When the pandemic started to pick up steam in March, I heard from many concerned insurance clients. Most clients had the same questions: Will my policy cover COVID-19, do I have enough coverage and finally, who are my beneficiaries, and am I properly set up in case something happens? Another question was, what are the insurance companies doing to cope with COVID-19?
When it comes to change, the life insurance industry can be a laggard. There are many insurers in Canada, from large to small, trying to navigate the same marketplace, making long-term decisions based on historical information. How does an industry that makes the bulk of their decisions by trying to predict the future now deal with the unpredictable? They do what all of us have been required to do. Adapt at warp speed.
Here are 6 ways that the insurance industry has been impacted:
- Technology Shift – The majority of insurers fast-tracked their online processes enabling advisors to get insurance to their clients faster by eliminating the use of paper. This has also allowed clients to meet advisors non face-to-face providing a safer client experience. This change has helped expedite the process and get coverage in the hands of clients sooner. In turn, less paper and processing has led to cost savings across the industry.
- Ease of Underwriting – Many clients I spoke with thought applying for insurance during COVID-19 would be more difficult. Life insurers have demonstrated flexibility to the halting of medical appointments to collect fluids to minimize face-to-face interactions due to the pandemic. As a result, many insurers have temporarily relaxed requirements for healthy individuals (up to a certain age) to acquire up to $2 million of life insurance coverage.
- COVID-19 Questions – The majority of insurers are now asking screening questions surrounding the virus on their applications. A concern is potential symptoms coupled with underlying health issues.
- Volume of Applicants – Life events, such as the pandemic, result in an overall reassessment of lifestyle and finances. The insurers are seeing an unprecedented volume of applications from younger individuals as many have revisited their portfolios, and concluded their coverage was inadequate in some form. With the ability to apply and get coverage faster, it was a predictable conclusion for companies to see a massive increase in applications.
- Business Interruption – The life insurance industry was deemed an essential service for many employees. Insurers quickly assembled their teams on a work from home basis to continue the flow of new business as well as processing claims. The industry is well positioned to continue to do business in the event of future closures.
- Impact on future claims – In Canada, due to the low mortality rate of COVID-19, the impact on insurance claims is expected to be manageable. A greater concern for some insurers is the potential for an increase in claims resulting from disability, not from COVID-19 specifically, but indirectly due to the mental health implications of the pandemic.
Every generation has one or two major events that has a lasting impact on the way society operates. For the life insurance industry, COVID-19 has been an instigator for change for the better. The ability to purchase life insurance products virtually through digital channels combined with relaxed underwriting has improved the overall client experience.
When was the last time your insurance was reviewed? At Tall Oak Private Wealth we invite you to reach out to us to discuss your insurance.