7 Ways Top Insurers Are Preparing for the Next CrisisLast updated: June 9, 2023
The global pandemic has revealed gaps in many insurer’s business continuity plans (BCPs). Most plans were designed for natural disasters and are not equipped to manage the fast-moving and uncertain variables of an unprecedented incident like COVID-19. With the possibility of a second wave or similar event, top insurers are taking this time to review and rebuild their crisis plans to minimize disruption and reduce the impact on the organization.
Here’s how the leading insurance carriers are planning ahead to future-proof their organizations against new potential pandemics or global crises.
1. Update Your Crisis Plan
Top insurers build a crisis plan using the worst-case scenario. This ensures you’re prepared for the worst while enabling the flexibility to scale back if needed. However, it’s important to keep your updated plan within reasonable limits. Consider the potential risks of a crisis to determine the right balance of effort and resources needed to prepare, while also preventing the waste of valuable time and resources.
One of the most essential components of your crisis plan is a proactive communications strategy. Policyholders, employees, and stakeholders will be watching how insurers react. Crisis events can shape a brand image far into the future. During a crisis, you need to respond quickly and frequently.
Think about your audience and be transparent when setting expectations to maintain customer trust and confidence. It’s important to maintain company-wide consistency, reach your customers on their channel of choice, listen to their needs, and adapt to ensure your messages are efficiently and effectively heard.
Learn more about building an insurance crisis communication plan and start delivering correspondence that builds trust, confidence, and a sense of safety.
2. Move to Digital
Manual insurance communications are no longer relevant in a world with stay-at-home mandates and social distancing. Now more than ever, consumers and the insurance market are viewing digital as an essential platform for effective and instant communication.
Recent events have shown insurers that a fully digital sales and service model is attainable and brings several benefits, including improved customer experience, higher operational efficiency, cost savings, and minimized compliance risk. As top insurers prioritize digital transformation, IT strategies are focusing on investment in digital capabilities such as core systems and customer communication management modernization.
To make an effective move to a fully digital insurance model, you first need to create a strategy and invest in the right technology, then transition processes and stakeholders to the new model. Read this article for more information and a helpful checklist on how to move to digital insurance communications.
3. Create a Response Team
If you haven’t already, consider building a response team to manage and execute your crisis operational and communications plans. Great response teams often include representatives from each functional area led by an executive leader, such as the CEO.
Once your team is created, determine who is responsible for what. Consider having an official spokesperson to publicly announce all new developments, and handle media coverage. Assigning an employee spokesperson to keep staff informed on recent changes and updates is also highly recommended. Similarly, many insurers allocate an investor spokesperson to focus on releasing information that could affect stakeholders.
For fast-moving crises, many insurers have engaged outside experts to step in and help. This can include external counsel or public relations firms. However, it’s important to keep in mind that these businesses may be impacted during a crisis as well. If you decide to rely on an external company as your response team, take precautionary measures to ensure their BCP is reliable and up to date.
4. Review Key Partnerships
Many insurers have faced vendor disruptions during recent events, causing them to reassess key alliances such as IT and other support services.
When reviewing and refreshing your partnerships, consider the following:
- Does your current or potential partner have a business continuity plan or disaster recovery plan that you are satisfied with?
- How difficult is it to move this work in-house or to another vendor quickly if necessary?
- Do your service-level agreements or key performance indicators for vendors need updating?
- Which vendors are at risk for downtime or an unmanageable spike in service requests during a pandemic or similar event?
- Do you have someone to oversee vendors and reduce the risk of disruptions?
5. Solve Internal Challenges
Recent events have resulted in employee health and safety becoming a top priority. Still, this isn’t the only internal challenge to plan for. Insurers also need to prepare for face-to-face restrictions, create an agile remote working strategy, and address gaps in existing IT infrastructure and internal processes.
As a result, many insurers are taking this time to update their work-from-home policy as needed. Creating a plan to solve workforce challenges during a crisis means having network technology solutions. This keeps employees connected while working from home. You’ll also need to adjust your policies and refine performance expectations as many teams may struggle with remote working and remote collaboration.
Learn more about creating effective internal communications as a remote insurer here.
6. Monitor Regulatory Developments
During a crisis, regulators often shift requirements to meet new needs. In a heavily regulated industry, insurers need to consistently assess and monitor regulatory developments. This includes evaluating ongoing litigations and investigating how changes can impact the market and your organization.
Insurance carriers need a clear plan to engage with government authorities. This includes local, state, federal, and foreign regulators as needed. Work with your counsel to get a holistic picture of how changing regulations could impact business operations. Insurers who sell in multiple jurisdictions may require a tailored response plan for each location of operations.
7. Reevaluate Financials and Budgets
As the current pandemic impacts insurers’ short-term and long-term financials, many are creating scenarios to determine the resilience of their financial status. This is resulting in departmental budget changes, requiring many to achieve goals with less money.
One department that is most commonly affected is IT, as they are expected to meet the changing needs quickly while keeping costs low. Top insurance IT experts have developed plans to keep innovation going by investing in cloud and automation, considering SaaS vendors, and developing outsourcing strategies.
To learn more about how insurers are meeting digital needs on new IT budgets, read this article.
Start Preparing for What’s Next, Today
When it comes to crisis management, it pays to plan ahead. As insurers move away from reacting to the global pandemic, they are taking the time to develop strategies that will mitigate the impact of similar events in the future. Carriers who create solid plans that accelerate digital transformation, protect and empower the workforce, focus on communicating to and retaining customers, and continuously evaluate risks, regulatory changes, and budgets will be the ones to emerge stronger.
For help with customer communications or to learn more about the benefits of insurance CCM, get in touch with one of our experts. To discover more about the impact of COVID-19 on insurance, visit our Resource Center.
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