Industry experts discuss the change in business approaches as insurers decide whether Covid-19 reactions are a ‘one-time thing’ or have ‘fundamentally changed the fabric of the business’

As lockdown measures are gradually relaxed by prime minister Boris Johnson, insurance industry professionals are left weighing up their operational models, separating “one-time” Covid-19 reactionary measures from technology-driven steps that have “fundamentally changed the fabric of the business”.

Speaking at an Insurance Times webinar held on 30 July, titled ‘The legacy of Covid-19 will be the end of legacy – how a global pandemic is accelerating the adoption of cloud platforms’, Jim Sadler, chief operating officer at SSP, which sponsored the online event, explained how the threat of a potential second lockdown raises questions around insurers’ resilience, both operationally and in responding to clients.

He said: “One of the challenges that we’re going to face is what have we done now in response to this first lockdown that was actually only ever intended to be a one-time thing and therefore it can’t really perpetuate versus how much have we actually fundamentally changed the fabric of the business and the way we operate forever? Whatever we’re doing now has actually added more value in some way or is relevant for whether there’s a lockdown or not.

“In a world where things were getting more volatile and uncertain anyway, what we might have had is just a wake-up call that showed us where things were going to end up in any case and we’ve just prepared ourselves for that in short order. I’m a great believer that seismic events like these don’t change the future, they just advance how quickly it gets here.

“If the first lockdown was the initial meteorite strike and we’re the dinosaurs, then at least we’ve had a warning that there’s a meteorite coming.”

Reactive to proactive

Making operational changes to accommodate the first lockdown, initially implemented in March, was “reactive” and “created a bit of manual work, manual processing” said Jasvinder Gakhal, managing director at Direct Line for Business.

For her, this included moving her firm’s entire operation to a home working environment, including telephony. However, not all of the business’s changes centred solely around operational functions – Gakhal added that policy terms and conditions were affected too as they “did not allow for some of the things that came with the lockdown”.

She cited occupancy policies as an example. “If people can’t get into their buildings and it’s through no fault of their own, what do you do about that?” she asked.

Additionally, intervention from the regulator also created changes, as Direct Line for Business had to adhere to rules surrounding flexible payment plans in response to coronavirus-related financial hardship.

With these measures still in situ, Gakhal said that if a second lockdown occurred imminently, then the firm would be fully prepared and could simply extend the provisions they currently have in place. However, greater consideration would need to be taken if the country were to enter a fluctuating state of lockdown, she added.

Gakhal continued: “We now have a pattern if there were a second lockdown and we needed to repeat that - we’ve got a pattern of behaviour. But what is as yet a little bit more unknown is if this is a repeated thing and it happens time and time and time again, well actually some of these things will need to become core product features and then you come back to how do we need to adapt technology, how do we need to adapt our policies, product wordings and the sales process, underwriting, all of this stuff to be able to accommodate what could be this on-off, on-off [lockdown] and we’re back to change again.

“I think we’ve had the immediate hit where we’ve had to respond and it’s had to be reactive. In being reactive, it’s created a bit of manual work, manual processing because we were reactive and I think what we need to do is move now into proactive, which is if this were a repeated event, if we needed to do this, what is the right way to create these products? What is it that we would need to change and therefore what business model do we need, what technology do we need?”

She added that employee productivity is another concern, “because not everybody has a home working environment that’s suitable”.


Greg Brown, partner at Oxbow Partners, agreed that uncertainty had become a prime topic of conversation for his firm’s clientele. Typically, how the sector will evolve can be gauged by claims history, especially with regards to personal lines, Brown explained, however now “everything is uncertain”.

He said: “Where are my people going to be working? What are my customer behaviours going to be? Most [insurance policies] are 12-month policies and if I’m an underwriter now pricing for 12 months’ time, I’ve absolutely no idea what’s going to be happening in 12 months’ time. Same in motor. Are people going to be behaving as they are now, are they going to be driving more because people don’t want to use public transport? No one really has a clue and most people are looking for a weak signal. The ability to adapt really quickly is going to be crucial to insurers, particularly to be able to manage the underwriting uncertainty and the operational uncertainty.”

The legacy of Covid-19 will be the end of legacy – how a global pandemic is accelerating the adoption of cloud platforms