UK Insurers Face Challenges with COVID-19

COVID-19 UK update: March 2020

 

This post was written by our new Business Development Director for the UK, Andrew Lowe, who offers a unique perspective on the state of insurance from his home office in South Croydon, England.

 

Just last week I met an insurer in The Gherkin, right in the heart of the City of London. The streets were quieter than normal but it was fairly much business as usual.

After the meeting I decided to go home rather than to the office, in part as I was having a computer monitor delivered, but also because working from home had started to feel like the sensible thing to do off the back of the weekend’s developments. I got home, received my monitor and set up a home office in my daughter’s bedroom. My daughter Lara is at university in Liverpool and wasn’t due home until Easter.

At 5pm the prime minister said that everyone should work from home where at all possible, avoid social interaction and self isolate if any member of the family had symptoms. Lara rang to say her university had stopped face to face lectures with immediate effect and she was coming home in the next couple of days.

So I’ve now relocated my office to my 23 year-old’s bedroom. The view isn’t as nice but hopefully I won’t be bumped out of this room!

Work wise it’s been strange as people come to terms with working remotely. Having worked for US companies for the last five years I’m used to this way of working. This is not necessarily the case for insurers. Senior managers may have laptops but typically they have clunky log in processes and slow network systems. One client I spoke to said she’d be working antisocial hours, purely so the network speed was better.

I’ve also experienced the conference call network under strain. On one call this week my colleague couldn’t get into the call. And another call was disconnected out of the blue.

Generally we’re all getting more familiar with conducting business over the phone, Zoom, Skype etc. I’ve already worked out how to change the background on Zoom!

 

Challenges for Carriers Ahead

 

The big challenge for insurers though is they operate large call centres with staff working in close proximity. The call centre technology, policy and claims systems are not accessible remotely, making home working difficult. Home working is not a scenario that would have been run in business continuity planning. In the insurers I’ve worked for we anticipated the loss of a particular site and would have a plan to decant to a backup site and/or upweight our volume into another of our sites elsewhere in the country. But I don’t recall seeing a scenario whereby home working for the mass of staff is required.

Like all other businesses in the UK, insurers will also be suffering from high absence rates as their staff self isolate. From next week parents will have a further challenge to arrange child care for their children who are no longer able to go to school.

The good news for motor insurers is that claims are significantly down. I only need to look out of the window to the main road to see why. Less traffic on the road makes for less accidents. And the same will be true with home insurance. Occupied homes are good news for home insurers as this reduces the likelihood of claims such as escape of water, which in itself represents around a third of all claims.

Clearly travel insurers will not be so lucky. The flight and holiday cancellations and travel restrictions will have created significant anxiety for travelers and this will be a challenge for insurers in meeting the needs of their customers. Other classes of business will be creating strain too. Whether or not businesses are insured for this interruption is of great concern. And people are losing their jobs and livelihoods, which may or may not be insured.

 

Challenges for the Economy

 

The UK government has said they will help businesses and workers get through this but the detail of support is yet to be seen. In the meantime, airlines and tour operators are laying off staff, and this is being seen across many other sectors such as car manufacturing etc where there are knock-on impacts. Businesses are not waiting to see the details of the government support and are taking swift action to contain their costs. 

A friend of ours works for TUI, the UK’s biggest tour operator. Yesterday she was told that as of Monday she would only be needed 50% of the time and would only be paid 50% of her salary. This is going on across the employment market, adding to the anxiety in the country.

It’s hard to believe that only two weeks ago I was in our head office in Santa Barbara, having enjoyed a week in the sunshine socializing with colleagues in the many bars and restaurants. These bars and restaurants are closed for the foreseeable future and my colleagues are working from home full-time.

 

Worrying times, and we’re not in the clear yet. Stay safe!

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