P&C insurance companies have had a year full of unexpected challenges due to the COVID-19 pandemic. No-code can help turn obstacles into opportunity.
If you haven’t heard this message enough already, we’ll say it again: 2020 has been an unprecedented year. The COVID-19 pandemic has disrupted our lives in more ways than we ever thought possible, and individuals and industries alike are still finding ways to adjust. For small businesses and large enterprises across industries, digitization and accelerated product development have become key to staying afloat—and the insurance industry is no exception.
Naturally, some lines of insurance have fared better than others during COVID-19. A McKinsey survey of insurance agents in China found that, understandably, more customers have been investigating health and accident insurance during the pandemic, resulting in a 17% bump in sales from Q1 2019 to Q1 2020.
However, other types of insurance haven’t seen the same growth. In fact, in most cases, demand for insurance has dropped dramatically. The same survey found that 40% of respondents saw an increase in policy cancellations, and 13% have experienced a decline in business of at least 60%. With roughly 20% of the global population in lockdown by the end of March 2020, and even more following stay-at-home and social distancing mandates throughout the year, certain insurance categories were hit especially hard—perhaps none more than property and casualty (P&C) insurance.
Surviving (and Thriving) as a P&C Insurer in 2020
As the pandemic continues, insurers have to resume business with fewer face-to-face interactions, default remote work, and even a slower postal system, which can disrupt paper-based manual processes. All of these factors have pushed insurers toward offering more digital products and means of communication.
P&C in particular faces a number of key challenges due to the COVID-19 pandemic. For example, insurers can expect a sharp increase in business interruption claims in the near future. This increase corresponds to a jump in administrative and claim-related expenses as policyholders file thousands of claims. Also, P&C companies that write auto insurance should prepare for cancellations or policy reductions, since many policyholders aren’t driving as much due to stay-at-home orders. Combine these hurdles with the ongoing struggles in the P&C sector, and insurers have lots to think about as they adjust to the new normal.
The insurers who survive (and even thrive) in this new landscape are the ones who have undergone—or are best prepared to undergo—digital transformation.
The insurers who survive (and even thrive) in this new landscape are the ones who have undergone—or are best prepared to undergo—digital transformation. However, this is easier said than done for many insurance companies. Here are some of the top obstacles currently standing in the way of digital transformation.
The Current Top Obstacles for P&C Insurers
1. Competition with Insurtech Companies
Although traditional P&C companies have years of experience that emerging Insurtech companies lack, disruptive start-ups have built their whole business model around using digital experiences to deliver superior customer experiences. These disruptors have fundamentally reshaped consumers’ expectations when it comes to product delivery, and investment in Insurtech continues to rise. Recent research suggests that the global market is expected to grow at an annualized growth rate of 41% from 2019 to 2020.
Insurtech’s digital experiences, fast product delivery, and more modern offerings are incredibly enticing to prospective policyholders. Almost 60% of insurance customers and over 80% of millennial customers, who are rapidly becoming a larger portion of any insurer’s customer base, are open to purchasing policies from neo-insurers and other tech companies looking to disrupt brick-and-mortar P&Cs. The threat of new competition means traditional insurance companies must rapidly come up with new (primarily digital) ways to reach customers, policyholders, agents, and partners.
2. Legacy Systems and Project Backlogs
Insurers understand that innovation is key to remaining competitive in today’s industry, but many tend to rely on their existing legacy systems to conduct their operations. These disparate systems are often either completely separate from one another or held together using programming languages that are always on the brink of becoming obsolete. Because of this, insurers spend most of their financial and human resources simply maintaining these systems to hold onto the business they do have. This takes time away from pursuing new customers and potential opportunities for innovation.
68% of insurance companies see legacy systems as the biggest obstacle to digital transformation, because legacy maintenance feeds into numerous other issues. For example, it has become increasingly difficult to find engineers who can work with legacy systems. As a result, an insurer’s backlog of projects inevitably continues to grow as the demand for apps increases, which further stunts innovation.
Watch the above demonstration to see Unqork's P&C Admin Solution in action.
3. Offering a Connected Ecosystem
Insurers can stand out from the competition by offering their services as part of a larger ecosystem, which has the double benefit of broadening their portfolio and attracting new customers. Over 50% of customers in France, Canada, Mexico, and the United States surveyed by StarDust Testing were interested in holistic digital experiences that provide value-added services.
Integrating other technologies into their services can have huge advantages for P&C companies, but it also makes their systems that much more complex. If they’re still relying on code and outdated systems, it can be incredibly challenging to provide a seamless experience for everyone involved, from customers to brokers.
Tackling Today’s Challenges with No-Code
Despite all of the obstacles COVID-19 has presented for insurers, it’s not all doom and gloom. If P&C companies approach the challenges of digital transformation with the right solutions, these obstacles can actually become an opportunity for insurers to pull ahead. Insurance companies like Liberty Mutual and The Hanover Insurance Group trust Unqork no-code to deliver forward-thinking experiences, from customer portals to underwriting, policy issuance capabilities, and more.
Only no-code offers the speed-to-market, flexibility, and ease of collaboration that P&C insurers need to beat out the competition. Business teams can build complex applications that integrate with legacy systems just as easily as modern APIs, all without writing a single line of code. This makes it easier for P&C companies to offer interconnected services, push past Insurtech disruptors, and prove their value to customers in the midst of COVID-19 and beyond.