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Pandemic gifts industry ‘opportunity’ to remake for future

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A new report from consultancy EY has outlined what it believes is an “opportunity” for general insurers everywhere, including in Australia, to “remake” their business models for a post-COVID landscape.

According to EY, the pandemic has accelerated a number of changes that were already evident before the virus outbreak broke out in March last year and morphed into a global public health crisis.

A prime example is the industry’s investment in digital offerings and upgrades to its IT infrastructure, which are all aimed at keeping in touch with consumers who increasingly prefer to transact and communicate through mobile devices.

“The global insurance industry faces a truly unique moment in its long history,” the report said.

“The fundamental disruption caused by the COVID-19 pandemic equates to an opportunity for the industry to remake itself in line with new societal realities and market needs.

“Individual companies must look to retool, reposition and even reinvent themselves. We believe the industry has innate advantages and proven abilities - as well as a noble purpose of protecting people and businesses - that underscore the case for continued growth and opportunity.”

EY Asia-Pacific Insurance Sector Leader Grant Peters says Australian insurers should look to connect more with their customer base, explore ways to become more agile and digital-centric.

“Like any other industries, there will be certain learnings and almost accelerated trends if you like,” Mr Peters told insuranceNEWS.com.au. “Some of these trends already existed pre-COVID but have been accelerated.

“I think one of the key trends we are already seeing and will be accelerated is more flexibility in product terms and offerings that insurers have for their consumers.

“So we will see some more tailoring of products particularly for different customer segments than before and we think we will see a lot more innovation and competition in that area.”

The EY report also touches on the near-term outlook for insurers. It says as a broad-based economic recovery is likely this year, both individual and commercial customers will see greater need for insurance solutions.

On the other hand, stricter regulatory oversight and new reporting requirements will force insurers to rethink how they manage performance and communicate their strategies to capital markets.

“To be clear, the effects of the pandemic will be felt for years to come and considerable uncertainty remains,” the report says. “Still, there is reason to return to the cautious optimism that was prevalent heading into 2020.

“After all, insurers demonstrated their ability to change quickly and purposefully. To pivot so deftly to the all-digital, remote working world was an impressive feat for a sector widely viewed as sluggish.

“These hard-won operational and cultural changes should be sustained in the face of difficult strategic choices and resource allocation decisions.

“However, insurers should not miss this unique moment to enhance their relevance and reputations.”

Click here for the report.