ILC ARTICLE

Insurers warn of fluctuating recovery

16th April 2020

The insurance industry’s response to the Covid-19 crisis was under the spotlight at the fifth weekly webinar hosted by ARC360, in association with I Love Claims, when leaders from the sector warned of a fluctuating recovery once the lockdown is lifted.

Having discussed volumes, supply, and staff safety in recent weeks, attention turned to the insurance sector with Alex Caldwell, claims fulfilment director and managing director of Solus; Andy Warren, head of claims operations at Ticker Insurance; and Andrew Brown-Allan, group marketing and propositions director at Track Global Group making up the panel.

Situation

The first question on everyone’s lips was whether this is as bad as the crisis will get? Three weeks into the lockdown, repairers want to know if they can start thinking about a return to normal service, or whether the nadir has not yet arrived.

Andy Warren believes it’s the latter. He said that as the coronavirus spreads wider among the population it feels closer to home for everyone, and fears that activity will reduce still further as people batten down the hatches.

He said, ‘I don’t think we’ll see a big drop from where we are now, but I think there will be another few weeks of pain before we start to see a turnaround. But the question is what will that easing up look like? Will there be a double dip and how do we manage cash-flow problems? I think we will get back to normal, but it will be a slow release. It will take longer than expected because this has affected our mindsets.’

Tepid forecasts

Alex agreed with those tepid forecasts. Claims volumes are down 75%-85% and while there is a sense they have now plateaued, he warned the industry not to expect a consistent recovery once the lockdown measures are lifted.

‘I don’t see it getting much worse during this lockdown, but I think recovery could fluctuate. Who knows if there will be a second lockdown or if regional restrictions will be imposed in the winter? It feels reasonably calm at the moment, but there are too many things that can affect the recovery to expect a linear build-up.’

Collaboration

But however long it takes to rally again, there is a general consensus that the Covid-19 pandemic could leave the industry in a more healthy position. The crisis has in many ways engendered a new spirit of togetherness and while that is unlikely to remain intact when competitive business resumes, the stronger lines of communication and collaboration must be protected.

Andy said, ‘Some of the good things that have come from this situation will fizzle out because that’s just human nature, but we’d like the collaboration to stay. Volumes will come back. The market hasn’t gone away, it is just taking a deep breath, and insurers will need repairers, so it would be naïve not to keep collaborating with the supply chain.’

Closer relationship

Alex agreed, suggesting that a closer relationship going forward could help to develop a solution that works commercially and in terms of customer service.

He said, ‘We should be able to take a lot of lessons out of this. How do we plan better and learn to trust each other more? Society will continue to evolve and technology will undoubtably play a part in that, but if we can work together as an industry we should be able to find a sweet spot where we are providing a fantastic customer service and everyone is winning and making a profit.’

Trust

But while he spoke about developing trust between insurer and repairer, Andrew suggested this was a golden opportunity for insurers to build a new level of trust between themselves and their customer. He said that would result in significant long-term gains as more trust meant more data, and more data meant better decisions.

‘We’ve seen significant driver behavioural changes in the last few weeks,’ he explained, ‘particularly around utilisation, with 50%-60% of drivers not using their cars at all. The average miles per day has gone down from 14 to four, and this is from the younger demographic, proving that even they are towing the line.’

However, many policies did not reflect these changes and he urged insurers to use this opportunity to prove to customers how access to data could be win-win. He pointed to insurance companies in America that have given drivers premium rebates as they’ve not been driving, and said UK insurers could take similar measures.

Just do it

He said, ‘If emergency workers are running out of mileage then give them more. Don’t ask them if they want it and don’t wait for regulation to force you to do it, just do it. You build trust by earning trust. Overlay artificial intelligence with emotional intelligence and demonstrate how data is being used for the customer’s benefit.’

Andrew said these sorts of measures will enable insurers to end the crisis better connected to their customers, and in a stronger position to introduce the propositions that tomorrow’s policyholder will demand.

He said, ‘It’s not possible to know what the new normal will be because there are so many human behavioural elements and we’ve never lived through this before. But big insurers haven’t changed in shape or size for 200 years, so are they offering products that are right now and right for the future? We’re already seeing insurers starting to bring forward products that are better suited and more flexible to suit the way consumers have changed and will change further because of Covid-19.’

Future

Putting a time limit on the lockdown is impossible. However, bodyshops that aren’t trading or only operating restricted trading can still use this time well to gain a competitive advantage. Alex suggested that when volumes come back they will do so at unreliable levels.

‘Bodyshops should use the time they have to see how they can flex their business to meet the demand that may come in,’ he said.

Andrew suggested there might be a spike in retail jobs with drivers opting to go down the unreported route of repairs, while Andy encouraged bodyshops to use these next few weeks to search the business for efficiency gains, even if it meant a new filing system, and to maintain relationships with work providers.

He said, ‘Think beyond this time, make sure your relationships are strong. And I’d urge repairers not to take their eyes completely off apprenticeships and training because that will still be the lifeblood.’

ARC360 in association with I Love Claims would like to thank its corporate partners ACIS, BMS, EMACS, Entegral, Enterprise Rent-a-Car, Nationwide Vehicle Recovery Assistance, S&G Response and CAPS; partners The Green Parts Specialists, Indasa, and Innovation Group; and strategic partners AutoRaise, NBRA, RepairTalks and TrendTracker.