Corona Virus Is A Wake-Up Call For Insurers To Not Disappoint Their Customers
At a time when people and small businesses need coverage the most, insurers are denying coverage. The industry’s practice of working-the-fine-print to bury what-is and is-not covered is rearing its ugly head.
Travel insurance customers are being told to “read your insurance policy thoroughly” or to comb through their policies to find a list of reasons for trip cancellations and interruptions covered. Many travelers are also learning the hard way, that when the World Health Organization declared COVID-19 a pandemic, it also meant their travel insurance companies could void coverage and fall back on clauses in policies that exclude cancellations out of concern or fear of travel associated with a pandemic. This goes against the most fundamental rules of meeting customer expectations: to offer products and services that demonstrate an understanding of our customers’ circumstances and what they value as important.
The insurance industry is messing up. Responding to the COVID-19 crisis by sending customers to read the fine print in their policies and poking holes in coverage with exclusions and clauses are the very thing that has ruined the industry’s reputation for the last 20 years.
And it all stems from a fundamental business shortfall: insurance companies have failed to create a compelling willingness-to-pay and differentiation for their products and services. This has, in turn, created a marketplace where they are competing on price. This commodification, where one offering is indistinguishable from a similar one by a competitor, means many insurers have to resort to punching holes in their coverage to stay viable.
The way insurance companies respond to the COVID-19 crisis is indicative of how the industry will meet the biggest challenges going forward: the disappearing retail customer, over-regulation, shrinking product margins, low customer loyalty, and public distrust.
Insurers must reassess their revenue and pricing models, and find ways to radically transform the way they deliver products and services to customers. They must take the steps towards becoming a customer-centric organization where they are introducing transparent products, easy-to-understand, valued-by-the-customer and above all fair. Research shows insurance consumers are willing-to-pay a premium for better products and services. They see value and convenience in having one insurance provider. By stepping up to meet customer expectations, insurance companies have an opportunity to compete on value instead of on price.
For now, insurance companies must find ways to accommodate claims arising from the pandemic crisis. This includes offering to pay a percentage of claims that it wouldn’t otherwise like trip cancellations and emergency medical care for customers who fall ill with the coronavirus. They must also step up and do the same when it comes to business-interruption claims for small-business owners and restaurants impacted by COVID-19.
Inmediate is an insurtech company in Singapore that is using the latest technology such as Artificial intelligence, Distributed Ledger and NLP, providing insurance processing that is fast, cheap and flexible. That makes for better processes, lower costs, improved time to market and new revenue opportunities.