Tag Archives: covid

State of the Insurance Marketplace

The insurance marketplace has been changing rapidly, with the economy having a significant impact on both carriers and businesses, including employers, public entities and the middle market. So, what are the implications for the industry? And what risks should organizations be prepared for?

At the recent Out Front Ideas with Kimberly and Mark virtual conference, Elevate, an executive panel discussed the state of the commercial insurance marketplace across multiple lines of coverage and their outlook for the future. Panelists included:

  • Cynthia Beveridge – president, AON Broking
  • Patrick Gallagher – CEO, GGB-Americas, Gallagher
  • John Glomb – CEO, Philadelphia Insurance
  • Mark Wilhelm – chairman & CEO, Safety National

Economic Impact

The combined impact of an aging workforce and the pandemic in the insurance industry is causing significant challenges in recruiting and retaining talent. COVID-19 accelerated retirements with the inherent risks it created for baby boomers in a physical workplace. Beyond just retirements, all industries feel the effects of the Great Resignation due to employees questioning their career choices and priorities, seeking more money, flexibility and happiness. The shortage of trained talent has meant overhauling previously successful recruiting efforts. With talent requirements unrelenting, tactics like higher offers, new training and development and incentives to draft a much younger workforce have all been employed. 

Looming economic uncertainties have left employers realigning their discretionary spending on insurance purchasing due to higher premiums across the market. Employers are also facing their own issues with staff shortages across the U.S., leaving many to rethink their operational security, cash flow and real estate. Government and insurance regulations, model improvements and consolidations are all considerations in how these businesses will continue to stay profitable.

The pandemic has forced carriers to reconsider their customer-focused ease of use by encouraging smaller insureds to carry cash reserves, ensuring access to lines of credit and offering flexibility in billing plans. Displaying this empathy throughout uncertain times builds trust and may even lead to a longer-term relationship. 

See also: The Evolution of Marketplaces

Insurance Marketplace

Prior to the effects of COVID-19, the industry was looking at a standard hard market with a spike in premium increases, but the pandemic moderated the rates and premiums that carriers needed. Typically, corrective actions at the carrier level, including growth and repricing, would lead to a softer market. However, more accessible data has provided insight into inflation, interest rates and industry demographics, making carriers more selective, leading to a fluctuating market. Carriers with specialty niches can use this data to provide a truly customizable experience that clients expect.

With the exception of cyber and E&O, rate increases are decelerating, showing signs of equilibrium. Now that there is more demand for valuable return on investing, carriers are reviewing the profitability within their books of business and looking for opportunistic strategies. Clients are demanding more collaboration and solutions to their risks, not just an insurance product making alternative risk mechanisms, like captives or different deductibles, more popular. Contract wording and certainty will continue to be a necessity to clarify coverage for all stakeholders.

As the courts reopen, carriers are preparing for lawsuits to abound. The rise of litigation funding, social inflation and the effects of COVID-19 will continue to create major challenges for employers. Rising medical costs could increase workers’ compensation rates, creating uncertainty for underwriters and actuaries trying to set rates and predict profitability. The severity of claims and advances in medical technology could also drive rate increases. 

Emerging Issues

The challenges presented by cyber policies create an opportunity for new solutions, especially with ransomware on the rise. New solutions for supply chain clients, like aggregation and vendor management, are also in demand. Environment, social and governance (ESG) principles have become a key point of discussion within the industry and beyond as climate change risks continue. Additionally, addressing the underserved and the gaps in coverage through better access to capital have required the industry to rethink these solutions.

High-profile sexual abuse cases have resulted in states introducing reviver laws, allowing the opportunity for victims to reopen cases where the statute of limitations had been exhausted. These laws have created pressure on the pricing for abuse coverage, whether the industry is carrying appropriate reserves for those losses and if future reinsurance will be available. 

See also: The Perils of the Purchasing Process

COVID-19 continues to pose a great risk, with death claims still occurring and additional presumption laws being created. New legislation around vaccine mandates is also creating an increased responsibility for the industry as employees consider litigation. Additionally, public entities face risks from sexual abuse, police excess of force and cyber immunities under attack. Other lines of business, including business interruption, event cancellation, cyber, E&O and D&O, are contending with the risks of increased tort reform. 

To watch the recording of this Out Front Ideas virtual conference session, click here.

Impact of PTSD on Workers’ Comp Costs

Mental health disorders have emerged as a potentially significant factor in workers’ compensation. This article focuses on potential impacts that post-traumatic stress disorder (PTSD), a mental health condition that some people develop after they experience a shocking, scary, or dangerous event, may have on WC system costs.

In recent years, there has been an increase in legislative activity across the country to broaden or establish eligibility for WC benefits for PTSD. The momentum of such measures has grown, and could be accelerated somewhat, given the spotlight the COVID-19 pandemic has cast on the potential for workers to contract PTSD from their employment—particularly in the healthcare field. In this paper, we review examples of WC benefit eligibility criteria for PTSD, available data and the potential impact of PTSD on overall WC costs, including possible effects stemming from the pandemic and other stressors.

How Do WC Benefit Eligibility Criteria for PTSD Vary by State?

There is much variation in WC benefit eligibility requirements for PTSD between states. The first question we reviewed is whether PTSD—without a corresponding physical injury—is explicitly addressed as being a compensable injury or occupational disease under WC statutes.

  • Statutes may generally address WC for a mental injury or illness in a variety of ways, explicitly exclude mental injuries not accompanied by physical injuries (a mental injury or disability that arises without a physical injury is also known as a “mental-mental” injury) or limit mental-mental injuries to certain situations such as crimes of violence.
  • If PTSD is compensable as a covered injury or occupational disease under a state’s WC statutes, it may be compensable for all occupations or only for some subset of occupations such as “first responders” (e.g., law enforcement officers, firefighters and emergency medical technicians).
  • In the case of first responders, statutes typically reference the PTSD subset of mental injuries.

If a state provides WC benefits for PTSD without a physical injury, what conditions need to be satisfied for it to be a compensable claim?

  • Must the condition result from a specific incident, or can it arise over time as a result of cumulative exposure to several events? (When the condition is brought about by repeated traumatic events, it may also be referred to as continuous traumatic stress disorder, or CTSD.)
  • Must the nature of the traumatic event preceding the PTSD be extraordinary in relation to the average worker’s job experiences, or in relation to other employees in the same occupation?
  • What is the burden of proof required to establish eligibility for WC benefits? For example, must PTSD be proven with clear and convincing evidence or with a preponderance of evidence? Is PTSD associated with a presumption that it arose out of and in the course and scope of employment?
  • What type of healthcare professional may make the diagnosis, and what standards can they use?

Some states have legislative proposals that consider establishing or expanding eligibility for WC benefits resulting from PTSD to first responders or a broader group of occupations. Some others have considered increasing coverage to all occupations under certain conditions. Several states where mental injuries may already be eligible for WC benefits have introduced legislation to provide a presumption that PTSD in first responders occurred in the course of employment.

In jurisdictions where NCCI provides ratemaking services, first responder classes only account for approximately 1.6% of privately insured costs, with most states ranging from 0.5% to 3.0%. Therefore, legislation focusing on first responders may have a relatively small impact on overall privately insured WC costs. But it may have a significant impact for the affected classifications. On the other hand, legislation affecting all classes could have a significant statewide impact.

What WC Data Is Available on PTSD?

WC data on PTSD is limited due to both the relative scarcity of PTSD claim data, in general, and limited data reporting for first responder employer groups. If legislation is enacted making PTSD more readily compensable under WC, the subsequently reported additional data could be used in future PTSD cost impact analyses. Until a significant volume of credible WC PTSD data becomes available, non-WC data may be leveraged.

What Are the Incidence Rates of PTSD?

We can get a general idea of PTSD frequency in the workplace by analyzing incidence rates from published PTSD studies and meta-studies of the general population, first responders, veterans and those in other occupations.

For the general population, a 2016 epidemiological study indicated that 6.1% of American adults experienced PTSD in their lifetime, while 4.7% had it as a condition during the most recent year. The presence of PTSD in the “most recent” year does not indicate when the event or events occurred that led to the condition. So, care must be taken if these prevalence rates are extrapolated to estimate annual WC claim frequency, which is the likelihood that a worker will file a PTSD claim in a particular year and that the claim is accepted.

See also: Workers Comp Trends for Technology in 2021

There have been numerous PTSD studies on first responders. One worldwide meta-analysis estimates a 10% average PTSD rate for first responders overall, where the average rates vary by occupation.

Care is needed when comparing the results of studies that were conducted in varying locations and time periods, and that use differing methods to identify and analyze the incidence of PTSD. Further, it is possible that reported mental illness from traumatic events in the workplace may be increasing relative to levels reflected in past studies.

What About the COVID-19 Pandemic?

While some employees have been working from home, many employees classified as “essential workers” have continued to work at their usual place of employment. This latter group may have faced a higher risk of contracting COVID-19 and possibly experienced more fears and anxiety about becoming infected themselves or infecting their loved ones. In particular, early data suggests that first responders and healthcare workers may have been disproportionately affected by COVID-19—accounting for almost 75% of all COVID-19 claims reported to NCCI as of year-end 2020. Some of these workers have provided direct care to people with the virus, often in overburdened areas. As a result, they may experience significant physical and psychological strain. For example, a sample of 571 frontline workers in the Rocky Mountain region surveyed between April and May 2020 showed 15% to 30% reported traumatic stress.

The myriad of issues faced by first responders and those on the front lines of the pandemic have been well-documented. For example, one writer opines: “Over the last year, there has been the psychological trauma of overworked intensive care doctors forced to ration care, the crushing sense of guilt for nurses who unknowingly infected patients or family members and the struggles of medical personnel who survived COVID-19 but are still hobbled by the fatigue and brain fog that hamper their ability to work.” Extended periods of stressful conditions resulting from the COVID-19 pandemic could mean that these workers may suffer trauma not necessarily from a specific extraordinary event, but perhaps from continuous stress.

Mental health was reported as a significant concern for healthcare workers before the COVID-19 pandemic, and COVID-19 appears to have increased the stress, with 37% reporting “mental health issues” in 2019 versus 41% in 2020. And 58% of healthcare workers say mental health issues have affected their work more since the COVID-19 pandemic began. If any resulting emotional impact persists, it could increase the prevalence of PTSD and CTSD among healthcare workers after the pandemic.

Some other workers, such as nursing home staff, have also disproportionately suffered from COVID-19-related stress. One survey taken between May and June 2020 revealed some of the same adverse conditions for these workers as noted above for healthcare workers.

At this writing, it remains to be seen how COVID-19 will affect the propensity to file PTSD claims in those states that have chosen or will choose to make PTSD or other mental-mental claims eligible for WC benefits.

What About Other Stressors?

The COVID-19 pandemic is an example of a potential large-scale stressor on the WC system because it may contribute to an influx of claims involving not only physical injuries but also mental trauma. However, this is not the only potential source of escalation in mental trauma claims. Other types of events could have similar impacts at a state or local level, such as shootings, natural disasters and domestic terrorism.

Events involving mass injuries or casualties could lead to spikes in reported PTSD cases, which would present a challenge when projecting future PTSD incidence rates.

Understanding How PTSD May Affect WC System Costs

In all situations, one must account for how state law treats physical-mental, mental-physical and mental-mental events when assessing their potential impact on WC system costs.

When analyzing how proposed PTSD legislation may affect a state’s WC system, one must first consider issues related to estimating the number of compensable claims, including:

  • Nuances in current and proposed WC statutes—What are the eligibility requirements, and how are they changing?
  • Studies of PTSD prevalence rates—Are the prevalence rates for the lifetime or a recent period? What were the exact occupations of the participants in these studies? What DSM (American Psychiatric Association’s Diagnostic and Statistical Manual of Mental Disorders) standard was used? Did the study use clinical reporting or self-reporting? If the latter, what cutoff point of scores was used to determine the presence of PTSD? Were the participants selected at random or by convenience? What was the sample size? When was the study conducted? What country did the participants live in?
  • Other factors that might cause actual claim frequency to be different than otherwise expected—Will frequency be lower due to any potential perceived stigma associated with reporting a mental injury claim? Conversely, will frequency be higher if there are financial incentives for being diagnosed with PTSD?

WC benefits available to workers with PTSD may vary significantly by state and by occupation. Considerations when estimating the average WC cost of a PTSD claim include:

  • Types of medical treatment provided—Beyond the cost of counseling sessions and primary care office visits, what medicines may be prescribed to sufferers of PTSD? What health issues may arise directly related to PTSD or related to the treatment provided, such as side effects of prescription drugs? Might there be cases of self-harm?
  • Temporary versus permanent disability—How might healthcare professionals determine when a worker has reached maximum medical improvement? How likely is it that a worker will be found to have a permanent total disability due to PTSD? How will benefits be determined in cases where the worker has a permanent partial disability? How will statutory time limitations affect expected costs?

See also: Addressing PTSD in the Workplace


Mental health conditions in the workplace are receiving greater attention, whether they arise from a single event or continual exposure to an unusually traumatic work environment. Many state legislatures have been considering establishing or expanding the eligibility for WC benefits to those suffering from work-related PTSD. And COVID-19 could intensify this trend.

To gauge the impact of PTSD claims by occupational group and on overall costs, one needs to estimate the number and average cost of such claims. Recognizing the scarcity of WC-specific PTSD claims data, a projection of the potential impact that PTSD claims may have on WC costs may result from analyzing available literature and incorporating key considerations. These considerations include the extrapolation of prevalence rates to estimate annual WC claim frequency and the applicability of historical studies to the current situation, given the locations, time periods and methodologies underlying such studies.

Pandemic’s Lessons for Auto Insurers

It’s impossible to deny the profound impact that the pandemic has had on every person and every business, and the U.S. automotive insurance industry was no exception. Previously mundane errands such as a trip to the grocery store became a battle for survival — and toilet paper — and once-gridlocked highways were replaced with barren stretches of asphalt. 

On a more serious level, the global health crisis sent shockwaves of financial uncertainty across the nation that was also addressing considerable emergencies on both the civil and environmental fronts. 2020 quickly cemented itself as a year for the record books, and not for good reasons. 

However, as tough as COVID-19 has been, there are hidden lessons in connecting and analyzing what would otherwise have been viewed as dissociated events. And when compared with years past, the auto insurance industry can turn these pandemic-led transformations into actionable insights for the industry to evolve and adapt to meet future disruptive events. Our recent Auto Insurance Trends Report focused on analyzing the “new normal” of consumer behavior, which has a direct correlation to critical carrier-related factors such as underwriting, claims and those actively participating in telematics exchanges or usage-based insurance programs. 

Here’s what we found:

Empty Roadways Bring Out Lead-Footed Drivers 

When looking at the initial timeline of the pandemic, the sweeping stay-at-home mandates and shutdown orders across the country created a drop in miles driven of over 40% from March to April 2020. Even normalized mileage hovered between 83% and 88% of 2019 levels for the second half of the 2020 calendar year.

The empty roadways, particularly at the beginning of the pandemic, enticed many lead foot drivers, who took the opportunity to turn highways into personal drag strips. The first spike in elevated speeding rates occurred around mid-March of 2020 and remained 110% of 2019 data recordings for much of the remainder of the year. With those open roadways, drivers favored their accelerators over their brakes, resulting in a drop in hard braking instances during that same observed period. 

See also: How Insurtech Thrived in the Pandemic

Gen-Z Drives DUI Trends 

As part of our generational data insights, where we examined driving behavior across multiple age brackets, we discovered a particularly troublesome trend among our nation’s youngest drivers, Gen Z. 

Classified as ages 22 and under, Gen Z drivers ranked the highest when observing violation data across DUI infractions, overtaking those in the Traditionalist age group (ages 76-plus) who were the highest offender the year prior. While restaurant and bar closures led to a potential overall reduction in total figures, the months of April and May 2020 indicated an approximate 50% increase of DUIs among Gen Z drivers. 

Collisions and Claims Down, Severity on the Rise

When looking at the onset of the pandemic in 2020, much like the reduction in total miles driven, the volume of collisions and subsequent claims experienced considerable drops. With a 19% drop compared with 2019, one of the emerging trends throughout the entire year and particularly heightened in October was the inverse relationship between lowered claims figures and increased bodily injury. Comparing the months year-over-year, 2019 saw 7.1% growth in severity, while, in 2020, that figure rose to 12.7% despite the fewer miles driven. 

Naturally, the onset and continuation of a global pandemic will profoundly influence consumer behavior, including driving patterns, creating new challenges for the businesses that are so closely related to such behavior. However, from those challenges, pandemic-led transformations such as enhancing virtual claims capabilities have shown how the industry can adapt and improve. 

Adapting to Tackle Future Disruption 

While telematics has been around for years, 2020 and the pandemic brought a new sense of urgency to better understanding driving behavior. For insurance carriers, leveraging telematics and deploying usage-based insurance programs provides an incredible solution to accommodate changing driving behaviors. By way of stronger analytics and timely data reporting capabilities, telematics programs assist in taking the guesswork out of how to accurately calculate the risk propensity of an individual. 

As drivers continue to show interest in pay-per-mile programs as part of fluctuating driving patterns, telematics and usage-based insurance (UBI) programs give consenting consumers the opportunity to be priced more accurately than a traditional risk pool would dictate. This can increase customer satisfaction and allow an insurance carrier to be a competitive differentiator with a way to stay ahead of the curve of future disruptive events. 

The same can be said for almost all data or analysis during this strange but insight-full period of history. Understanding the motivations and connections between such events and human behavior will highlight both vulnerabilities and opportunities to grow. The pandemic will continue to affect virtually every market imaginable, not just now but for months and potentially years to come. The important aspect to consider is how to best adapt and evolve for the road ahead.

Better Models for Next Pandemic

Natural catastrophe risk models have revolutionized the property/casualty re/insurance business over the past 30 years. They have allowed more efficient deployment of capital by providing a rigorous way of estimating potential losses, better quantifying the tail and increasing trust in the probabilities assigned to natural disasters and the damage and losses they produce.

All of these models have been developed from common assumptions: An event happens and produces impacts on a known (although somewhat uncertain) exposure (property or other fixed asset), which has a known (although, again, somewhat uncertain) vulnerability to the consequences (hazard) of the originating event. Using an intricate mix of physics (through natural science and engineering lenses) and statistics, such models produce insurance loss estimates that are, generally, robust and defensible.

As new systemic and non-natural risks have emerged, establishing the potential future loss range of perils, such as terrorism and cyber, has required the introduction of social science disciplines (and greater levels of uncertainty) but did not greatly disrupt the established logic of the cat model; the components and controls remained familiar.

Not so infectious disease models. First introduced to the insurance sector to capture excess mortality from global pandemics in the life insurance business, they began as a combination of stochastic elements of natural catastrophe models with a well-established form of epidemiological model, the Susceptible – Infectious – Recovered compartmental model (and its many and varied siblings).


From a traditional cat modeling perspective, there remained a lot of unknowns. For example, the two components of “hazard” – location and intensity – were both poorly understood, thanks to a very sparse and poorly documented experiential history and only a rudimentary understanding of the zoonotic viruses that are the dominant cause of epidemics and pandemics.

And the model architecture required was more Gaudí than Brutalism. There is no fixed exposure or vulnerability; both are dynamic and feed directly back into the model in its next time step. And exposure and vulnerability are not controlled by engineering equations, they are assumed impacts of political decisions and human behavior, of travel webs and social networks.

The Sars-CoV-2 virus has brought epidemiological modeling to our living rooms (many doubling as home offices). Previously obscure epidemiological modelers have become household names, and the concepts of reproduction numbers, non-pharmaceutical control measures and even herd immunity have become all too familiar. Covid-19 is by far the best-documented pandemic ever, but even after many months of live information being available (although to widely varying degrees and with a broad quality range) to calibrate forward-looking models of case counts and mortality, inconsistencies and uncertainties abound.

See also: Transformation of the Risk Landscape

Epidemic forecasting, by nature, is a tall order. In some cases, these model inconsistencies are due to different assumptions that necessarily change as new information becomes available. Another reason model outputs may not reflect future outcomes is because there is a feedback loop dynamic – models affect reality. If a model predicts a dire outcome, it may in fact prompt decision makers and even the general public to change their behaviors, thereby changing the final outcome.

Further challenges are found in the conversion of pandemic model outputs to the short-term economic impacts of interest to P&C re/insurers. The literature on the economic impacts of pandemics is extremely sparse (although this will change) and dominated by economic simulations that sit on top of epidemic simulations, rather than empirical data. The consequences of government policy responses (like lockdowns) and sociological dynamics (fear, social distancing) are generally not economic outputs from models but input assumptions driving the direction of the reproduction number and, ultimately, the outcome of the epidemiological event.

As one moves from modeling a single event to the full probabilistic modeling familiar to the re/insurance industry, additional challenges must be addressed.

We think near misses are frequent in real life and must be captured via counterfactuals in the modeling domain; two coronaviruses with very similar characteristics emerging in very similar locations can lead to very different global outcomes, at the whim of individual actions – by patient zero, a head of state or many people in between – impossible to fully capture stochastically. Big challenges remain in quantifying public policy and behavioral elements that shape the nature of risk; these, too, need to be mapped out as they evolve over time and then linked to biological and epidemiological modeling frameworks.

Lessons to learn

Progress is being made, however, and Covid-19 learnings will help, although the temptation to model to the last big event has to be closely managed. The next pandemic will most certainly be different in character.

There have been significant advances in our understanding of the nature and spatial distribution of zoonotic viruses that pose the greatest risk of spilling into human populations and igniting pandemics. Improvements in biosurveillance have also shed new light on the rate of spillover, which is critical to characterizing high-frequency events, as well as the tail.

There are also continuing advances in modeling methodology, ranging from the incorporation of socio-political factors to capturing population movements. And there is still work to be done. The assumptions required to construct a probabilistic pandemic model are hugely influential on outcomes but are now based on expert judgments that are art as much as science and vary (often in ways that are not readily quantifiable) from modeler to modeler. The use of structured expert judgment to quantify and constrain uncertainties in such assumptions – and thus in model outcomes – is an area of development that carries promise from successful deployment in other contexts and, alongside other innovations, will help to build a level of trust in pandemic models that approaches that found in nat cat models.

See also: Benchmarks, Analytics Post-COVID

Despite present and future scientific and modeling advances, the full benefits will not be realized if there is a failure among decision makers to effectively use data and analytical tools as part of their decision-making process, whether it be to inform preparedness or guide response activities.

In the context of the global re/insurance market, it must be recognized that while modeling infectious disease risk is challenging and will take time and resources to build the level of trust found in nat cat models, there are already pathways to gain an understanding of the risk. This present understanding is sufficient to support tangible innovation – policy experiments, insurance structures, refinements to preparedness and mitigation strategies – within both public and private sectors. Ultimately, further innovation will be necessary (and is entirely within our grasp) if we hope to better manage the financial and social consequences of future epidemics and pandemics.

Could COVID Help Life Insurance?

With vaccination programs rolling out across the globe, and cases beginning to fall exponentially, there is finally hope that the worst of COVID-19 may be drawing to a close. But while this may signal the imminent end of the pandemic itself, it is surely only the end of the beginning with regard to its long-term impact. In almost every area of life, from the political through to the economic, the transformative consequences will be felt for some time.

The world of life insurance is no exception. But while the impact of COVID-19 on many industries remains uncertain, to say the least, the big picture for the life insurance industry is a lot clearer.

Prior to the pandemic, the so-called generation gap when it comes to life insurance was a constant point of consternation for the industry. Back in the mid-20th century, life insurance policies were as common and ubiquitous as mortgages or car ownership – a standard rite of passage for younger households embarking on their journey into adulthood. This culture has almost entirely evaporated. Younger cohorts, especially the millennial generation – under new financial constraints and not necessarily catered to by traditional sales channels – had little awareness of or inclination to take out life insurance policies, and sales withered. 

Remarkably, though, the last year and a half has seen a dramatic reversal of this long-term trend. Despite a period of volatility around March and April 2020, coinciding with the initial swath of lockdowns, the MIB Life Index ended 2020 up 4% year-on-year, the highest annual growth rate on record. What’s more, this growth was driven predominantly by younger cohorts, with activity increasing in the 0-59 age range rather than 60+, in stark contrast to recent years, where any growth has been almost entirely driven by the latter group. Recent sentiment research underlines this turnaround; members of Generation Z are now significantly more likely to increase life insurance spending than other generations, with millennials following close behind.

Intriguingly, this shift started slightly before the pandemic came to America’s shores, in January 2020. Kobe Bryant’s death from a helicopter accident appears to have triggered a sharp uptick in demand for financial protection in the case of unpredictable tragedy. Then the pandemic understandably heightened awareness of mortality in generations previously unaccustomed to such perspectives. The economic hit also contributed – with many facing the prospect of losing employer group coverage.

This uptick of interest alone, however, will not be enough to bridge the generation gap in life insurance for the long haul. Consumer demand for life insurance has only ever been one piece in a larger puzzle. For some time now, the industry has been aware that re-engaging with younger market segments, while also continuing to serve its traditional customer base efficiently, will require a wholesale adaptation to more advanced technologies and digital forms of distribution. Technology and digitization – and taking full advantage of the new opportunities and business models they enable – will be key to taking long-term advantage of this renewed interest in life insurance.

It’s good news, then, that on the insurer side the pandemic has dramatically accelerated existing trends. As with many other industries, the chilling effect of lockdowns and other emergency measures on physical, face-to-face interactions has forced life insurers to dive headfirst into technology-driven approaches in underwriting and distribution methods. The transition to digital marketing, digital distribution and automated underwriting and digital policy insurance leveraging new forms of data was already inevitable before anyone had heard of COVID-19. But from early 2020, what was once a priority for future growth has become an immediate non-negotiable. New approaches to underwriting, business processes and distribution models made commercially viable by automation technology are higher up the insurance industry’s agenda than ever.

See also: 6 Megatrends Shaping Life Insurance

While nearly half of agents have reported a collapse in in-person business since the onset of the pandemic, life insurance companies across the industry have leapt headfirst into new digital technologies, tools and channels to compensate for the sharp drop in traditional methods of doing business. For example, embracing new technologies enabling real-time access to medical records and other forms of advanced data allow insurers to underwrite policies accurately even without face-to-face assessments or interactions. These advancements in the underwriting and distribution process are pivotal in future-proofing the industry, and in creating massive efficiencies at the same time.

The life insurance industry has always, by nature, been cautious in embracing technological change. But the pandemic has entirely removed the luxury of time from the equation. New technologies, new data sources and new approaches to automated underwriting that may have spent long periods in planning and testing are already live and gathering momentum. A transition to digital technology that prior to the pandemic could have spanned the next decade will now likely be complete in just a year or two.

This is no bad thing. If the industry is to take advantage of the new interest in life insurance among the young, as well as continue to service its traditional customer base in a more efficient and sustainable way, the sooner the better. The sector was already facing a challenge of modernization; COVID-19 is unlikely to change the future shape of life insurance.

What it does mean, though, is that the future is going to be here much earlier than expected. For those carriers keen to acquire first-mover advantage, the window of opportunity just became even narrower. The time to embrace new technology is now.