03/24/20

Business Disruption Strategy During an Economic Downturn

By: Karna Trautman, Senior Principal

The COVID-19 pandemic has triggered business disruption at a global level. The nature and scale of the resulting economic impacts will likely take time to work through. Companies in every industry face unique challenges and approach them with a variety of risk thresholds. There is no “one-size fits all” strategy in any industry. There are, however, tailored solutions that mitigate risks while minimizing losses and position companies to emerge from the COVID-19 pandemic stronger and better positioned, particularly insurance providers.

Short term:

Address employee needs

Employees who usually work onsite may now be feeling a lack of connectivity if working remotely. Job satisfaction can be highly dependent on an employee’s social engagement with others at work. Enabling your team to utilize digital tools to the fullest can help provide normalcy to an otherwise abnormal time. For example, some companies are allowing employees to connect over coffee breaks – virtually. If the team regularly congregates for coffee at 10 am, have them now do it with their laptops open and cameras turned on.

Put the customer at ease and communicate

Hotels, airlines, restaurants, stores, health insurers, home, and auto insurers have all sent messages about what they are doing to help their customers. Interestingly, I haven’t heard from any of the five life insurance companies that I have a policy with. This proactive communication is an opportunity to reinforce insurer-to-policy-holder connectivity, remind people of the benefits they have, and put the customer at ease.

Review your business operations

Reassess your organization and critical functions. Do you have a backup plan if your key contributors are out for 2-4 weeks? For example, insurance and financial service contact centers are currently experiencing an unprecedented influx of activity. Due to support issues of global remote employees and contractors, the struggle to support the intense volume of inbound calls, emails, and queries has escalated. Set in place resource backups, potential staff transfers, and consider using interim third-party help that knows your business operations.

Map your technology dependencies

Reassess where technology and human dependencies co-exist to support a remote workforce. Improve remote/cloud data center management capabilities, ensure additional inventory of critical equipment is readily available, and leverage web/virtual desktops for crucial applications such as customer service, claims, underwriting, finance, compliance, business intelligence, etc. Prioritize applications to identify the most mission critical. Finally, increase as required infrastructure capabilities to handle increased usage due to remote work for conference calls, video meetings, etc.

Project delays or reprioritizations

Many companies have put projects on hold or in slow mode until employees have adjusted to working remotely. Within days, allocations may increase for customer support, advisor/client virtual meetings, website product access, and financial products such as guaranteed income annuities and disability insurance. While reprioritization efforts of none-core projects are underway, some companies are pivoting resources to maintain productivity in a virtual delivery environment. A business reprioritization initiative may be necessary to start immediately.

Midterm opportunity:

Define the new normal

And YES, in my opinion, there will be a new normal because companies have experienced a new workforce model and are learning from it. What’s the new normal when employees are asked to return to work in the office or no longer required to work remotely? In the medical industry, telemedicine is in demand and growing. They have figured out how to get more done now than they ever thought they could get before through digital channels. During unprecedented times like this, migration from physical visits to digital visits in the insurance space will move faster than we ever thought. Now is an excellent opportunity for insurers to define a new normal that can accelerate their growth.

I believe that insurers will come out stronger after the pandemic by implementing a virtual face-to-face sales model. The days of kitchen table sales will be in the past, as people may find it inconvenient to have agents in their homes. Agents need to continue to build their business and increase sales by using digital tools and expanding consumer experience to stay viable. These capabilities in the long term will have a significant impact on your growth trajectory after the crisis is over.

Long term opportunity:

Increase in product sales

We already see a demand increase for guaranteed income annuities, disability insurance, and life insurance. As history repeats itself, “safety” products increase during and after a market downturn. Though we have seen a downturn in companies offering disability insurance over the past decade, several insurance companies are now re-entering the disability insurance business.

Meet customer expectations of an “Amazon-like” experience

Direct-to-consumer (D2C) sales are on the rise. We now see new insurtechs offering “click to buy” options with no agent involved. This pandemic could be the impetus to catapult the D2C channel. Many companies have resisted or incurred obstacles with their agents as they see this as competition. Now is an opportunity to do it without offending agents because companies no longer have a choice.

During times like this, companies can differentiate themselves and create new opportunities. Immediate tactical actions, strategic mid-term and long-term planning will define how your company will emerge from the global impact of the COVID-19 pandemic.

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