Lockdown has forced us to think creatively and innovate

By: Louis Kahts, CIB, Head of Underwriting

For many, if not all of us, 2020 has been a year that’s required a complete rethink of how to approach certain situations and for a while – especially during the hard lockdown period – normal, day-to-day activities have become almost alien. 

The impact of lockdown on our careers has been even more demanding and challenging. The changes we have experienced are profound and, to a large degree, have shaped our future way of working and forced us to adjust to new employment rules and trends. The financial impact on our industry has been severe, to say the least. There are ample news articles available from industry players highlighting the loss of income, the loss due to claim payments as well as future expectations in terms of what the outcome might be. Then there’s the reputational exposure that has engulfed our entire industry and left it bruised and tainted.

However, we have also seen some excellent positive innovations being brought about by the lockdown. It is crucial that we do not lose the thread of this thinking, nor stop innovating once lockdown restrictions have been lifted. 

Asset insurance 

One of the first aspects we were required to look at during lockdown was the fact that many employees are working from home. This was especially relevant during the first two months. Suddenly insurers had to start thinking about how to accommodate this new trend as, historically, the Electronic Equipment section for instance, is intended to cover assets while on the office premises, not while at the homes of employees. 

Not all companies were geared to allow employees to work from home. It was not the norm to have laptops for all staff. Furthermore, most companies still use desktops, primarily for cost reasons, but also for the ability to increase memory and speed in these units. It was, however, easy to extend cover to residences of the employees and insurance companies were eager to assist. Certain factors needed to be taken into consideration, like lightning protection and security, but there is no reason that we should discard this benefit. Work practices have changed, and more people will work from home in the future. We should welcome this forced change to our thinking. 

Motor insurance

The lower traffic volumes on our roads has most definitely been one of the stand-out benefits we have experienced during lockdown. As mentioned above, lockdown led to most of our colleagues to work from home, especially during the first two months. Traffic is gradually increasing as the lockdown levels become more permissive, but many of our colleagues are still either working from home on a permanent basis or operating from the office on a limited number of days during the week. 

Most of us would also have seen the number of products that have been created in the past couple of months targeting this work-from-home consumer. People spend less time in traffic, which consequently improves their risk profile. These consumers want to see some type of benefit. Fewer vehicles means fewer accidents and fewer opportunities for associated issues such as vehicle thefts and hijackings. 

It is still difficult to estimate the benefit that this might have on our results. It will be interesting to see if there is a marked improvement or not. The fact remains that this trend has created the opportunity to look at conventional vehicle insurance and improve the market offering. Some insurers have offered kilometre-driven products in the past, and this has become extremely relevant during the lockdown. It will be important for all insurance companies to operate in this space if they want to be serious players and if they are committed to growth and client retention. 

The complexity is to find the perfect position of being able to offer some type of discount while not causing a deterioration in results. Risk assessed rating remains relevant. 

Property insurance

One of the biggest concerns we have encountered during the past couple of months has been remedying certain clients’ outstanding risk requirements. 

The risk approach strategy of any underwriter will dictate what is acceptable and what is not. CIB believes that successful underwriting cannot be achieved without a sound risk management approach. Although it was difficult for some clients during lockdown, most construction and maintenance companies could return to normal working conditions relatively early as lockdown restrictions were lifted. 

We focused on getting essential requirements completed first, while standard housekeeping requirements were remedied as soon as clients could visit their business premises again. It is, of course, beneficial that we are currently in stage 2 of the lockdown and that most companies can operate again, either at or near full capacity. Clients can therefore ensure that all requirements are met before we enter the rainy season. 

It has been – and remains – important to understand different requirements, as well as the severity of the requirements, and to assist clients wherever possible. 

This approach is another example of how underwriters can meet specific client requirements in terms of getting outstanding risk requirements resolved. It is sometimes worthwhile to understand client restrictions before simply limiting cover.

And always remember, changes should not be made at the expense of applying sound underwriting principles. 

In closing

The impact of the current restrictions is not as severe as it was in previous months. Businesses can conduct themselves in mostly familiar circumstances and insurance companies can use the best of what they have learnt to offer our consumers more relevant products and solutions. 

This is what I referred to in terms of the entire experience not only being negative. The past five months have created new ideas and new approaches to employment, risk management and product offerings. 

Companies that will succeed in the future will take the lessons from this situation and use them to improve both their internal and external offerings. Who knows what the next challenge might be? 

For the first time in years the insurance industry has been forced to really think creatively to ensure business retention and business growth. A challenge normally brings out the best in people and companies that are willing to accept it will see the positive in it and learn from it. 

We are confident that our insurance industry has done just that, and we are exceptionally positive about our future.