Restore and reimagine: Digital and analytics imperatives for insurers

McKinsey 14 May 2020 12:00

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When the world paused (and reorganized) its usual activities to contain the spread of COVID-19, many insurers demonstrated great resolve. As operations stabilize—even as the macroeconomic environment does not—the next phase must be focused on embedding resilience and flexibility in organizations and reimagining insurance for the next normal.

The COVID-19 crisis will cause structural shifts that will have significant implications for the insurance industry. An extended period of volatility, uncertainty, and depressed economic activity will accelerate ongoing changes in consumer behavior, needs, and expectations. Some of these shifts will be irreversible.

Demand for digital interactions will spike and stay elevated. In such an environment, digitally enabled intermediaries and digital-only sales models are proving to be effective and may be accelerating the winner-take-all trend.

Customers will also be more acutely aware of their personal and health risks and will demand solutions to help them better manage these risks. These shifts, combined with ongoing economic pressures, will require insurers to develop radically simple solutions, highly efficient operating models, and consistently innovative business models.

Insurers should not postpone their digital and analytics agendas. They can approach the current moment as a chance to reimagine and rapidly prioritize upgrades in their technology platforms. The time to act—and to tap into the resulting business value—is now.

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