Blog: Coronavirus has transformed insurance - three trends that will stick

As Amazon, Spotify and Netflix have shown, technology has dramatically changed the way people interact with products and services.

In times of social distancing, digital insurance is gaining momentum. If you have to reduce your social contacts, your agent or broker will not be top of the list of people to see. The alternative is to take out insurance digitally, or – even easier – via an app. A representative survey by Yougov, conducted on behalf on Getsafe, shows that one-third of British citizens want to take out insurance completely digitally because of the Covid-19 outbreak. The rising interest in digital insurance is independent of age or gender.                                                           

While Covid influences buying channel preference, it does not impact how Brits in general think about their insurance coverage. More than 36% believe that their own insurance coverage is sufficient in view of the events surrounding the pandemic, while only 8% feel they need to change something.

Still, the coronavirus crisis will change how people think about insurance in general, and it will change the insurance sector in three ways:

First, the coronavirus crisis makes digital insurance the new standard.

The pandemic will massively accelerate digital transformation. We have begun to see a shift from physical sales towards online sales. As long as people need to distance themselves socially, technology will help us stay connected to the world outside. The national lockdown makes people realise that they can buy insurance online – the same way they order goods from Amazon or food with Uber Eats. There is a realistic possibility that  this shift towards digital insurance will last. Why should people change back once they have realised how easy it is to manage all insurance coverage on their smartphones?

Second, small and medium-sized insurers will be the biggest losers of the crisis.

The coronavirus crisis has hit many insurers and brokers unprepared, forcing them to close the doors of their offices and start working from home. Operations and sales still rely on physical contact and paper-based processes and documents.

But how do you manage to have hundreds or even thousands of employees working remotely, without technical infrastructure? The problems already arise when insurers cannot access customer data from home. Many traditional insurers depend on an architecture that relies on local server landscapes which are immovable. What’s more, many insurers, agents and brokers neither have the experience nor the mindset to sell insurance online. Insurers and particularly agents and brokers that have not adapted to digital structures will have difficulties, especially the SMEs. The crisis will set them back further than before.

And third, it will fuel the growth of established insurtechs.

While traditional insurance companies have to almost stop operations in times like these, digital insurers are hardly affected. They don’t rely on brokers or agents and they are built on a strong and modern technological infrastructure that allows them to continue their daily business even when all employees work in isolation from home. Insurtechs have already succeeded in attracting young people as either customers or employees.

Millennials prefer solutions that aren’t paper-based, where they can see and change their coverage instantly. However, insurtechs still only have a tiny fraction of the market share. Over the next ten years, the millennial generation in Europe will buy almost one billion new insurance policies. That’s a huge potential. Now, insurtechs even have the opportunity to change customer behaviour for good. It is up to them to convince older generations of the benefits of digital insurance.