COVID-19 is causing economic hardship for consumers, businesses and communities. Insurance companies play a vital role during times like this by helping companies and households manage risks and cushion against losses.
Four phases in fighting the Corona pandemic
Forrester CEO George Colony suggests the coronavirus pandemic plays out in four phases:
- Phase 1: With no social distancing or active management, each infected person passed the virus to two others
- Phase 2: Most countries are in this phase, where infections are rising, but management techniques will eventually curb the increase
- Phase 3: New societal norms, enforced by governments, will help manage the impact of the pandemic. If done correctly life starts to resume, albeit at a “new normal.”
- Phase 4: This is the eradication phase which will occur once a vaccine is available and is achievable only if the world is successful in the first three phases.
Meanwhile, businesses are shut down, people are being laid off and companies are not realizing new revenue. As financial pressures mount people seek new ways to balance their income loss. As a result, insurance fraud thrives in times of economic crises.
Data-driven underwriting and claims
According to Celent, one way for insurance carriers to stay healthy in these times is to invest in data-driven underwriting and claims solutions.
Implementing automated fraud tools will allow you to safely automate underwriting and claims processes, staying focused on your core processes. Doing so allows you to serve the 97% of well-intentioned customers, while flagging suspicious claims or applications automatically for further investigation. Legitimate customers benefit from fast-tracked/low-touch processes.
With automated fraud detection, data is leveraged in real time. Solutions allow carriers to rapidly accelerate their use of third-party data as well as AI and machine learning to make sense of it.
Insurers have a chance now to build greater trust, brand loyalty and employee morale, affirming to policyholders, prospects and staff that the industry’s core mission is to help manage risk and buffer against major loss.
In their report Practical steps for responding to the coronavirus crisis, PWC shares that it is important to look for ways to “show compassionate, decisive value to the insureds and society to encourage long-term loyalty and impact.” This can be done using technology to enable speed and flexibility in response to crises.
Myriad articles recently speculate on how insurance companies will be affected by this situation, and the ultimate impact will depend on the duration and magnitude of COVID-19’s global impacts. Due to mandatory quarantines and shelter-in-place orders, people and business are getting used to operating remotely using digital tools, and this will likely continue even after the virus is contained.
Driver for digital transformation
The “new normal” we are living in has highlighted both the ability and importance to work in new, digitally enabled ways. As Mark Breading, Partner at SMA remarks in a recent article, our dependence on digital capabilities is something we’re currently getting used to and will come to expect in the future. With these capabilities, insurance companies must be prepared to deal with the increase in self-service digital interaction, assess internal operations and implications to employees and shield against the guaranteed increase in risk associated with a lack in human touchpoints.
It’s all about supporting the honest customer
In this time of crisis, customers need their carriers to keep their promises, exhibit honesty and empathy, and exceed expectations through full transparency. Not all customers will commit fraud because of the situation they might find themselves in, so it’s now more important than ever to trust your customers.