The Covid-19 pandemic has changed almost every Canadian’s aspects of life, including the insurance industry. Up until now, everyone is still trying to get acquainted with the “new normal” life. In terms of the insurance industry, coronavirus has significantly impacted this sector’s development and performance.
The Growth of Insurance Industry during the Covid-19 Pandemic
Based on the survey conducted by Statista, the insurance industry in Canada was forecasted to grow by 4.1% between 2020 and 2024. Nevertheless, due to the anticipated economic downturn, this estimate was decreased to 1.7% in April 2020.
The Challenges for Insurance Industry
The spread of Covid-19 has created a variety of challenges for the insurance industry.
One of them is the increase in life and health claims. The social concern about health is prioritized, so it is time for Canadian insurers to express their sympathy and initiative on the difficult current circumstances of insurance buyers. Canadian insurance companies have tried to meet the customers’ demands and extended their insurance policies to attract more potential customers. They have offered changes in some factors such as grace periods, eligibility periods, and coverage periods.
Due to the fear of community spreading, traveling or usual social activities no longer happen, and the need for purchasing insurance decreases. For instance, at the beginning of January 2021, Quebec entered a complete lockdown reacting to the out-of-control spiral. It means the city dwellers are obliged to significantly restrict their comings and goings, and having an accident insurance package is not practical.
Moreover, the emergence of this pandemic has strongly influenced insurance business continuity. Insurance enterprises have to prioritize people’s health safety, specifically their employees, customers, and partners. Hence, the progress of the insurance business has been interrupted by mass gathering limits that can restrict human connection in the workplace.
An expert revealed that the pandemic creates a capital and liquidity problem on several fronts. Specifically, payouts are more than claims, and there is an increase in the outflows of insurance company’s capital.
Mergers and Acquisitions (M&A) of the insurance sector are affected by the pandemic. The frequency of M&As is not as high and vibrant as before. Most parties focus on the new method of operations or some of the above matters more than M&A activities.
As can be seen, learning how to adapt to the new norm and solve these problems is a puzzle.
As a result of the Covid-19 pandemic, the insurance industry and other affected industries have to face decision-making on how to operate effectively.
The emergence of social distancing, travel bans, and full lockdowns make “working from home” more essential. The employees in the Canadian insurance industry are forced to work in a digital and agile environment. What is more, the companies ensure that they will try their best to support and enable their staff away from the offices responsibly. It maintains productivity despite working virtually at home.
In terms of communicating with consumers, it is not the time to be silent. Most insurance companies have made lots of effort to connect with them during the pandemic via online channels. Insurance customers are looking forward to the advice and support with finance or health from insurance consultants. During these turbulent times, their help will be fundamental to strengthening the enterprise’s brand, building trust, and even the long-term relationship with consumers in the future.
A necessary measure is to update the pandemic situation and monitor the market continuously to ensure no misinformed decisions regarding business strategies.
The insurance industry has run into lots of difficulties due to the Covid-19 pandemic. With the effort of the Canadian government, the Office of the Superintendent of Financial Institutions (OSFI) has announced a series of adjustments to regulatory capital, liquidity, and reporting requirements, including delays to planned regulatory changes (i.e., IFRS 17) to help reduce some of the operational burdens on institutions during this time. And the vaccination campaign did help too.
Events such as the Covid-19 pandemic bring about both challenges and opportunities for the insurance industry in Canada. It imposes a heavier requirement on the obligations of Canadian insurers. The more intelligent and flexible they are, the more likely they will overcome this tough time.