By Bence Takács
The Coronavirus pandemic in Hungary has also infected insurance companies, forcing the sector to accelerate digital developments in the industry. While these changes may affect each types of insurance differently, the outbreak has caused permanent changes in the overall workings of most insurers.
“If we look back at the last three months, we can see that the pandemic has significantly changed the workings of insurance companies overnight,” said Dénes Csata, CEO of Signal Iduna Insurance in an interview to Hungarian portal Portfolio.hu. “Without any possibility for personal consultancy during the quarantine – while understandably, people’s interest in insurance has drastically increased – the need for applying further online communication channels was necessary.”
One of the early challenges for most industries during the lockdown was the transitioning period from physical offices to the digital world. The insurance industry has been no exception to this, however, the problem created by the virus runs much deeper. According to Deloitte – one of the “Big Four” accounting organizations – the three biggest challenges for insurance companies are:
- Changing consumer demands
Clients are either curious about their insurance terms related to Covid, or they are trying to modify or cancel their insurance because of the uncertainty of the situation. According to Generali – 43 percent of Hungarians would like to buy new health insurance because of the pandemic.
- Tightening business opportunities
The pandemic has caused hysteria in the money and capital markets, which has affected investments of insurance companies, even in the short run. The decrease in global tourism has decimated the otherwise very profitable travel insurance sector and other types of insurances as well.
- Deteriorating sales network
The elimination of personal interactions between sales agents and potential clients due to the lockdown has affected commissions and the overall workings of these networks.
The outbreak has triggered a long overdue modernization process in the industry. In the short run, the main focus of the modernization is to create conditions for working remotely, such as tools, applications and digital infrastructure. Another important step is to further strengthen the existing digital customer service channels, as the virus has put huge overload on them. Technologies such as the use of digital signatures and chatbots have become more relevant than ever.
Once the pandemic is over, there are several uncertainties the insurance industry has to face. Insurers must provide at least the same service quality in the digital space, in order to keep customers loyal. On top of this, some insurance companies have to regain the trust of clients, as a great multitude of them have realized the limits of their contracts relating to Covid. The sudden global economic slowdown also puts seismic pressure on insurers, which may prevent the sector from growing, due to the lack of new contracts.
Interestingly, the current situation created by the virus can also be viewed as a tremendous opportunity for players in the sector, as the race for clients has begun with the realignment of customers. This challenging period will certainly determine a new direction for most insurance companies and usher in a new era of advanced digital ways.