What changes will the insurance industry undergo with the lessons learned from 2020? What transformations are to be expected?
Here are some of our insights:
The pandemic and ensuing economic fallout essentially shifted consumer and employee needs, practices, and expectations, while pushing digitization of insurer operations quite quickly. But while most of those in the industry adjusted, insurers are will likely face lingering challenges to growth and profitability this year.
A survey by Deloitte with 200 insurance providers reported that 48% of executives recognised that the pandemic proved how unprepared most providers were to endure this type of economic storm. The same survey also showed that only 25% out of the 200 strongly agreed their providers had “a clear vision and action plan to maintain operational and financial resilience” during the crisis.
The pandemic gravely resulted in a loss for the property-casualty bottom line. This is attributed to massive event cancellations and employee compensation claims.
Given the crisis’ impact on jobs, business transactions, and trade, global non-life premiums were flat for the entirety of 2020, including a 1% decline in advanced markets.  However, despite these roadblocks, the industry may yet recover to 3% growth in 2021, led by a possible 7% boost in emerging regions.
Non-Life Insurance Are Forecasted to Recover in 2021
At a regional level, total insurance premium growth in advanced regions and China will be more positive than GDP, mostly driven by non-life insurance. This is mainly due to government support under the rural revitalisation strategy and rising risk awareness. The growth pullback in advanced markets will be less, but we anticipate the largest annual contraction of close to 1% in premium volumes terms throughout this year.
INTERESTING LEARNING: While it was assumed the pandemic might boost consumer awareness about the value of life and health insurance, a J.D. Power study discovered that was not the case. Despite the fatalities in the US with over 300,000 deaths, consumers did not seem any more motivated to get life insurance. This behaviour was due to a combination of scarce client communications and a continuing perception of high-cost and transaction complexity. 
Product developments will likely shake-up traditional offers. This is an opportunity for insurers to innovate based on emerging trends and needs.
New types of covers such as the launch of more parametric policies or “index-based insurance” (which pays out on the occurrence of an event rather than having to claim a specific insured property loss). This was observed as the top product development priority among North American and European providers and number three in APAC. The concept, which has already been growing in popularity in property-catastrophe insurance, might have use for future viral outbreaks.
Lloyd’s of London recently introduced a parametric business interruption policy for small- and medium-sized firms suffering IT disruptions.
WHAT CAN BE DONE BEYOND 2021?
Insurance providers must take steps to manage three key phases of the COVID-19 crisis
When the pandemic hit, insurers reacted by taking critical steps to ensure business continuity and help clients and their communities cope. As we all head into 2021, insurers should consider a mix of offense and defense-based actions to hasten long-term recovery efforts and pivot to the thrive phase when growth is most needed.
 Swiss Re Institute, “World insurance: Riding out the 2020 pandemic storm,” Sigma No. 4/2020, July 2020.
 BusinessWire, “Life insurance customer satisfaction flatlines despite pandemic fears, J.D. Power finds,” accessed November 4, 2020.