The Resilience of an Industry Called Insurance

The Resilience of an Industry Called Insurance

The Resilience of an Industry Called Insurance

Vishakha RM, MD & CEO, IndiaFirst Life Insurance Company Limited, 0

“Toss me like a dough and watch me rise!” Here, it almost seems as if Chinonye J. Chidolue is referring to the insurance industry of today, which has surmounted every challenge over the years. Insurance has always played a crucial role for people and the economy; however, the sudden heightened consumer demand took it to the centre stage. This meant that the industry had to tread the tightrope between performance and compassion. This meant that whether it was about the customer, distributors, or employees – every stakeholder was addressed with empathy and benevolence.

As an industry with risk management at its core, the insurance industry used its experience and expertise to work out risk mitigation measures to continually deliver its promise that became extremely relevant during the pandemic year.

Products and Pricing: Price optimization for any risk is primarily achieved through data analysis and forecasting. However, last year, insurance companies had to suddenly evolve and adapt to offer protection against a virus, which did not exist until it took the world by storm! The insurers have done a remarkable job given the sketchy data, need for speed, and consumer expectations leading to an altogether new product pricing methodology. That done, the insurance industry has provided what only they can provide – peace of mind through efficient risk management.

New Mindset to Settle Claims: Insurance companies rose to the challenge and stepped up to support consumers by covering COVID-19 claims as a part of existing policies. While all life insurance products have mortality assumptions, the pricing for these policies was never provisioned from the pandemic perspective. Yet, not a single COVID-19 claim has been repudiated by any insurance company citing any exclusion, besides; companies did not hesitate to dip into their reserves to settle the claims. Earlier this year, over nine lakh COVID-19-related claims worth INR 8642 crores were settled by insurance companies, adding that the turnaround time for settling these claims has been dramatically reduced to further help customers. These are statistics that have even forced the skeptics to rethink.

Seamless Customer Service: Incorporating protection about Covid-19 to make policies robust and relevant to consumers was just the beginning. In addition to the challenges, the lockdown suddenly imposed a new way of working.
Meaning, insurance companies had to seamlessly transition into the digital model to be able to serve their customers across demographics and geographies. Whether it was talking to prospective customers, explaining the products to them, helping them with documentation, finding substitutes for medical tests, working out alternatives to paper processes, claims settlement, and more. For an industry that relied upon physical interaction and documents, the move from paper to paperless mandated new protocols of working. No matter what the obstacle, the industry responded with utmost speed and empathy.

It is the only one that offers a shield against unplanned changes in circumstances

The Larger Role of Insurance: The insurance industry has always helped individuals and families by offering financial protection. Also, the country’s economy has been served better due to Life Insurance companies moderately absorbing the shock of financial loss and empowering individuals to continue contributing to the economy. Early-stage investors were able to manage their financial commitments like children’s education and loan commitments with ease. At a macro level, insurance companies are prominent institutional investors. From government-led infrastructure projects that help build the country to the stocks and bonds market that propel capital formation; the insurance industry plays an important role in boosting the nation’s economy.

At a time when the nation continues to deal with illness, death, and adjusting to a new normal, insurance continues to provide support at macro and micro levels. While people are coming to terms with the loss of a loved one, insurance ensures a stable financial situation in homes. This does not compensate for the emotional loss, but it helps them tide through the sudden changes by providing security and a sense of certainty around finances.

The industry, over stringent trials, has effectively demonstrated that it is indeed an entity that provides benefits in adversity. As a result, in recent times we have seen insurance gaining awareness, acceptance, and momentum. This trend must continue, and insurance must find its rightful place as a risk mitigation tool. The insurance industry is uniquely positioned and cannot be compared with any other industry in the financial services spectrum. It is the only one that offers a shield against unplanned changes in circumstances.

The path to recovery may not be an easy one, but the industry will continue to play a pivotal role in getting the nation back on its feet.

Stay home. Stay safe.