My article on the longer-term business model implications of Covid-19 asked whether COVID-19 creates an opening for new, or updated, products and services that insurers should be offering to the market. This article is an attempt to answer that question, focusing on P&C/general insurance.

Personal Lines

Given its scale, let’s start with auto/motor. So far, we’ve seen major reductions in vehicle usage, and many insurers returning premium to policyholders. But what will happen next? Two potential scenarios are:

1. People wonder why they’re paying for vehicles they’re not using, and sell (or end finance arrangements on) one or more vehicles, taking up any slack by using rideshare companies or (cheaper) public transport. The auto insurance market shrinks.
2. People reconsider the risks to their health of using public or shared transport, so reduce their usage and buy a car instead. The auto insurance market expands.

Either scenario is believable, and I suspect both will be true, each applying to different cohorts of customers. Someone living in an area with no public transport and minimal rideshare coverage may well make a different decision from someone in the opposite position.

If this is correct, insurers need to be thinking about the potentially changing needs of different customer cohorts and adapting their sales and marketing efforts accordingly.

There’s scope for product changes, too.

Concerns about paying premiums for unused vehicles could certainly lead to increased take-up of existing usage-based, or pay-as-you-go, insurance.

But insurers could also offer some innovative "in between" options. For example, where mileage driven is a material rating factor, perhaps the customer could have the option to submit monthly odometer readings and have the premium adjusted automatically -- just as many energy companies do. Thanks, Charles Bryan, for that idea.

Turning to homeowners and renters insurance, there are product development opportunities here, too. If I’m spending much more time at home, I’m far less likely to be subjected to theft or burglary. I may have a slightly increased risk of fire breaking out (increasing claim frequency), but I’m also far more likely to notice this early, reducing claim severity. Damage through escape of water is also likely to be noticed much earlier than if the home is empty all day. So – why am I paying the same premium on days that I’m a lower risk than I pay in normal circumstances? Wouldn’t I be attracted to a usage-based or pay-as-you-go proposition for my homeowners or renters insurance if one was offered?

But also, if I’m doing my day job from home, won’t I need additional covers? What if I somehow mess up while working from home, in a way that wouldn’t happen if I was at my employer’s premises? Maybe there’s a computer virus lurking on my home network, just itching to break into my work laptop via that free conferencing app I just found. Does my existing liability or umbrella cover protect me? Or is this another opportunity for insurers to provide further covers for those feeling nervous about working from home?

See also: Pulse of Insurance Shopping During Crisis  

What about pet insurance? Am I less likely to have to make a claim on such a policy if I’m spending more time at home with my pet, and exercising him or her more often? Should my insurer take that into account in its pricing? And how might my insurer take account of the fact that the pandemic closed many veterinarians’ offices?

How about travel insurance? (Thanks, Julie Culligan.) Clearly, there’s been a downturn in this product’s attractiveness over the last couple of months. I’ve certainly not renewed my own annual travel policy this time around. But what happens when people can travel again? Perhaps potential customers in a post-pandemic world will now be more aware of the risk they’re taking if they book vacations uninsured. Does this provide new opportunities for insurers? If so, do covers need to be adjusted to provide comfort to customers that the events they’ve seen in the COVID-19 pandemic will definitely be covered next time around? Will customers be prepared to pay more?

Is there any scope for developing new products or new covers altogether? Here are some initial thoughts:

Many people have now realized that their home broadband connection is more critical than they thought. Without a working connection, children can’t attend video lessons, parents can’t work remotely and the family’s entertainment options in their downtime are much more limited. Is there scope for an internet interruption product? Or even something more sophisticated that underwrites a certain level of internet bandwidth or internet speed, given multiple concurrent users?

How about personal technology and cybersecurity products? There’s a good chance that, once people’s incomes have returned, they’ll be upgrading their home tech to provide larger screens, more stable video-conferencing, and better Wi-Fi – all in case there’s a second spike. Does that provide a one-off opportunity for smart insurers to alert existing or potential customers to technology risks more generally? And should insurers consider providing cybersecurity audits to personal lines customers in the same way as some do for businesses?

Those are my initial thoughts. Are there any other personal lines product or service opportunities that insurers should be thinking about?

Commercial Lines

Some of the themes explored under personal lines are equally applicable for commercial lines insurers. 

For example, many businesses, as well as individuals, will have vehicles sitting unused. And they, too, may be considering making changes to their fleet when they can. The ideas discussed above, in the context of personal lines, apply to commercial auto, as well.

Commercial property considerations, on the other hand, work in reverse from personal lines. Instead of being unexpectedly occupied, many commercial premises are now unexpectedly empty – increasing the risk of major theft, fire and water claims. Did the rating of these businesses’ polices anticipate this possibility? If not, is some element of flexible, usage-based insurance needed for commercial property, so as not to undercharge for these risks again? 

Turning to more specific commercial lines products, much has already been written about business interruption insurance. In some jurisdictions, commercial lines policyholders have been very surprised to discover that their business interruption cover doesn’t cover this particular business interruption. Legal action and, in some jurisdictions, legislation is on its way to resolve the issue this time around. But what about next time? What is the opportunity available for the insurer that states, unequivocally, that the temporary closure of a company’s business by government edict will be covered by insurance?

And how about a business disruption that doesn’t go as far as a full interruption? As I wrote in my earlier article, many companies that could otherwise have stayed open found that their supply chains were no longer supplying – either because of the suppliers’ own business problems, or because the country in which the supplier was resident had banned the export of their supplies. Is this type of business disruption already covered by a typical business interruption policy? If not, does that create another opportunity for insurers to innovate? Especially as a "mere" epidemic in the supplier’s country might have the same impact in fthe uture as the current pandemic.

Turning to workers’ compensation, are employees covered by a business’s standard policy even when they are working from home? Even if their working from home was never expected, and therefore never considered, or priced, by the insurer? Unless the answer to both those questions is yes, then these products will also need to be re-written, or have optional covers added, to account for similar occurrences in the future.

And how about cybersecurity cover? We looked at that, above, as a potential new opportunity for personal lines. But should the experience of the pandemic drive changes to the product in a commercial lines context? I know of a case where an IT employee, who had never previously worked from home, was forced to do so because of COVID-19. When making an update to the company’s core systems, he used his home PC -- to which he would not normally have access when at work -- and triggered a company-wide ransomware attack. Whether that completely unexpected act is covered by the company’s cybersecurity insurance, the key question for me is whether it should be covered in the future, at least as an option, given what the insurer now knows about that particular risk. Either way, the chances are that the product needs to be redesigned.

See also: Parametric Insurance: Is It the Future?

Again, those are just my initial thoughts for commercial lines in the wake of the coronavirus. But are there any other commercial lines product or service opportunities that insurers should be thinking about?

* * *

One final thought, which applies to both personal lines and commercial lines, and therefore to the P&C/general insurance industry in general:

If there is one positive for insurers arising from COVID-19, it’s that most people in the world, whether currently insured or not, are now much more aware of the massive impact that an apparently small risk can have on both them and their business.

If insurers take steps to tailor their products and services, and to innovate based on what they have learned, there is a once-in-a-lifetime opportunity to educate potential buyers on the value of insurance -- and hence expand the market.

As the pandemic began to sweep across the world, reports of people panic-buying life insurance appeared in the media. RGA reviewed the available data to determine if a COVID-19-inspired spike in sales is in fact taking place and to consider whether the current crisis could prove to be the tipping point for a new era of digital life insurance sales.

Most people have a problem that life insurance can solve: If your family would struggle to survive the permanent loss of your salary, then life insurance could be vital. This is the case for hundreds of millions of people around the world.

The challenge is that most people do not realize they have this problem. Few people spend time thinking about the consequences of low-probability events and are therefore disinclined to consider the need for life insurance. This has given rise to the industry adage: Life insurance is sold, not bought. 

But surely the COVID-19 pandemic has awakened public awareness of the need for life insurance, right? With the world shut down and media reports filled with stories of tragic loss of life, people are increasingly aware that good health and a long life cannot be taken for granted.

Initial media reports spoke of COVID-19 fears leading to increased online life insurance sales, with Forbes even reporting evidence of “panic shopping.” At RGA, we have been actively analyzing available data to identify and try to explain any early patterns. 

Early data indicates limited early impact

We began with Google Trends data to determine how searches for life insurance have been affected.

Source: Google

NB: The chart covers May 10, 2015, to April 26, 2020. The data is based on random sample of searches, excluding duplicates by user. Results are relative to all other Google searches during that period and geography – decreases are relative to other searches, not necessarily absolute. 100 = highest relative search volume for that term.

As the graph shows, worldwide searches for “life insurance” have risen steadily over the last five years and peaked from January to early March 2020, coinciding with the beginning of the COVID-19 outbreak. However, searches have since fallen back to pre-virus levels. Furthermore, this peak did not occur in all countries. Analysis at a country level shows that the U.K. and U.S. mirror, and perhaps drive, the global pattern, but no discernible peaks or subsequent decreases coincide with COVID-19 outbreaks in Italy, China, Germany, Australia, India or South Africa.

We should be cautious about drawing too many conclusions from Google Trends data. Considerable noise and fluctuations make it difficult to distinguish clear effects from statistical randomness or other patterns. For example, similar Q1 trends occur in the previous four years – although the March 2020 decrease is much larger than in these earlier years. Most importantly, Google Trends does not indicate causation. For example, some people may have been searching simply to check if their life insurance policy likely covered COVID-19.

Yet evidence from other sources supports the U.S. Google Trends pattern. A  LIMRA survey of 47 U.S. insurers assessed the impact of COVID-19 on individual life sales and applications in the U.S. 24% of companies reported that online and mobile applications rose in March, but 63% reported either no change or a decline. Only 7% saw an increase in face-to-face applications and 9% an increase in call center or mail applications.  Nearly half of companies said they were expecting a decline in sales in March, with 20% expecting a decrease of 10% or more. How this reflects normal seasonal fluctuations is unclear, but most companies were expecting sales in the full first quarter to be flat at best. 

According to the MIB Life Index, which measures U.S. life insurance application activity, demand for policies in January and February reached its highest level since 2015 but then dropped by 6.7% in March and a further 5.5% in April. This was a year-on-year fall of 2.2% in March and 3% in April.  

See also: Fundamental Shift in Life Insurance?  

Data available to date suggests that, even if an initial COVID-19-related bump in applications occurred in some markets, that bump was both limited in time and geographic spread and may be outweighed by a subsequent drop in applications. So we must now ask: Why has COVID-19 had such a seemingly limited impact? 

Life insurance is still sold, not bought 

It is possible that any initial rise in searches and applications came from those already considering life insurance and for whom COVID-19 acted as a final spur and accelerant. Some media reports support this thesis. This could also explain why the sales impact was greatest in those markets where it is easy to buy life insurance online or where consumers are accustomed to buying other financial products online. Similarly, advisers may have accelerated sales ahead of the lockdown, as they anticipated delays and restrictions on medicals, lab tests and other underwriting requirements. The subsequent reduction could also then reflect the delays and restrictions that people experienced once the lockdown began.

For the majority of those people not already considering life insurance, data indicates the pandemic has not motivated them to make a purchase. Also, the subsequent drop in searches does not suggest consumers are trying to buy online but finding it difficult to do so. The key reason, of course, may be economic. Most people do not view life insurance as an absolute essential, so if the primary breadwinner has lost, or is at risk of losing, his/her job, it is unlikely the person will decide now is the time to spend discretionary money on life insurance.

This is another reason why, counterintuitively, now might be a bad time to be promoting life insurance. It is easy to forget many people have an instinctive negative reaction to talking about money in relation to death. We are hearing about an increase in complaints and negative comments in response to online ads for life insurance, even when they are seemingly innocuous and make no reference to COVID-19. One prominent clergyman in the U.K. has even criticized the “grim promotion” of life insurance ads on Twitter. Many insurers have recognized this and are delaying planned email marketing pushes.

It may also be that the risk of COVID-19 is still too abstract for most people. One of the main triggers for purchasing life insurance occurs when someone we know passes away, especially if that individual is young and leaves behind a family. This was highlighted earlier in 2020 with the death of basketball legend Kobe Bryant. The volume of life insurance application requests and submissions spiked by over 50% in the days after the 41-year-old’s death on January 26, before returning to normal levels within a week, according to True Blue Life Insurance, an online aggregator and comparison site for life insurance. True Blue’s CEO commented: “In a lot of the phone calls to our agents, Kobe came up.” 

Whereas a personal story of loss such as Kobe Bryant’s can significantly affect numbers and statistics, the risk of COVID-19 may still feel distant and theoretical for many people. 

Or perhaps this crisis is just another reminder that the life insurance industry has not yet cracked the digital distribution challenge. Buying life insurance is not natural human behavior. In fact, from a behavioral science perspective, it is probably one of the hardest products to sell. We are drawn to personal, immediate and certain rewards – but the rewards of life insurance are for others, seem distant and often appear uncertain.

People need to be persuaded to buy life insurance, and the human-to-human approach remains the most effective. Even if we see an increase in online applications, it may not make up for losses incurred from sales teams’ inability to go out and sell. For example, Ping An in China has reported a hit to sales driven by a decline in face-to-face services.

An uncertain future

It may be that COVID-19 will eventually help drive demand for life insurance, but not quite yet. As lockdowns began and people were stuck at home, often juggling work and parental responsibilities, life may have simply become too busy to think about life insurance, especially as many came to grips with social distancing and other disruptive public health measures. We are still in the eye of the pandemic storm, and people have more immediate concerns than life insurance.

COVID-19 could create fertile ground for future sales opportunities. It has been suggested that younger generations, especially in developed markets, view life insurance as less necessary than previous generations did at the same age.  

See also: Pulse of Insurance Shopping During Crisis  

This may change in a world where illness or accident is no longer a distant threat and where we can clearly demonstrate the value of life insurance to people. Once the immediate COVID-19 fear has passed, insurers may find it easier to help consumers appreciate the “peace of mind” that life insurance brings. 

It is clearly too early to draw conclusions about how COVID-19 will change society and undoubtedly too early to be certain how it will affect demand for life insurance. However, at the moment the evidence suggests that the adage about ‘life insurance being sold, not bought’ still rings true. COVID-19 is hampering the intermediary sales channel more than at any time in living memory. For many developed markets, this merely highlights a problem expected to occur in the next few years anyway as the intermediary market continues to age and shrink. 

In recent years, the life insurance industry worldwide has made great strides in making life insurance easier to buy. The focus may now need to shift toward finding ways to make it easier to sell.

As companies emerge from government-mandated COVID-19 shutdowns and begin re-opening, they will have to balance a desire to resume operations with the risk of a liability exposure from customers or employees who get sick and claim the business was to blame. In tomorrow’s fragile economic recovery, such litigation could mean the end of a business.

Small businesses and retail in particular will need to take reasonable steps to open safely, following recommended measures to minimize the risk of transmission and infection among people before re-opening their doors to a willing public.

Even if a business adopts all prudent measures, there is so much we don’t yet know about the transmission of the COVID-19 virus or its prevalence that there remains a chance of people being exposed and getting ill. And where there’s a chance of exposure, there’s also a chance of businesses facing liability lawsuits alleging their preventive efforts were negligent and to blame for someone’s illness or death.

If businesses choose to open, and not avoid the risk by remaining closed until safety is more assured, they will have few options to transfer their liability risk. One option eventually will be new pandemic liability policies and endorsements, which are sure to be developed by the insurance industry soon. These likely will be quite costly and perhaps unaffordable to small business until the risk is better quantified. Small business associations might eventually develop group captives or risk-sharing mechanisms as an alternative, but those also will take time to set up and price the risk.

A more fundamental option for non-essential businesses to transfer the risk from opening their doors might be to implement some sort of hold harmless agreement. Such an instrument would require people to waive liability for their voluntary patronage of a non-essential business, such as a retail store, restaurant, hairdresser, sporting event and so on. This kind of agreement seems especially applicable when we know so little about the transmission of the COVID-19 virus, and going out into this unknown environment seems risky.

Hold harmless agreements are widely used but often overlooked. Have you ever read the fine print on a parking ticket, or read the waiver you sign when you participate in an athletic event or activity like a zip line ride? With modern technology, there likely are more efficient digital ways to present a waiver of liability before one enters a business, requiring a person to give consent and to record that agreement.

When a business does all the right things, it shouldn’t bear all the liability arising from a pandemic virus. While a customer may have a reasonable expectation of safety entering premises open for business, with coronavirus unknowns the customer is assuming some risk. Asserting one’s freedom to engage in non-essential activities like shopping for garden supplies, getting a haircut, going to a concert or eating at a restaurant four-top also requires the customer to assume some responsibility for the risk of infection.

When someone engages in a high-risk activity like skydiving, the person typically is asked to sign a liability waiver, acknowledging there are risks and expressing a willingness to assume them. This doesn’t eliminate the risk—it shifts it to the consumer. Obviously, if one doesn’t wish to bear the risk of horrible injury, one shouldn’t jump out of a plane and find the parachute doesn’t work as well as the laws of physics.

We know the industry is looking to develop insurance solutions for the business liability risk, but, if individuals are assuming a greater personal risk, might there be an opportunity?

Maybe this unprecedented situation calls for some form of personal accident insurance, or an endorsement to another policy like health insurance, that would cover medical expenses, loss of income or even death benefits if someone is exposed to a pandemic virus after shutdown orders are lifted. This sort of insurance would not only provide financial relief for a loss, but also peace of mind amid the unknown exposure risks of a pandemic.

Airlines, event organizers and so on could even embed such voluntary coverage in the price of a ticket, perhaps for a limited time at risk, such as a two-week period of incubation after an event.

Maybe there’s also a market for a transmission liability risk, protecting an individual from being sued by another party for causing an infection. This could be structured as an endorsement to liability protection in homeowners or umbrella coverages.

Who knows—for the first time the industry could come up with a product that people want to buy, not one they have to buy.

See also: Rethinking Risk Management in a COVID-19 World  

All of the above presumes that businesses and customers act responsibly and take preventive measures to minimize exposing themselves and others, and do not negligently embrace the contagion. What about situations—which sadly are emerging more frequently as shutdowns ease and people balk at stay-at-home restrictions—in which neither party shows a regard for public safety and exposes themselves and others to a risk of infection?

People may have a right to put themselves in harm’s way, but do they have a right to expose others to harm? Throughout all of our communities are those who choose individual freedom and ignore potential adverse consequences to themselves and their community. This raises a significant challenge to both risk managers and legislators and raises a basic question: Who is responsible for managing the risk of coronavirus transmission?

While there’s a lot of uncertainty and misinformation about COVID-19, there’s almost universal agreement that, once infected, people can spread the virus to others. Borrowing from science fiction vernacular, COVID-19 acts like a microscopic alien life form, with humans as non-voluntary and unwitting hosts. This alien life form enters the body, adapts to the host’s DNA, thus converting every host into a potential killer. Even when a host is unaffected by symptoms, and may forever be unaware of having been a host, COVID-19 makes all infected people the contemporary version of a Trojan horse.

For policymakers, carriers, regulators and consumers thinking about ways to provide an incentive people to better manage this risk, consider the following “what if” scenario about introducing potential consequences of not following current mandated guidelines meant to manage the spread of COVID-19.

Let’s assume that, in a rebound of the virus later this year, the capacity of medical resources to care for the infected and ill ranges from scarce to completely overwhelmed. What if our individual access to the full measure of available medical services were to become largely decided by our own choices and risk management attitude? 

Person A goes to a hospital to be tested. The attending physician captures the person's contact history over the prior week. On the list is a sports bar and grill, which brings follow-up questions regarding that establishment and whether it followed social distancing and personal protective equipment guidelines. The patient replies, “The place was jammed, they had a band, and you couldn’t find a mask anywhere. It was great—just like old times!” The physician thanks the patient and promises to follow up with the test results. Patient A later receives a call at home. “We got your test back and are sorry to inform you of a positive result. We have already called in a script for a Z-Pak. However, I must also inform you we cannot treat you in the hospital if your condition worsens given that you chose to ignore current safety guidelines. We have limited capacity, and every serious case puts our staff at risk. We hope you feel better soon.”

Patient B also tests positive. This patient’s contact history reflects adherence to established guidelines regarding social distancing and protective gear. This patient gets a phone call that goes something like this: “We got your test back and are sorry to inform you of a positive result. We have gone ahead and called in a script for antivirals. I can assure you that, should your condition deteriorate, we will treat you here in the hospital.”

We believe insurance can offer solutions to help responsible businesses and individuals transfer some of the financial risk arising from a pandemic, but we also caution against a mindset that whenever a loss occurs “insurance can pay for it” without also introducing incentives for businesses and individuals to be smarter about risk management.

P&C insurers are staying the course when it comes to their original digital and technology plans and investments for 2020. Many insurers report no changes to their plans, with some reshaping and a few accelerating, but very few pausing or retrenching. These are the big themes in SMA’s new research report, P&C Tech Plans in the COVID-19 Era: SMA Market Pulse Insights. 2021 plans may paint an entirely different picture, but, for now, P&C insurers are moving full speed ahead.

As might be expected, the plans vary significantly by line of business. Commercial lines insurers are much more cautious than their personal lines counterparts, chiefly due to the larger negative impact of the pandemic. Still, our SMA market pulse survey of insurance executives confirmed what we have been hearing from our clients:

• 95% of personal lines insurers are moving forward with their overall technology plans and investments, with only 5% retrenching.
• 75% of commercial lines insurers are moving forward with their overall technology plans and investments, with 25% retrenching or pausing.

Our survey also showed that many of the insurers that are moving forward are reshaping and reprioritizing projects while keeping investment levels steady and striving to maintain momentum. Digital payments appear to be one of the hottest areas, as insurers have been obligated to send employees into physical offices to print and mail paper checks. Core systems also continue to move forward, although interestingly nuanced by line of business and with differences between policy, billing and claims plans.

Digital transformation plans are quite different for personal and commercial lines insurers. On the personal lines side, there is a trend toward accelerating plans, while commercial lines insurer plans are mixed. Only about one-third of commercial lines companies are continuing with digital transformation plans unchanged, while another third pause or retrench and the final third reshape or accelerate.

See also: Will COVID-19 Disrupt Insurtech?  

Overall, the response to the pandemic from P&C insurers has been remarkable as companies continue to support their distribution partners and policyholders. Plans are likely to morph even more as the pandemic continues. SMA intends to conduct the market pulse research on a regular basis throughout the remainder of 2020 and report on changes to insurer plans along the way.

For more details on how insurer plans are changing, read the new SMA Research report, P&C Tech Plans in the COVID-19 Era: SMA Market Pulse Insights, which can be purchased here. The report covers personal and commercial lines insurer plans for overall tech spending; digital transformation plans and investments; and plans for policy, billing, claims, and payments initiatives.

If you’ve read Part One of this series, you’ll have got your crash course in parametric insurance and can now call yourself an expert (relatively speaking). In the article, I promised to give a short overview of the 12 companies I think worth looking at that are examples of how parametric insurance works, and what the future might look like. But first a quick summary of Part One:

• Parametric insurance is emerging as a way to provide financial protection against losses that are often hard, or even impossible, to get insured for.
• Parametric insurance has been around for over 20 years. Today, it makes up around 15% of issued catastrophe bonds in a $100 billion market.
• Access to more data and more reliable sources of how that data is transferred is opening up an opportunity to take parametric insurance to companies small, medium and large. The access is also offering new ways to address the global insurance gap.

Now, here’s my list, ordered approximately by theme, rather than any specific ranking. Leaderboards have their place, but outside the established market for catastrophe bonds the area of parametric insurance is still too diverse, and broadly unproven, to attempt to rank companies. At least not yet.

AIR Worldwide (Owned by Verisk)

AIR’s U.S. hurricane catastrophe model was used for the first major catastrophe bond, issued by USAA, in 1997, providing $400 million of protection. AIR continues to provide one of the two most commonly used suites of catastrophe models. Reinsurers, brokers and insurers run cat models to price and manage natural catastrophe risk in most major countries. AIR has probably been the most frequently used modeling agent for U.S. hurricane catastrophe bonds in the last decade, and the company provided the analysis for the WHO pandemic catastrophe bond.

RMS

RMS and AIR have been jostling for position as the leader in providing insurance linked securities (ILS) catastrophe bonds to the global insurance industry. The RMS capital markets team has been behind some of the most complex and innovative catastrophe bonds, and RMS has been particularly strong in creating well-designed parametric triggers. Examples of bonds that RMS has worked on include Golden Goal, which provided $262 million of terrorism cover for FIFA for the 2006 World Cup. RMS was also behind the New York Mass Transit Authority (MTA) $200 million storm surge bond in 2013, issued following MTA's unexpected and largely uninsured losses of $4.7 billion from Hurricane Sandy.

As I mentioned in Part One, Artemis has the most comprehensive directory of catastrophe bond issued, if you want to learn more about what RMS, AIR and EQECAT (since acquired by Corelogic) have worked on. 

See also: Growing Case for Parametric Coverage  

New Paradigm Underwriters

This is one version of what the future may look like as parametric insurance moves upstream to the company market. Founded in 2013, New Paradigm pre-dates the term "insurtech," but as an MGA using new technology in a smart way it is one of the pioneers in this space. The company offers supplemental U.S. hurricane insurance for businesses that want added coverage for exclusions from the conventional policies on offer from insurers. The company's first product used an index derived from recorded wind speed as the payout trigger, and the company is now diversifying into terrorism cover.

A quick side note here. It was discovered in the early history of parametric hurricane bonds that conventional windspeed recorders that were relied on to measure windspeed (and hence define if the bond had triggered) had a tendency to blow away when conditions got unusually gusty. New Paradigm, and others structuring windstorm parametric triggers, now use data from the WeatherFlow network. It has installed over 100 windspeed recorders designed to survive winds of 140 mph and requiring no external power.

FloodFlash

Adam Rimmer and Ian Bartholomew, the founders of FloodFlash, started their careers at RMS and got their passion for parametric insurance when working on the New York MTA bond. The company's seed funding came from U.K. investor and incubator Insurtech Gateway three years ago. Still relatively modestly funded (£2 million, according to Crunchbase), FloodFlash is one of the best examples of parametric insurance being used today to provide a solution where traditional insurers have declined cover.

In the U.K., most homeowners get flood protection thanks to the government’s Flood Re initiative, but commercial businesses are excluded. FloodFlash models the flood risk at a high resolution and sells building-specific parametric insurance. The company operates as an MGA and sells via brokers. A FloodFlash sensor is attached to a building and triggers a payment almost instantly when the water rises to a pre-agreed depth. With hundreds of clients already signed up in the U.K., FloodFlash proved its worth after Hurricane Caura hit the country earlier this year -- “the fastest payout by a parametric insurance product that I’ve ever seen,” according to Steve Evans of Artemis.

Global Parametrics

Global Parametrics was launched in 2016, the brainchild of Professor Jerry Skees, and run today by Hector Ibarra, formerly of the World Bank and Partner Re. With funding that includes support from the U.K. government’s DIFD and Germany’s KfW, the company is building parametric products to support organizations and people in the developing world who lack insurance coverage or can’t afford it. Global Parametrics has commissioned its own models for climate-related losses around the world and is building out partnerships with other leading providers. Its customers include microfinance lending organizations and NGOs such as VisionFund. The company provides payments through disaster recovery payments, which can be used to help get vulnerable communities back on their feet after a flood, drought or other natural disaster. The team is well connected and has strong technical chops, definitely one to watch. Catch Hector live or listen to the recording of our chat on our BrightTALK channel.

Descartes Underwriting

It's one thing to build the technology for parametric insurance, but someone needs to have the confidence to underwrite it. Descartes is a Paris-based underwriting specialty insurer and is open-minded in what it covers as long as it gets "proper data.” Coverage so far has included property damage, business interruption from natural catastrophes, losses from droughts and losses from excessively high or low temperatures. Descartes has covered industries in areas such as agriculture, mining, construction, renewable energy and supports banks in protecting their loans and assets. Sebastien Piguet, co-founder and head of underwriting at Descartes, spoke to us on stage in April last year, and you can hear him on Episode 23 of the InsTech London podcast

Jumpstart Recovery

Getting claims paid from traditional insurance cover can take weeks, or even longer after a major catastrophe, but the costs kick in immediately. California earthquake insurance is expensive,and there are few affordable options to the rather limited state-backed California Earthquake Authority. Kate Stillwell, an engineer and earthquake modeler, started Jumpstart in 2015 with the aim of providing much-needed funds to increase the financial resilience of communities and provide economic stimulus immediately after an earthquake. Jumpstart accesses the peak ground velocity of the earthquake recorded by the USGS (U.S. Geological Survey) and aims to pay claims after 24 hours. The cover is currently limited to $10,000 per person, for residents of California only, and users need to certify, by text, that there has been damage and loss. Jumpstart has been supported SCOR’s Channel Syndicate.

Exante

One of the best ways to reduce loss from natural disasters is to provide funds to help people act before an event even happens. There is a lot of work going on to improve resilience from natural disasters through improvements in construction, often at a city or state level, but actions taken by individuals before disasters hit can also make a big difference. No one’s yet figured out how to forecast earthquakes, but Chris Lee, Dublin-based founder of Exante, launched his company in 2019 with backing from Shipyard Technology Ventures. Its aim is to help increase hurricane resilience for companies and their staff with a new approach to using parametric cover. Exante has designed a payout approach that is developed and calibrated using near-time forecasts of U.S. hurricane severity and landfall. If a hurricane looks likely to make landfall, funds will be released in the hours before a hurricane strikes. Payments will be made directly to Exante’s clients’ employees to help cover the costs of protecting their homes or evacuation expenses. It’s early days yet for the company, but contingency finance for risk prevention is a smart way to reduce losses.

African Risk Capacity

The African Risk Capacity (ARC) is a specialized agency of the African Union established to help governments improve their abilities to plan for, prepare for and respond to extreme weather events and natural disasters. ARC is using parametric triggers to provide contingency funding, and ARC Insurance creates pools of risk across Africa, which are then insured in the global markets. One of ARC’s parametric covers had a wobble in 2016, when a major drought in Malawi caused a large loss for farmers, but due to a problem in how the modeled index was set up didn’t trigger a payment as was intended. ARC ended up agreeing to pay a contribution toward the costs, but the wobble is a reminder that parametric insurance is sensitive to modeling assumptions and data, and that payouts may not always match the financial losses suffered (a problem termed “basis risk).

See also: Travel Insurance: An Exemplary Experience  

Blink

Paul Prendergast set up Blink in 2016 to provide flight cancellation insurance and earlier this year announced the launch of “Blink Parametric.” Back in the normal world we knew a few weeks ago, Blink Travel offered a cash payout or vouchers for hotel stays to customers who missed a flight, all fully automated. A recent development is Blink Energy & IoT, aimed at domestic appliance insurance and industrial IoT, offering protection for problems such as unexpected increase or decrease in energy usage. Blink's partners include Generali, Munich Re and Manulife. Paul reckons he’ll have three million customers by the end of this year.

Arbol

Arbol was set up in 2018 by former banker and commodities trader Siddhartha Jha to provide weather-related crop cover for farmers and others. The team is using highly localized data sets accessed from IoT sensors and satellites to create bespoke cover down to individual field level and is selling these through an established insurer broker network. The market in the U.S. for agriculture insurance is limited due to government subsidies, but demand globally is significant, and a lack of crop insurance, particularly in developing countries, is one of the biggest contributors to the global insurance protection gap. I’ll be recording an interview with Siddhartha later this year.

Qomplx

Formerly known as Fractal, Qomplx has the experience, beefy technology and access to data for rapidly analyzing risk across many industries. The insurance business is headed by President Alastair Speare-Cole, previously chief underwriting officer of Qatar RE, CEO of broker JLT Re and chairman of Aon Benfield Securities. Qomplx has a number of initiatives in the pipeline. It recently launched its first parametric product, WonderCover, backed by Chaucer and offering cyber and terrorism cover for small to medium-sized enterprises (SMEs). Alastair and his team supported our live chat event on April 30 on our BrightTALK channel.

In conclusion..

It’s not possible to get every company offering parametric insurance onto a list of 10, and this is certainly not intended to be the definitive top 10. (Although unlike some lists of “top insurtech companies” I’ve come across, at least all these companies are all still in business at the time of writing.) None of the main brokers are mentioned, but the big three (or should that be two?) are key in working with insurers and insureds to help communicate and structure all but the smallest risks. As a supporter of InsTech London, Aon gets a shout out here as one of the longest-standing experts in this field.

There are other companies we’re watching closely and have had on stage at InsTech London. Please let me know of other (decent) companies you are aware of with parametric solutions.

And look out for more live events on this topic soon. I'll also be hosting chats on post-pandemic coverages. Registration on BrightTALK.

Finally, if you are a company that would like to be considered for a future article, being a member of InsTech London or having a great photo of your equipment or your tech….

If you enjoyed this, found it useful or maybe both, then you may find something of interest in my other articles. You can also hear me talking to the industry's leaders and innovators each week on the InsTech London podcast channel (available on Apple, iTunes, Spotify etc). And for a weekly check-in on what's going on and what we think about it, you can get our two-minute, handcrafted newsletter delivered to you each Wednesday morning - sign up here.

Twenty-six million Americans are out of work, among them a large share of people who can no longer afford to put off applying for disability insurance. Where previously they may have been able to continue working for an accommodating employer or solely rely on their spouse’s income, today, there’s a good chance that’s not so. 

We have seen this happen with disability insurance in just about every recession in our nation’s history, so this shouldn’t come as a complete surprise. However, this downturn isn’t like most. Caused by a global health crisis, the current decline may bring additional changes to the long-term disability (LTD) industry that require strategic alternatives during an evolving economic environment. 

Consider all the cancer screenings that are on hold for two to three months or more. With progressive diseases or conditions like cancer, early detection is key. So, with these nonessential but still incredibly important appointments getting delayed, this means that, when forms of cancer are eventually detected, many could be in advanced stages with limited treatment options. 

This pandemic might also influence people’s thinking about both short-term and long-term disability insurance, including the possibility of more unexpected diseases like COVID-19. Reporting about the current pandemic already refer to prior outbreaks, such as SARS, MERS and the swine flu. These illnesses have been flagged by some researchers as more likely over the coming decades due to climate and environmental changes. As a result, employers and their employees might see even more value in disability protection.

See also: The Messaging Battle on COVID-19: Are Insurers Losing?  

Not only are LTD carriers in a position to see claims rise, they’re also in a position to see an uptick in business inquiries. This can be a positive, but things could quickly get out of control without the right insights and support. According to recent analysis by the Integrated Benefits Institute, costs for sick leave related to COVID-19 may be in the range of $6.1 billion to $23 billion in 2020, and short-term disability claims could go into the millions of workers affected.

To ensure success, LTD carriers are going to have to pay close attention to how much money is being paid in disability claims versus the rate of purchase by employers and their workers; the latter ideally outweighing the former. Third-party service providers may be able to help identify new developments. It can be hard to see emerging trends when you’re in the middle of them. Independent resources may have access and information to spot potentially significant marketplace trends— like COVID-19 survivors reporting long-term health issues—in their early days. 

Early analysis by medical professionals is finding multiple potential long-term health effects from the coronavirus, including conditions that fall under categories of long-term disability such as stroke among individuals under 50, long-lasting lung damage and damage to the heart, kidneys and brain. Research and medical studies are continuously advancing as the virus spreads. 

These developments signal the value and importance of accessing existing benefits such as Social Security Disability Insurance (SSDI), which covers more than 156 million U.S. workers. As more people experience COVID-19, LTD carriers can benefit by partnering with third-party providers capable of monitoring and assessing emerging health impacts. An added benefit is that these providers can help LTD carriers reduce spending by coordinating and assisting former workers to access the SSDI benefits they earned while working.

The LTD industry has long looked to third-party organizations to help them determine if a beneficiary is eligible for SSDI benefits. Steps include walking individuals through the application process and doing everything possible to make sure that person is approved for disability benefits as soon as possible. 

See also: 3 Tips for Improving Customer Loyalty  

This is important because almost two-thirds of SSDI applicants are initially denied during the application process, which lasts three to five months. If a claimant files an appeal, the reconsideration level of review by the Social Security Administration requires an additional four to six months, and only one in 10 claimants will be approved. With a second denial, claimants must file another appeal to the hearing level. This appeal may require another 12 to 24 months—up to two whole years—before an applicant receives a hearing with an administrative law judge, and less than half of these individuals are approved nationwide. 

During this time, LTD carriers can be paying the individual’s disability benefits and providing an important financial backstop for American workers. That reality is significant when coupled with the current environment as the LTD industry enters unprecedented times, and raises the opportunity for LTD carriers to explore and expand their alternatives with third-party service providers. If we’ve learned anything from this crisis, it’s that we’re stronger when we work together.

In the past, the insurance industry has had an image problem with younger talent. Top prospects have often migrated toward flashier industries like technology. But as the long-term economic impacts of the COVID-19 pandemic remain unknown, stable industries, like insurance, might have a recruitment advantage that independent agencies can capitalize on. 

There has been much discussion about how younger generations are changing the work environment. They want a flexible schedule, capability to work remotely and work/life balance. But they also want to have opportunities to be contributing team members. They want to create value and have their ideas heard. 

The insurance industry—especially independent agencies—are well suited for offering employees the ability to provide impact. Every day, agents help their customers have protection when the worst happens. The industry is also continuing to innovate and transform. Digital native young talent has an opportunity to lead the charge and help employers evolve. 

But agencies need to take the first step to show that they are committed to adopting technology and implementing new solutions. Agencies need to have tools that increase productivity. Frustrating old systems that only work on Internet Explorer – a web browser that Microsoft discontinued – won’t cut it. 

Here are five technology solutions agencies should consider using to make their business more appealing to young prospects.

1. Take your agency to the cloud

Key platforms that agents need to use every day such as agency management systems and customer relationship management systems should be accessible in the cloud. Up-and-coming generations don’t want to be tied to a desk. And in a post-COVID-19 world, where there may be lingering hesitations about going into crowded offices, being able to work from home might be a common expectation. Cloud-based applications allow more flexibility and give employees more freedom to work remotely. 

2. Add automated solutions like online rating and CRM to your cloud-based agency management system

Any solutions that help reduce redundancies and rekeying will help make your agency more appealing. For example, online quoting tools that automatically pull in customer information and can get multiple quotes from a variety of carriers using a single form can save valuable time. Solutions like these give agents more time to do meaningful work like servicing clients’ unique needs rather than typing the same data into different places. 

Also, look to see if there are integration capabilities between your different technology vendors. For example, your agency management system could be partnering with your CRM provider and online quoting solution so customer information passes from one platform to the next, so agents don’t need to reenter the information. 

See also: Keys to Finding and Nurturing Talent  

3. Use data analytics to help target customers

The next generation of workers never knew a time when information was not readily available at their fingertips. They rely more on facts rather than hunches or “the way we have always done things.” Agencies should implement customer relationship management and agency management systems that gather data, can analyze trends and give you a 360-degree view of your clients. For example, using analytics from your CRM system, you might see that emails to small commercial prospects about workers’ comp had a higher open rate than ones about business owner policies (BOP), suggesting you do more detailed outreach on a particular offering. 

4. Be like e-commerce – incorporate online bill pay, e-signature and SEO

e-Commerce has forever changed consumers' expectations when dealing with companies. They want on-demand service, and agencies need to adapt. They should look to reduce the amount of paper needed to complete transactions by implementing solutions like secure online payments and e-signature technology. 

Whether a prospect is looking for an agent to help with their insurance needs or a top recruit is looking for a place to begin a career, all searches begin online. People are not going to scour through multiple Google pages to find an agency, so those with the top rankings will win. Agencies need to invest in an SEO strategy that will elevate them in searches. This includes regular postings on social media, using keywords for key product offerings in website content and updating the website with thought leadership. 

5. Take face-to-face into the virtual world with video conferencing 

Even before the global pandemic, people were changing the way they interacted with companies. While customer relationships are important to any agency, agencies should go beyond in-person interaction. Video conferencing tools like Zoom and Skype allow agents to still meet face-to-face with clients but provide more flexibility. Agents can have more impromptu discussions or virtually meet with customers when they are not in the office.

Young talent wants flexibility and the ability to have an impact. With the right technologies, agencies can provide recruits with these experiences --- and even offer them more – the chance to help the business evolve. Agencies should be doing everything in their power to recruit these workers. Not only can young agents help your business transform, but they will help build your book of business with the next generation of insurance customers.

While we all long for a return to normal once we tame the coronavirus, when it comes to healthcare in the U.S., we can't go back to normal. "Normal" didn't work.

It will take a while for the new contours of healthcare and health insurance to appear, because the focus must stay for now on the acute, short-term dangers to our physical and economic well-being. But the policy fights will come.

When they do, they will have to produce at least a national layer of public health capabilities so that, next time (and we all seem to now realize that there will be a next time), individual states and healthcare systems won't have to fend for themselves so much. The fights will also accelerate trends in the healthcare world that are moving toward health care, rather than sick care, and will change the roles of many of the players in the industry, likely including the mammoth health insurers.

The need for more public health capabilities is obvious from just a cursory look at how the U.S. experience with COVID-19 compares with that of many other developed countries. Taiwan, for instance, has had only seven deaths. (I'd tell you what multiplier to use for that total to account for the difference between Taiwan's population and ours, but what's the point when Taiwan has had so few deaths that some people can probably name them all?) South Korea, with about a sixth our population, has had 263 deaths and is down to nearly zero new cases. Germany, with more than 8,100 deaths, at about a quarter of our population, has done far worse than South Korea and Taiwan, but has fared much better than the U.S. and is seeing almost no new cases. The country has only 5.8% unemployment, while economists say the U.S. is on its way to 25%, so Germany, like South Korea and Taiwan, has seen far less economic disruption than we have. Yes, Spain, Italy and France have done worse than the U.S. in deaths per 100,000 people, but all have their curves headed to zero for daily new cases while the U.S., despite recent progress, is still above 20,000 new cases each day. Only the U.K., among major European countries, has both performed worse than the U.S. in deaths per 100,000 and has failed to drastically reduce the number of new cases.

So, even in today's hyper-politicized world, it's hard to escape the conclusion that the U.S. has handled the pandemic poorly. The questions for the future will be: Why? And, more importantly, what can prevent a recurrence?

A significant chunk of the blame will accrue to the federal government, which received increasingly strong signals of danger through January but did little to build testing capability or to take containment measures until well into March. But there's also a systemic problem with our healthcare system, at least in terms of our ability to respond to a pandemic.

While South Korea responded to the pandemic almost immediately by setting up drivethrough centers in parking lots where anyone could be tested for free, the U.S. system is, "Call your doctor." That doesn't work especially well under the best of circumstance, because individual doctors and their health practices have to figure out what guidelines to use for testing and have to fight for supplies, while interacting with health insurers and local, state and federal authorities. The process just takes too long when you're dealing with a virus so contagious that one case can produce 59,000 new cases in less than two months (based on the R0, or R-naught, of three that seems to be the rule of thumb for the coronavirus at the moment).

Then you add in that many people who don't have a doctor to call. Some 44 million Americans don't have insurance, and a further 38 million have limited enough insurance that they likely don't have a strong relationship with a doctor. Because about half of Americans get their insurance through employers, even those with insurance become vulnerable as a pandemic devastates the economy and people are laid off -- like the 36 million Americans who have filed unemployment claims since the pandemic began. How can you do testing through a "Call your doctor" program when maybe a third of the country doesn't have a doctor to call?

The U.S. briefly tried a South Korea-like system of mass testing. You may recall the Rose Garden announcement in mid-March of a website that Google was supposedly developing that would soon direct people across the country to testing centers in parking lots of major retailers. But the problems were just too hard, and the administration quickly moved on from the plan. The last I read, the website was still just a test in a few counties in California, and testing centers had been set up in only five parking lots.

It seems clear that, where future pandemics are concerned, there needs to at least be a national overlay on the current system. That overlay needs to include detailed planning ahead of time so we can go straight to the South Korea model of widespread national testing, no matter who someone's doctor is or whether the person has insurance. The funding needs to be ample and permanent -- no raiding the cookie jar even if we go 15 or 20 years before another crisis. It seems we also need to agree on what kinds of restrictions on business and individual movement are philosophically acceptable, so we avoid a repeat of the current situation, where a health crisis has somehow become a partisan issue devolving into debates about who's more patriotic.

I hope we can get to the sort of "germ games" that Bill Gates has been promoting for five years, as he has repeatedly warned that a pandemic would show up soon enough. His idea is that, just as the military conducts war games, why wouldn't we conduct similar exercises to make sure we're ready for the viral threats that, as we're now all painfully aware, can cost the lives of many tens of thousands of people just in the U.S. and create trillions of dollars of economic damage?

I hope, too, that we won't just stop with planning for the next pandemic, because the current crisis has brought into sharp relief some major problems that we can start to solve even as we're throwing trillions of dollars at the acute, short-term issues. I saw, up close and personal, how this can work when I was involved in a Stimulus Act project at the Department of Energy in 2010. The leaders were charged with getting $36.5 billion into the economy as quickly as possible but took a very strategic focus and, in the midst of the chaos, made a series of investments that have helped drive prices way down for solar, wind, batteries, electric vehicles and more in the ensuing decade. The same strategic approach can be taken now with our healthcare system.

In particular, it's clear that we have to do something about "health equity," which may finally get the attention it deserves because of the hugely disproportionate effect of COVID-19 on minorities. Because of some occasional work I've done with the American Medical Association, I've heard for a while about "the death gap" -- the fact that people born in one part of Chicago have a lifespan 30 years longer than those born just eight miles away -- and it's nice to see that unconscionable disparity get national attention, including on the editorial pages of the New York Times. There's no simple solution, because so much of the disparity relates to what are known as the social determinants of health. (Even if you have access to healthcare, what does it matter if you don't have the money to buy a refrigerator and can't afford to eat well?) But we can start by building on the need for pandemic coverage to make sure everyone has access to a minimum standard of care.

If the dominoes start to fall, then we can look at a broader issue: the need to switch from sick care to health care. At the moment, healthcare providers get paid for each service or medicine they provide, so they focus on sick people and help them get better. But the goal with the pandemic is to keep people from becoming infected in the first place, and some of that prevention thinking needs to infuse the whole system. Healthcare providers are actually much more inclined at the moment to get away from fee-for-service, because so many people are avoiding any interaction with the healthcare system that they can, for fear of coming in contact with those infected with the coronavirus. That fee-for-service income has dried up. If doctors were paid a sort of subscription fee for keeping patients healthy, medical practices wouldn't be suffering so much. In addition, the pandemic has helped telemedicine finally come into its own. It offers a way to keep doctors in touch with patients easily, going well beyond that seven-minute annual visit that is the way many of us experience healthcare now.

Switching away from fee-for-service and increasing the use of telemedicine means changing payment models, which finally brings us to the health insurers.

They take a beating these days for two main reasons. First, the insurers catch much of the blame for the fact that the U.S. spends twice as much per capita on healthcare than other major economies while getting average care. Second, while everyone wants and needs health insurance, nobody likes it. Dealing with health insurance is simply painful.

In this case, they have the potential to lead the way. While they can't be expected to do anything deliberately that would cut into their lush profits, they can easily drive adoption of telemedicine and use that as the tip of the spear in efforts to move away from sick care and toward health care, earning good will without much change to their business models.

Even if insurers choose not to lead, the pandemic will drive others to demand change, so the insurers might end up following.

Cheers,

Paul

P.S. Here are the Six Things I want to highlight from the past week:

Firms' Top Priorities During the Pandemic

Change management, flexibility and risk management have exposed their critical importance.

How to Adapt to a VUCA+V World

In a world they haven’t seen before, insurers must do what they haven’t done before if they want to stand a chance to succeed.

Access to Care, Return to Work in the Pandemic

Beyond the pandemic, claims teams will need to know how to prioritize medical care for injured workers.

Hurricane Season: More Trouble Ahead?

As if COVID-19 isn't tough enough, the Atlantic hurricane season looks to be active, with a higher probability of named storms making landfall.

Getting Back to Work: A Data-Centric View

By the time the world gets to the new normal, insurers must have created an "information mesh."

The Pandemic and a New Ecosystem

As much as we all wish coronavirus had never happened, it has supercharged innovation in the insurance industry.

As the U.S. experiences a sudden rise in remote work self-isolation and health-related anxiety, there has been a general sense of unease for many people and exacerbated existing mental health issues for many more. Following a surge in anxiety caused by the COVID-19 outbreak, managing and supporting mental health at work has never been more crucial as research by Pews Research Center shows 73% of Americans reported feeling anxious at least a few days a week.

How Businesses Can Support Employee Mental Health Right Now 

With some team members working remotely and others off ill, quarantined or self-isolating, it is more important than ever for businesses to retain talent, reduce presenteeism and maintain morale. 

Break the Culture of Silence: There is still a stigma around mental illness that makes employees more likely to suffer in silence than share information with their managers or bosses. Around 82% of employees with a diagnosed mental health condition do not confide in management, and 40% of employees have given a false reason when taking time off for mental health. 

Now is an ideal time for leaders within businesses to talk more openly about mental health and create a culture that encourages conversations around these issues. Taking a mental health day or asking for support should never affect an employee's reputation or how the employee is perceived. 

Keep Socializing With Your Teams: Remote working has its perks, but a lot of people are feeling isolated right now. Office banter is missed most about work since lockdown, with a recent study by Vodafone showing that 41% say they miss the daily jokes. 

See also: 15 Keys to Mental Health Safety Net  

Environmental psychologist and wellbeing trainer Lee Chambers says dealing with a lack of social connections during the outbreak is a massive challenge for a lot of people: "In these turbulent times, social connection is vital to our wellbeing. Without the ability to go out and socialize in the way we usually would, we have to be more creative and have more intention in our connection with others during this lockdown scenario. In some ways, the enforcement of rules around movement have caused us to slow down. This actually gives us the chance to connect on a deeper level." 

Lead By Example: With many employees working remotely, managers need to be more conscious of the challenges that different households are facing. Encouraging flexibility, self-care and regular check-ins is key to reducing presenteeism and stress and ensuring that employees facing any issues can be identified and supported. Encourage transparent conversations and put action plans in place for team members who need help. 

Introduce Team Activity and Training Sessions: With employees using tools like Zoom to connect with the office remotely, now is a great time for businesses to encourage morning catch-ups, remote Friday drinks, yoga sessions or even company training sessions. Encourage team members to take a class they've always wanted to try, or to attend industry-related webinars. This is a great way to support employees looking to upskill themselves and stay busy. 

More work needs to be done to ensure businesses take care of their most valuable assets – their employees. Encourage employees to self-advocate and seek early intervention before their mental health requires more stringent measures, like having to take stress leave or resign.

The COVID-19 pandemic is upending the way employers conduct regular business operations. Most industries now face a wide variety of challenges, including dislocation of their workforce, lost revenues, changing priorities and employee safety, to name a few.

Three industry experts joined us for our special edition Out Front Ideas COVID-19 Briefing Webinar Series to discuss the major issues facing each of their industries: 

• Shaun Jackson – executive director of risk management, Panda Restaurant Group
• Rich Reynolds – senior manager of workers’ compensation, Providence St. Joseph Health Shared Services
• Steven Robles – assistant chief executive officer, Los Angeles County

PUBLIC ENTITY

Public entities face a host of different issues based on their location throughout the COVID-19 crisis. One of our guests explained the significant issues facing public entities currently:

Resource drain on risk management. Risk managers who typically handle workers’ compensation, liability, finance, safety, privacy and contracts for public entities are being outsourced to function as disaster service workers, making resources limited. Up to 60% of Los Angeles County’s risk managers are being used for disaster management.

Cyber and privacy challenges. Some employees are working remotely, but most public entities were not set up for a large portion of the workforce to shift to remote work. Currently, counties are learning how to manage security concerns associated with this shift by adding layers of privacy, like VPNs.

Workers’ compensation presumptions. The resulting costs of presumptions for first responders and other essential employees within the public entity realm could increase costs by 30% to 50%. If post-traumatic stress disorder is included in presumption laws, it could result in an additional 10% to 15% increase. Public entities are cutting back budgets to mitigate expenses, but additional costs could lead to potential layoffs.

See also: Business Continuity During COVID-19  

Employees returning to work. Public entities consist of both frontline and remote employees. Plans are being developed to phase in remote workers while still reducing possible exposure for both groups of employees. Concerns like childcare access and shielding more susceptible populations like the elderly and immuno-compromised are all being considered.

HEALTHCARE

Employees in healthcare, one of the most drastically affected industries, have to adjust to the constant challenges of COVID-19. One of our guests shares the most pressing concerns facing the industry:

Personal protective equipment (PPE) shortages. The healthcare industry is enlisting other businesses and organizations to fabricate masks and ramp up production of protective gear as they face a lack of necessary protection for frontline employees caring for COVID-19 patients.

Uncertainty about the future. Without enough information about COVID-19, there are many questions to be asked. Are states reopening too quickly? Will we face a second wave of cases and deaths? Do we have the testing capabilities that allow a return to our normal daily lives?

Financial impact of elective procedures. Due to the massive influx of COVID-19 patients, elective procedures are temporarily on hold. This pause has created a financial strain on a healthcare system that relies on these procedures.

Telemedicine development. One of the positive outcomes of COVID-19 has been increased access to telemedicine. If this becomes a more cost-effective alternative, it could mean a decrease in brick-and-mortar healthcare locations and a possible change in overall business models. 

RESTAURANT

The restaurant industry is facing one of the most challenging times in its history. Still, some with overseas operations were preparing as early as December, knowing the U.S. would eventually be affected. One of our guests discussed the industry’s challenges and how they are adapting:

Reworking business continuity and crisis response programs. Due to the state-by-state and county-by-county differences in stay-at-home orders, all crisis responses had to be retooled. Most of these plans had a great framework, but, because of the variances per jurisdiction, the industry could not replicate and impose these plans. Data from the Centers for Disease Control and Prevention (CDC) and the Federal Emergency Management Agency (FEMA) have made it easier to track COVID-19 hot spots, allowing restaurants to manage location openings. 

Defining the essential workforce. Restaurant employers are working with local health officials to identify which employees within a restaurant are essential. Because employers are at the mercy of the latest emergency guidance per jurisdiction, these efforts to comply help build relationships within each market.

PR and media response. Because many jurisdictions are requiring guests to wear face masks in public, restaurants are now having to learn how to respond to those opposing these restrictions. Knowing possible confrontation with these guests could occur, employers are responding by educating employees on how best to respond in these situations. Health departments are now also publishing lists of locations where five or more employees have tested positive for COVID-19, so restaurants are now facing possible damage control if deemed an “outbreak location.” 

See also: COVID-19’s Impact on Delivery of Care  

Contact tracing. Restaurants are moving forward with their own models of contact tracing for cases of COVID-19, knowing that a government model could take time to develop. They have set up their own process of quarantining and monitoring to prevent further transmission of the virus, knowing that any outbreaks could damage their reputation. 

Change management, flexibility and risk management have exposed their critical importance in business operations throughout this pandemic. Knowing this, all organizations will need to rethink their continuity plans as they address the complexities of reopening and returning to work. Because we know businesses will never again operate under the same model, there is an ever-increasing need to think differently and to work together across multiple industries to share insights and develop the best plans for the future.  

To listen to the full Out Front Ideas with Kimberly and Mark webinar on this topic, click here.