Insurance industry to face short-term shocks, but will see long-term benefits, says GlobalData

There will be little capacity for insurance product development in the short-term, but COVID-19 will shape future developments as it alters behaviours, according to GlobalData. The problem for insurers will be that as behaviours change dramatically, they will initially not have the capacity for new products and the cost of claims will hinder their ability to innovate. However, new products are inevitable in dealing with changed circumstances, and will happen once insurers recover from the aftermath of the pandemic.

GlobalData’s senior insurance analyst, Daniel Pearce, commented: “Other areas of business will be put under considerable strain in the short-term. Customer service will be one, with many customers disputing policy wordings. Claims management will also struggle under the weight of claims in the short-term, athough it will stabilize. GlobalData believes this will lead to investment into contactless claims systems with virtual processing.

“Underwriting and risk profiling will be transformed by this crisis. Initially, insurers will need to review all policies to understand potential hidden exposures and areas of uncertainty. However, the industry will benefit from the wealth of data that will come from thisa cross key product lines. This will lead to improved underwriting accuracy in future pandemics.”

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