It has been a year since the first cases of COVID became known and began an upward world as we knew it. When COVID struck, our strategies, priorities and plans took on a new perspective, a new focus and in many cases a new concern – through the eyes of digital engagement, for customers, employees and channels. The good news … many initiatives were still relevant. The bad news … many initiatives needed to be accelerated as market assumptions and strategies changed significantly overnight.
COVID affected all industries, but some were better prepared than others because they were well on the way to digital transformation. McKinsey, in a multi-industry multi-industry research initiative, assessed economic profit by industry and identified what they call an "economic profit gap", which became clear in 201
- Streaming media versus traditional cable
- Cooking at home versus eating out
- Pick-up or delivery on the curb towards eating out
- Digital e-commerce versus shopping in store  Home delivery versus in-store purchases
Further emphasizes this, in a new report by Andreessen Horowitz found that e-commerce in North America as a share of total trade in the first six months of 2020 increased more than in the entire decade in advance – yesterday from 16% in January 2020 to 27% in July 2020, after starting 2010 at only 6%!
Parts of the insurance industry also experienced this. AccuQuote, a national online food insurance agency, saw a 20% -30% increase in life insurance applications. [ii] This is in line with a Forbes report which noted that online life insurance increased by 30% -50% for companies with fast apps that used data / algorithm-driven guarantees, especially for people 45 years and under, the main growth market for Millennials and Gen Z. [iii] In another Forbes article, they noted that P&C use-based insurance (UBI) accelerated in North America when people re-evaluated traditional car insurance and chose UBI. Prodigy, a car dealership software provider that lets customers compare and buy insurance when buying a vehicle, said online insurance sales increased by 300% by 2020, and that millennial buyers tended to opt for the UBI option. [iv]
Redefining the future of a crisis
The story tells a fantastic story of opportunity and innovation by embracing disruption. Looking back at other major crises and catastrophic events, there is a strong link between disruption and opportunity – driven by innovation in business and technology.
Think of the Spanish flu. It increased interest in epidemiology and set up the national disease reporting system. World War II brought radar and computers; the oil crisis of 1970 provided the Internet and autonomous vehicle technology; 9/11 introduced social networks, wireless technology and cinema surveillance; and the financial crisis of 2008 gave rise to Sharing and Gig Economies and InsurTech. From all these catastrophic or major events, fascinating and world-changing new companies and technologies emerged that helped us adapt to a rapidly changing world.
Now, almost a year later after the advent of COVID, companies – both insurers and those who are insurance customers – realize that it will never return to "normal". Companies with resilient, future-proof digital business models were better positioned to ride the trends, embrace disruptions and thrive during the crisis, increase their competitive advantage and establish them as the next generation of leaders.
Leaders hit hyperacceleration
Our upcoming new report on strategic priorities 2021, based on results after COVID survey results, shows a dramatically widening gap when looking at insurance companies' focus on key strategic initiatives last year between Leaders to Laggards of 64% – which corresponds to a growth of 20% in the gap from last year. Followers "trampled water" to keep up with the previous year – with a gap of 12%.
Even more striking and worrying is the widening gap with leaders over the next three years of 102% for Laggards and 28% for Followers, reflecting a growth of 40% and almost 10% for each! These gaps are not good for insurers' ability to create economic value, grow and remain relevant with the ever-increasing pace of change and disruption.
Now, almost a year later after the inception of COVID, companies – both insurance companies and their customers – realize that it will never return to "normal". As a result, insurance companies have a unique opportunity to reconsider their future insurance today and redefine their strategies and priorities for 2021 and beyond.
The COVID crisis, together with other customer, demographic, technology and market boundary changes, is changing. risk, customer behavior and expectations – create demand for new risk products, value-added services and customer experiences that the insurance industry must respond to and adapt to. These shifts create opportunities to make insurance better and more relevant through innovative application of technology. The most important thing is that we have the opportunity to make the change happen if we break down silos and long-term business assumptions, embrace the next generation of technology and ecosystems and more!
Just look at the achievements with Operation Warp Speed in the face of an "impossible" challenge! They were able to break through decades-old business models and processes to deliver the impossible – deliver the first approved vaccine in less than nine months compared to the "traditional" long, bureaucratic, complex process that lasted 10-15 years!
Think about which insurance can deliver within the same time frame – new products, customer experiences, services and much more. Instead of taking years … what can we do in weeks or months? The impossible is possible!
So how do you position yourself as a leader, climb the economic power curve and become strong innovators?
Know where you are in the knowledge gaps from our research on strategic priorities that define leaders who accelerate digital transformation with resilient digital business models. Then rethink and re-prioritize your strategies and priorities to take advantage of the change and opportunities that are evolving. And most importantly, run on those priorities with a sense of focus and urgency.
This year's report on strategic priorities is more important than ever for insurers to assess where they stand and how they will react, because "business as usual" is no longer a strategy in this age of dramatic change and pressure.
is time for bold moves.
Finding the right balance between optimizing today's business and boldly creating tomorrow's business is more important than ever. Are you ready to reach that balance and rise as one of the leaders after the crisis?
For further insights into the forthcoming report, see the webinar, Strategic Priorities 2021: The Insurance Industry Shift Meets Hyperacceleration Digital Business Models who shared details from the report.
[i] Bradley, Chris, et al., “The Great Acceleration,” McKinsey & Company, July 14, 2020, https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights / the great acceleration
[ii] Danise, Amy, "How life insurance shopping has changed during the pandemic," Forbes, August 9, 2020, https://www.forbes.com/advisor/life-försäkring / köp under pandemic /  [iii] Danise, Amy, “Consumers Panic Shopping For Life Insurance in the Face of Coronavirus,” Forbes, March 12, 2020, https://www.forbes.com/sites/advisor / 2020/03/12 / consumers -panik-shopping-for-life-insurance-in-the-face-of-coronavirus / # 351a4a826a6f
[iv] Garsten, Ed, "Covid Sparks Spike In Usage-Based Car Insurance," Forbes, December 7, 2020, https://www.forbes.com/sites/edgarsten/2020/12/07/covid-sparks-spike-in-usage-based-insurance/?sh=4f3ae7454ed0