The Covid-19 pandemic has been bad news for business.
Lockdown restrictions and social distancing measures forced many to close for months, with staff sent on furlough and sales grinding to a halt. For many, those temporary closures have sadly become permanent.
Even as the UK begins to emerge from lockdown we can expect to see many more businesses fail, especially with government support and the job retention scheme in particular, coming to an end over the coming months.
The impact of the pandemic and the government’s lockdown restrictions have seen the UK plunge into its deepest recession since World War II, with the economy shrinking by a mammoth 20%.
Insurers too have been hit by the pandemic, with many lines of business facing increased claims costs, and lets not forget the reputational damage that has already occurred as a result of the business interruption (BI) scandal and ensuing FCA test case in the High Court.
Despite these challenges, however, the insurance market has remained resilient and it is on these foundations that economic recovery post-Covid-19 could well hinge.
Insurance cover is a great enabler of economic activity, allowing businesses to carry out their trade, innovate and drive growth. Without that protection provided by policies, the risks for many would simply be too great.
That is not to say that insurers can carry on operating in the same way though.
Innovation is key and new products must emerge to take account of the new normal, as well as the new risks, we are now operating under.
Digital distribution channels, already an important part of the market for many, will become an increasingly vital tool for insurers to take advantage of, while insurtechs, a significant tranche of the insurance landscape that has been hit hard by the pandemic, could hold the key for insurers looking to make the most of pandemic presented opportunities.
By taking advantage of modern technology, insurers will also be able to search out new markets, including those vulnerable customers who have often been missed by the traditional players.
Research from Swiss Re highlighted this issue in its latest research, valuing the global protection gap at a whopping $1.24trn.
This presents a great opportunity for insurers that get their proposition right as they adapt to the post-corona world; helping to close this gap will not only boost insurers’ bottom lines, it could also light a fire under the economic recovery that we are all in desperate need of.