COVID-19: The European Insurance Industry in Crisis Mode—5 Strategies 

How European insurers are weathering the COVID-19 crisis, and five lessons learned for the benefit of markets that are yet to feel the full force of the pandemic.

(Streets of Milan. Image credit: Shutterstock.)

“Most people did not want to see us before corona,” said one of the most successful agents of a large German insurer in a conversation with me, “But now they surely don’t open the door. There are almost no sales going on anymore.”

The CEO of a midsize insurer told me, “Large parts of our business operations have no remote access. When corona forces us to shut down completely, we can’t process insurance applications or claims. We are setting up emergency processes.”

Warren Buffett once remarked that, “When the tide goes out, you discover who’s been swimming naked.” This seems also to apply to carrier and agents around the globe. Regardless of their starting point, now carriers, agencies and insurance professionals in Europe are developing measures and tactics to prevail—and to lay the foundation to come out of this crisis stronger than before. Here are some of them:

Corona Doesn’t Kill Sales—Bad IT Does

The agent mentioned was lucky. Just a few months ago his carrier introduced video consultation software including the possibility to fill out an application and sign the document legally binding via an app. The problem: after all the agents and sales managers were sent to their home offices and all meetings with clients called off, the IT infrastructure could not handle thousands of people using the system at the same time—so it crashed often in the middle of a consultation. IT departments in the industry are working day and night to increase the computing power of the IT architecture.

But it’s not only a technology problem. A lot of systems that are used to share a screen, show the form to be filled out and the app to sign the application are so badly designed and unstable that sales managers need to apologize for this painful customer experience. Going through the sales process for a new health insurance for my daughter, I was incredulous at the number redundant questions asked. We had to enter the same personal information several times, because different systems were not synchronized—all within a user-unfriendly UI. Such deficiencies can’t be corrected overnight, but in the wake of the crisis insurers must examine all online processes and in many cases radically improve them.

Some insurers have found that many agents and sales managers don’t regularly use the digital tools provided to them, whether out of habit or owing to shortcomings of the systems. To deal with the poor adoption levels some insurers have launched programs to (re-)train all their agents and employees with tools that can be be used in a remotely. As a result of the remote-work imperative, several insurers have just adopted digital tools like Slack, Trello and even Zoom. Due to data privacy concerns and strict interpretation of GDPR these tools were considered out-of-bounds only a few days ago.

Many of these measures have come down from headquarters, but often team leaders and department heads have taken the initiative without waiting without waiting for orders. Independent agents have had to shift for themselves, of course. Some agents have published emergency numbers for their clients—including chat options—stressing that while their agency maybe closed but that they are available to their clients. A role model here is Jörg Riccius, an Allianz agent.

Even when the technical aspect of the switch to fully remote has been successful, many departments and teams face the challenge of how to organize their work. While some departments have experience in remote work, other parts of insurance organizations have never worked remotely. Insurers and InsurTechs have been organizing daily meetups virtually. Naby Mariyam, CEO of the Australian InsurTech Coverhero, reports that her company started to conduct virtual coffee breaks and virtual lunches in a bid to acknowledge the social significance of work.

Life-Threatening Claims

Due to the partial shutdown of the European economy, insurers with large portfolios of business interruption policies are wondering if the accumulation of a large number of claims within a short period of time (in case epidemics are considered covered) will endanger their survival. The same applies to term life insurers. In case of a significant number of deaths, a huge amount of insurance claims could be paid out. This does not apply for all lines of business: without being cynical, one must note that for a long-term care insurer this could have the opposite effect. Depending on lines of business, the senior management of insurers across Europe may be evaluating very different scenarios.

Customers in Panic Mode

Already in the first days of the crisis, several sales managers from banks and insurers have reported a spike in policy cancellations. Such behavior makes no sense, for example, in the case of health insurance, but it shows how several customer groups are in crisis and panic mode. It’s safe to assume that they are not in the frame of mind for discussions about insurance and finance at the moment.

If the economy collapses, and small and midsize businesses either go out of business or scale down dramatically due to the implosion of revenue, insurers will lose a highly profitable customer group.

Some agents systematically call their elderly customers and offer help; others call small and midsize business owners; others still call them all. But there is only so much an agent can do. At some point the lead pipeline will come up empty. Insurers across the continent are debating internally how to support struggling segments of the sales force.

Life Goes On

Several insurers, InsurTech and service providers stated that they were surprised how quickly the whole organization was able to pick up the work again after a brief period of disorientation. Some midsize companies needed only a few days to turn the switch—arduous though they may have been.

We asked several decision makers in the European insurance industry what they would say to managers in countries that have not been hit as hard yet. Here are five lessons they shared

  • Take this crisis seriously—It’s not a problem in “China and Europe” it will also reach you
  • Prepare your organization to work fully remotely—before the pandemic hits you fully
  • Enable your sales force to serve clients via video and provide tools to close a sale fully digitally.
  • Support your employees to structure the remote work as you would have done in the office. Include social calls and meetings.
  • No need for panic of finger pointing: hyper-focused action ensure survival.

Adapting to Remote Agile

Robin Kiera, PhD // Dr. Robin Kiera is an Insurtech & Fintech Influencer and founder of Digitalscouting, a Hamburg-based consulting firm and platform for thought leaders, entrepreneurs and senior managers to share best practices, lessons learned and up-to-date views on tech and business trends around the world.

Leave a Comment