Insurance is all about risk management. The high risk associated with the insurance domain. The Insurance industry is usually prepared for minor as well as major losses, including pandemics, with the outbreak of the novel coronavirus, there has been a lot of panic around the globe. Due to the highly contagious nature of the virus, the number of deaths has gone up in a short span. The mortality rate in certain parts of the world has gone up.
Each of the stakeholders, such as capital managers, underwriters, customer support, operations, and claim departments, will have their distinct set of challenges. Due to the coronavirus panic situations created amongst the people, there are overwhelming inquiries about the claims and general concerns on different lines of insurance coverage. Pressing matters are whether or not the current health policy will cover medical expenses due to coronavirus. If the life assured dies due to coronavirus, will it be covered under a life insurance policy or not?.
To mitigate the spread of coronavirus, Insurance companies and all businesses across the country are asked to shut or operate remotely. Lockdown has changed the way things were done. Most importantly, operations, for instance, the health check-up at the time of policy purchase.
Insurers, distributors, and other entities involved in insurance have been putting digital channels in use, be it for making customers aware or helping them in buying a new or renewing a policy, addressing their concerns related to insurance, and so on.
Responding to this influx of expected queries have put the insurers and other insurance entities to work remotely. Insurance is one of the essentials, and the Government has asked industries, as usual, to perform to their potentials and try to come up with ways that would help customers in every possible way.
The Insurance Industry is making all efforts to back their customers in this coronavirus situation. From on-boarding, the emergency decision-making teams, setting new protocols to deal with the panic situation among the policyholder/policy seekers to create a comprehensive communication system through 24×7 availability via calls, SMS, emails, WhatsApp Chatbots, etc.
These current services are quick steps to fasten up the belt as the condition continues to evolve continuously. Each employee delivering the services to the customers is well equipped with the status of the business continuity plans. Digitization in Insurance Sector has helped in maintaining a better connection with the customers in such coronavirus pandemic times. Insurance distributors are leveraging for partners who would ensure speedy and effective services to the customers.
Lockdown in India due to coronavirus outbreak, Insurance firms need for staff to work off-site, i.e. remotely work from home type, thereby leading to a lot of technical barriers. With the evolving crisis which would be faced by the insurers in the coming time, insurers would be obliged to put all products online, perhaps also to come up with new need-based plans that can be bought online instantly.
With higher capacity and bandwidth, the inclusion of cloud services into the process could act as a catalyst to boost the momentum of providing quality services for this movement.
Having a look at the impact on the general and non-life insurance because of this COVID-19 outbreak, the effects on the various queries and claims to be relatively manageable. On the other hand, it’s a mixed diagnosis for health insurers. Since the coronavirus is more prone to people who are elder, or someone with compromised immune systems or those who are going through some pre-existing disorders, there might be a rise in the number of people opting for the health insurance plan.
Also, with the lockdown situation across the countries, the telehealth services and launching of new individual coronavirus products would lead to a constructive long-term strategy. They are insuring the uninsured or the remote populations as well. In addition to this, this sudden coronavirus outbreak may lead more customers or consumers to reconsider their needs relating to the health insurance policy. There could be a rise seen in sales of health, term life, critical illness policy in the coming future.
The IRDA has also asked the insurers to offer a grace period for the health renewals. The transition of policy purchase mode from traditional to digital transformation has been a turning point for the insurance sector.
The death rate has elevated owing to the COVID-19 coronavirus outbreak, the life insurers will offer coverage and will pay out for deaths due to coronavirus except for a few exceptions, such as providing incorrect or incomplete information, non-payment of insurance premiums, unrevealing travel history, etc. The coverage would also depend on what time you have brought up the policy.
Moreover, Life insurers would have to face maximum challenges if this continues, and the mortality rate increases. The potential impact on the mortality rates and the side effects due to the market volatility will have a heightened asset-liability management risk on the life insurers. This might ultimately affect the prices of premiums.
The insurance companies are expected to serve the customers in the best way possible in this coronavirus outbreak situation, they should be well prepared for the surging rush of claims if the coronavirus pandemic situation continues to increase its impact in India. The bottom line is, the whole society and economy would face an extremely challenging time if this situation persists for the upcoming months. However, the insurance industry would need to continue playing a significant part in extending support to customers and societies through the crisis and recovery.
Note: Author of this article is Rakesh Goyal, Director, Probus Insurance, Insurtech Broking Company