Insurance Innovation Opportunities Beyond Covid-19
Conclusions from an interactive webinar discussion run on 9 June 2020
Written: Sabine VanderLinden, co-founder & Managing Partner, Alchemy Crew
On June 9th, Ninety’s innovation expert Nonna Polonskaya held a webinar in which we expanded on the concepts presented in Ninety’s Insurance Innovation Opportunities Beyond Covid-19 whitepaper. The webinar welcomed experts including AXA XL’s Digital Leader Hélène Stanway, and Gen Re’s Chief Underwriter and Digital Engagement Lead Ross Campbell who respectively covered issues relating to the Future of Health and the Low Touch Economy.
Working from a customer perspective, I focused my attention on providing some level of insights into the broader impacts of the on-going pandemic on remote working and its consequences for insurers on the gig economy workers, increased cybercrime and mental health. If you’re involved in the insurance industry, it’s important to consider whether the socio-economic shifts described here will have a direct or secondary impact on your business model. Preparation and innovation are vital for any firm that wants to support broader economic recovery and continue to serve customers.
The future of work and remote working
The Covid-19 pandemic has forced companies in numerous sectors to switch to a remote working system at extremely short notice. While several companies had prepared for a remote working scenario, many organizations had little experience with remote working prior to the pandemic. Despite some of the pitfalls associated with working at home, such as perceived reduced productivity and security issues, remote working offers a range of fantastic benefits to individual workers, and many employees demonstrated to their employers that they would deliver more during such demanding times.
Workers who live far from their traditional place of work no longer have to deal with lengthy commutes, for example. This improves their work-life balance and frees up hours every week that can be spent with family. Also, remote working entails fewer expensive business trips, reduced office space requirements, and actually in many cases improved worker productivity (remote workers are less likely to take illness-induced breaks), improving business efficiencies.
Organizations that have switched to remote working during the pandemic have recognized these benefits. Due to the on-going health risks and economic costs of returning to a traditional working style, it’s likely that remote working will, for many, become the new normal. A recent survey from Gartner CFO found that 74% of CFOs intend to shift some of their employees to permanent remote work.
This has important implications for the insurance industry as remote work-based businesses have unique risk profiles. It’s important that insurers innovate to reflect this through coverage that fits the specific needs of remote workers.
Spotlight on the gig economy
During our chat we also addressed the topic of the gig worker.
Gig economy workers have been hard hit by Covid-19. Talking to young ventures, it appears that April was a particularly difficult month in which a large proportion of gig workers stopped taking on work due to safety concerns. Of these, some 70% had no revenue source then, around 23% had money saved already, and 89% were searching for an immediate replacement of their income streams.
Such financial difficulties are amplified by the fact that most gig workers have limited access to health insurance, sick leave, or unemployment benefits. A report from the University of Oxford and IIIT Bangalore has found that, out of 120 gig platforms studied, only five had put measures in place to compensate workers for the revenue lost due to the pandemic.
The research further found that many gig workers yearn for services that better align with their own needs such as flexible liability coverage, income protection, and coverage for those facing additional risks.
To address these issues, many InsurTech ventures are springing into action, providing options like on-demand marketplaces for custom and adaptable policies, real-time pricing information, and cost-effective digital services for gig economy workers. Today, a number of InsurTech firms, including Zego which received top three InsurTech investment in the UK, are attempting to offer a variety of helpful services such as these to gig workers. More broadly, around 100s of young gig economy ventures, representing $3bn in investor funds, have pivoted their propositions to provide help to diverse types of gig workers during the pandemic.
Spotlight on Cybersecurity
Covid-19 has led to a significant increase in global cyberattacks. One study showed that in the first 100 days of lockdown measures being put in place around the world, cyberattacks jumped by 33%. A major driver of this spike is the fact that businesses have less control over the connections made to their systems when employees are working remotely.
As a consequence, the demand for cybersecurity solutions and cyber protection tools has increased dramatically. Some 70% of organizations view increased cybersecurity solutions investments as more valuable now, but understanding the underlying risks resulting in cyber crime remains still limited. We estimate that there will be over 4 million threat types by 2025. Cybercrime will cost the world $6Trillion annually starting next year.
“Cybercrime represents the greatest transfer of economic wealth in history, risks the incentives for innovation and investment, and will be more profitable than the global trade of all major illegal drugs combined.” (source: Cybercrime magazine)
Today’s cybersecurity risk prevention market includes more than 9,000 young ventures that aim to detect, prevent, and respond to all manner of cyber threats. 3,500 of these have received $1Trillion of investment. Over 100 InsurTechs have developed some form of cybersecurity insurance product, with pioneers including Coverwallet, Cybercube, Spice, and Zeguro.
What does this mean for the Health sector?
During our webinar, Ross Campbell presented an insightful segment touching upon opportunities in the health space exposed by Covid-19. As he pointed out, although many organizations have found a shift to remote working to be technologically feasible, few have considered the consequences on an employee’s mental health.
As I reviewed recent stats, it appears that since the beginning of the outbreak, 35 to 40% of individuals in the UK have shown signs of depression, stress, and anxiety, and these most affect young people, whose expectation is to work from an office space to be guided by a mentor and to network and learn from experienced professionals. There is significant room for improvement regarding the assignment of UK government funds for tackling mental health, most of which are currently assigned to awareness, anti-stigma, and human rights protection efforts.
Opportunities in the health sector also include the mental health telemedicine market. This covers a wide spectrum of propositions, including marketplaces, video consultations and collaborative ecosystem services. Around 80 funded startups are attempting to break into this space, alongside well-known established players such as Bright Health, Cover Health and Oscar.
In 12 to 18 months, what do you think we’ll see as the biggest missed opportunity if the industry doesn’t take advantage of it now? We would love to hear your thoughts on those topics that will drive future sources of growth. As we continue to work remotely for some time, remember to develop the right remote working leadership, promote a problem-solution owner’s mindset as well as a trusting culture despite the distancing.
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