer service will be one, with many customers disputing policy wordings. Claims management will also struggle under the weight of claims in the short-term, although it will stabilise. GlobalData believes this will lead to investment into contactless claims systems with virtual processing.
“Underwriting and risk profiling will be transformed by this crisis. Initially, insurers will need to review all policies to understand potential hidden exposures and areas of uncertainty. However, the industry will benefit from the wealth of data that will come from this across key product lines. This will lead to improved underwriting accuracy in future pandemics.”