COVID-19: Impacts on the New Zealand Insurance Environment
What steps should be taken by insurers to transition and thrive?
Financial resilience and a focus on customers go hand in hand for insurers building towards a new normality.
So far 2020 has been a rollercoaster ride, not only for New Zealand but for the world as a whole. New Zealanders had a well-deserved celebration on 8 June when we finally reached 0 active cases in the country. However, the rest of the world continues to face ongoing virus-related health risks and, as highlighted by the new local cases recently, strict border controls are needed to prevent a second wave in New Zealand. Meanwhile, New Zealand’s economy is heavily impacted by reduced tourism and trade opportunities and global supply chains have been disrupted. COVID-19 has also forced businesses to catch up fast to new ways of working and changing consumer preferences.
We therefore encourage insurers to address two key themes in minimising the impacts of the pandemic.
Firstly, now more than ever, insurers will be expected by the Board and external regulators to have a strong focus on financial resilience. This requires taking a strategic approach, having a plan, and being agile in adjusting that plan as new information becomes available. Insurers may need to increase their frequency of monitoring their own experience against forecasts, and track developments in industry and global experience to identify any trends. To reflect the increased uncertainty of the situation, insurers may also need to enhance their scenario modelling to ensure their business is robust under a wide range of potential outcomes.
Secondly, over and above meeting any regulatory requirement, putting the customer first is critical in building trust and loyalty. When customers trust their insurance providers, the resulting customer-relationships last longer. This leads to better, stronger business, and therefore aids in financial resilience. Most insurers have been quick to support their customers through short term financial measures. Insurers must now look to build a sustainable long term offering that responds to changing customer needs and expectations. Embracing digital technology to reduce process friction, developing human-centric ways for customers to engage and constructing or enhancing products to respond to customers’ changing circumstances are all ways to build healthy customer relations.
See “Insurer resilience to Covid 19 Impacts” for an overview of how New Zealand insurers can move forward from the COVID-19 pandemic with confidence.
Our Insurance Services team have also published a new article series on our blog, focusing on the specific issues for the insurance sector in the wake of COVID-19.
Here are the topics and links below:
The content of this article is accurate as at 25 June 2020, the time of publication. If you wish to understand the potential implications of current events for your business or organisation, please get in touch. Alternatively, our COVID-19 webpages provide information about our services and provide contacts for relevant experts who can help you navigate this quickly evolving situation.