How Covid-19 Transformed the Insurance Industry

This post is part of a series sponsored by AgentSync.

Across the insurance distribution channel, everyone from the largest carriers to individual insurance consumers have witnessed a “digital transformation” to some extent in the past three years. We’ve seen it through a growing number of insurance technology companies, an increased investment in software (both internal and customer facing), and new developments in automating previously manual parts of the insurance underwriting process – just to name a few examples.

COVID-19 hasn’t disappeared, but the world has started to resemble pre-pandemic times in many ways. While some things are returning to how they were before COVID, the technological leap forward we see in the insurance industry isn’t something that can revert, nor would we want it to! On the contrary, it appears that COVID-19 helped the insurance industry hit the gas pedal on modernizing work practices, customer experience, and operational efficiency.

As we approach the three-year mark of when the world basically shut down, we wanted to look at what kinds of changes COVID brought to the insurance industry, and if they’re here to stay.

The insurance industry has been trying to put its old fashioned, low-tech reputation behind it long before anyone heard the phrase “COVID-19.” Whether that’s via an ever-growing list of insurtechs (backed by billions of dollars per year of venture capital), or by legacy insurers and brokers trying to appeal to a new generation (both of customers and employees), the conversation about modernizing insurance isn’t a new one.

Despite decades-long efforts, and incremental improvements, the insurance industry in 2019 looked surprisingly similar to what it had 10 or even 20 years prior. Many insurers and insurance agencies large and small still required employees to work from centralized office locations and relied on spreadsheets, shared network drives, in-person meetings, wet signatures, and hard copies to conduct business. Then, a pandemic happened and the world had to adjust literally overnight. Organizations that had already invested in more digital tools were ahead of the curve, but ultimately, every insurance organization had to become more modern to survive.

Ask anyone who’s worked at an insurance carrier, agency, MGA or MGU, FMO, IMO, BGA, or any other insurance business: Most likely, they’ll tell you about working in an office and relying on manual processes to get things done. Day-to-day activities included phone calls, in-person meetings, visiting client locations, dinners and drinks with prospects and clients, and lots and lots of typing information into documents across multiple systems.

Depending on the individual organization and its level of digital sophistication, employees may have relied strictly on email for digital communications or they may have had skype or another type of instant messaging. Many insurance agencies had agency management systems, but many also managed their business using spreadsheets or even paper documents.

Insurance carriers before COVID-19

Before the COVID-19 pandemic, insurance carriers were already using a variety of technologies to automate and streamline their operations. It was 2019, not the stone ages, after all! Examples of technology insurance carriers often employed included software to handle policy underwriting and claims processing, as well as the use of data analytics to better understand customer needs and risk profiles.

Insurance carriers were also starting to adopt newer technologies, such as artificial intelligence (AI) and machine learning (ML), to improve their operations. The largest and most tech-savvy insurance carriers were using technology to analyze large amounts of data and identify patterns and trends that could help them make better informed decisions about risk assessment and policy pricing. On the customer-facing side, they were also using digital platforms and tools to interact with customers and distribute their products. This included the use of online portals and mobile apps to allow customers to purchase policies, make payments, and file claims.

Still, in a late 2020 interview with Brandon Carter, President of USAA Life Insurance Company, Carter reveals the extent to which USAA was entrenched in more dated practices prior to the pandemic. For example, Carter says that 90 percent of the insurer’s then 35,000 employees worked out of an office location. And, as is common in life insurance, all applicants needed an in-person medical exam before their insurance could go through underwriting. These are a couple of areas that would see a big overhaul in large part due to the pressure USAA felt from the impacts of COVID-19.

Insurance agencies and brokerages before COVID-19

According to one agency employee we spoke with, prior to COVID all 30 members of the agency’s staff worked from the office full time and had desktop PCs. The agency wanted to grow but struggled to attract the best talent because they were limited to hiring locally, since they required in-office work. In terms of operational tech, the agency had Outlook for their email and Skype for interoffice instant messaging. They had an agency management system, but no other forms of automation or technology to speak of (automated producer compliance management, for example).

This story isn’t unique. From firsthand experience, and from speaking with producers and account managers at a variety of insurance agencies, working from a central office location was often non-negotiable before March, 2020. Insurance agents conducted most of their business in-person by traveling to client locations or hosting prospects and clients at their office. Thus, the amount of technology in place to facilitate real time digital communication and collaboration between staff and clients was minimal.

In March of 2020, most U.S. workplaces shifted as many employees as possible to remote work. Only essential services like hospitals, police departments, and grocery stores kept staff coming to their physical working locations. As vital as bodies in chairs had seemed to many insurance industry professionals, the truth was that nearly every member of the insurance distribution channel could work just as effectively from home – with the right tools to assist.

Digitization at insurance carriers during the pandemic

In an interview from late 2020, Brandon Carter, President of USAA Life Insurance Company remarked that less than 2 percent of his workforce remained in the office, compared to 90 percent before COVID. He also said that his employees had maintained their extremely high levels of customer satisfaction throughout 2020, proving that most of USAA’s insurance employees could do their jobs from home just as well as in an office.

At the same time, COVID brought along higher demand for personal lines insurance products like life and health insurance, according to a study published in the journal Procedia Computer Science by Dariusz Pauch and Anna Bera. The higher demand for these products meant insurance business was booming and competition between carriers to provide the best customer experience – and the best experience to their downstream distribution partners – became even more important.

Other areas of digitization and modernization Carter spoke about implementing at USAA due to COVID-19 include:

Shifting more resources to creating a way to automate life insurance underwriting using people’s medical records and “big data” instead of an in-person medical exam.
Looking at mobile apps like Uber and Amazon for how to create a frictionless customer experience for people wanting to purchase life insurance.
Taking a page from consumer-favorite brands’ books when it came to re-engaging with customers after the initial purchase (e.g. newsletters, surveys, reminders, outreach).

USAA is just one example of what was happening at insurance carriers during the height of the COVID-19 pandemic to quickly shift to safer, socially-distanced, and digital operations. Conveniently, adopting these practices is what insurance consumers had been hoping for all along, which may have contributed to higher profits (both in life, health, and P&C) in the year following pandemic-induced digitization.

Digitization at insurance agencies and brokerages during the pandemic

Insurance agencies weren’t completely without some modern technology at the end of 2019, but they were largely office-based and may have used just the basics like email and internal instant messaging. According to an AgentSync customer we spoke with, her agency jumped into action as soon as the COVID lockdowns started and got laptops for every employee, where most had been tied to desktop PCs previously.

With all of the agency’s employees working from home, leadership was surprised to see that almost everyone thrived in the remote environment. This is a common story: Agencies forced to go remote by the virus were shocked that productivity, profits, and client service didn’t suffer.

However, some people, including this agency’s leaders, missed the community of being together in person. Around September 2020, they started having people come in on designated days, for example commercial lines staff on specific days and personal lines staff on others. This compromise allowed those craving their old style of work a chance to do so in a safer way during the pandemic. At the same time, most people were still working remotely the majority of the week. It was at this point that the agency invested in new tech tools like Office365, Microsoft Teams, and Zoom to enable continued collaboration and productivity with its newly hybrid workforce.

Another development that stuck was the “COVID casual” dress code. Where this agency’s employees had been required to wear business casual dress while they worked in the office full time prior to COVID, leadership acknowledged that insurance staff working at their desks could do just as well wearing whatever they were comfortable in. While not a technological improvement, this modernization speaks to an overall evolving culture at the agency.

The agency also underwent a hiring boom in 2021 and 2022, thanks in part to its modernized culture and the ability to choose talent from anywhere in the U.S. As of early 2023, the agency has created another “sister agency,” hired over 30 new employees (many of whom are entirely remote), and continues to invest in technology – like AgentSync – that creates more time for staff to do their most valuable work while technology does the rest.

It’s March, 2023 and life looks very different from three years ago in almost every way imaginable. For some people, the entire COVID era has faded into the background, and they live their lives as if nothing happened. For others, incorporating COVID safety protocols into their daily lives has become the “new normal.”

For the insurance industry, we’ve got our own “new normal” and that includes a level of technology usage and digitization never before seen. Like toothpaste that can’t be put back into the tube, insurance professionals have seen a different way of working that is an improvement over “the way it’s always been done” for many, and they don’t want to go back.

The digital impact of COVID-19 at insurance carriers three years later

According to a 2021 insurance CEO outlook survey conducted by KPMG, 96 percent of insurance CEOs attribute their companies accelerated uptake of digital operating models to pressure from the COVID-19 pandemic. Across the board, these insurance digitization efforts appear to fall primarily into four areas.

Customer experience

Insurance carriers largely realize that there’s no going back to the old days of consumers just taking what they could get. People shopping for insurance have so many choices at their fingertips and can often use their mobile phone to get instant quotes from one or more insurers online.

Consumers’ expectations didn’t just change in 2020 but insurers’ response to them did. KPMG’s survey showed that 50 percent of insurance CEOs say the pandemic so dramatically accelerated their race to create a seamless digital consumer experience that they’re now years ahead of where they expected to be before COVID came onto the scene.

At USAA Life Insurance Company, which has always prided itself on being a leader in digitizing the customer experience according to president Brandon Carter, customer experience and customer satisfaction are central to success. In the years since the pandemic started, USAA Life Insurance Company has continued to look to non-insurance apps for inspiration on creating a positive digital experience including: digital channels for customer interaction, digital tools for outreach and re-engagement, and virtual claims handling to make the experience as seamless as possible.

Employee experience

In an industry that faces a largely aging and retiring workforce, and a lack of sufficient new talent coming in to fill those roles, employee experience is a major opportunity for insurers to leverage digitization to their advantage. And since the start of COVID-19, insurers have stepped up to the challenge. The USAA Life Insurance Company’s transformation from 90 percent in-office to 98 percent remote workers illustrates the complete 180 that many insurance carriers have been through. Insurance carriers have also put emphasis on employee experience by investing more in digital tools that ease employees’ burdens and let them focus on the work they want to be doing.

Automating repetitive tasks

According to Brandon Carter, President of USAA Life Insurance Company, the most natural place for insurers to continue evolving is in the automation of mundane processes. We happen to agree! For any insurer trying to reduce costs and prevent employee turnover, getting software to take on repetitive and mundane tasks instead of people is a win/win. Sidenote: If one of these tasks happens to be manually tracking and verifying producer license and appointment status, AgentSync has some great news for you.

Scaling decision making through artificial intelligence (AI)

Artificial intelligence is getting a lot of attention these days, and it’s hard to know what’s going to be impactful and what’s just hype. For insurers, AI presents a very real opportunity to scale decision making that was once only possible by humans.

For example, insurers can dramatically speed up underwriting and claims processing by taking information that’s historically been stored inside employees’ minds and creating decision frameworks that can accept massive data inputs and output decisions at a speed millions of times faster than a human. If done well, scaling decision making through AI will free up people to do more high-impact work while simultaneously pleasing customers with unheard of speed in policy underwriting and claims payment.

The digital impact of COVID-19 at insurance agencies and brokerages three years later

Most insurance agencies don’t have the same type of resources at their disposal as an insurance carrier. For them, the lasting impacts of digitization from COVID-19 seem to be mostly in employee experience and the way they serve clients.

Of course, employee experience is not at all unrelated to implementing technology that makes everyone’s jobs easier by automating repetitive tasks, or simply providing a modern experience. Agencies that had previously worked out of a single office location may have suddenly realized the benefits of a cloud-based software for their agency management system when it never seemed necessary before. They may have also suddenly realized the magic of a Zoom account to keep agents and CSRs in contact with clients and internal partners.

For the agency we spoke with, the impacts of their COVID-19 digital transformation are still apparent and ongoing. The workforce is almost entirely remote or hybrid with only a couple of employees working from the office full time. After seeing the efficiencies brought on by upgrading to more modern communication solutions, the agency began applying this digital mindset to other parts of the business – eventually implementing AgentSync to automate producer license compliance. Since the start of COVID, the agency has doubled its employee headcount and enjoyed higher revenues because employees are able to work when and how they work best, with the technology to help them do it.

No one will argue that COVID-19 was a “good thing” but it did provide the motivation the insurance industry needed to embrace some long overdue changes.

Regardless of where you are in your digital journey, AgentSync can help you simplify producer license compliance, carrier appointments, producer onboarding and offboarding, and more. Get in touch with us today to learn how.

Topics
COVID-19
Market