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Shrinking premium pool among key post-COVID industry risks

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Insurers need to have a post-COVID game plan as they look to rebuild their businesses after months of disruption from the pandemic, according to insurance managed services provider Xceedance.

The Boston-based firm says the crisis has created new challenges in the form of shrinking premium revenues and increased risk of workforce claims spikes, all of which will require the industry to relook its current operating model.

At the same time the industry also has to deal with operational and productivity matters arising from remote working arrangements as well as manage the raft of regulatory reforms that were in the works before COVID-19 struck.

“A lot of change was already occurring in the insurance market during the past 12 months,” Sydney-based VP and Country Manager Stephen Browne said. “Many insurers have digital transformation projects already in progress.

“COVID-19 didn’t initiate the change, but is a catalyst that validates the need to fortify operational and technological resilience.

“COVID-19 has shown us that insurers should revisit and redefine their operational models, ensuring they have the right technologies in place to be more scalable and adaptable in a potentially unstable business environment.”

Mr Browne told insuranceNEWS.com.au today the next six months “could well be a big planning session” for the industry as it brainstorms for ways to adapt to the new landscape.

He says the industry has responded well, quickly mobilising its staff to shift to remote working when the economy went into a lockdown in late March, with minimal disruption to its frontline operations.

But as the recent results of major insurers have shown, revenues have been strained to varying degrees by the pandemic crisis, and there are worries there could be more financial pain in store.

“It is a changing environment,” Mr Browne said of the challenges facing the industry. He says insurers will be asking “how do we create more revenue, how do we turn the situation around and still operate as a profitable business? So there’s going to be reflection and strategy on that.”