December 10, 2020 by Adam Malik
The insurance industry should not be surprised by the fact there was a global health pandemic, a senior P&C industry exec says, adding that COVID-19 is not likely to change industry fundamentals significantly, since nothing new was brought to the table as a result of it.
It may seem like an odd thing to say, Rob Wesseling, CEO of The Co-Operators, acknowledged at a recent virtual conference. But “COVID-19 is not changing the industry.”
“In my view, the pandemic simply brought one of the significant risks that we live with every day to the top of our consciousness,” Wesseling said during a presentation during the Future of Insurance Canada virtual event. “But let’s be honest: A pandemic with this level of severity should not be a surprise to those who study epidemiology or those that study risk, so it should not be a surprise to us.”
That said, Wesseling added, the COVID-19 global pandemic has made the industry more aware of how many risks there are around us. And it has accelerated the pace of industry trends that were already in motion.
Wesseling said that, although he hasn’t gone back to double-check, he’s certain he reviewed a number of detailed stress test scenarios that placed a focus on pandemics before this year. “So while the timing and the severity of the arrival of COVID-19 was unknown, I put to you that it wasn’t unexpected.”
He stressed that he’s not lacking empathy for the pain the pandemic has caused. “It’s quite the opposite, actually,” he said. “The physical, mental and economic suffering that has resulted from this virus, from our preparation for it, or lack thereof, from our response to it, or lack thereof, is absolutely tragic.
“But no, it hasn’t changed the world. It’s simply made us more aware of the risks that we live with every day.”
It’s also accelerated a number of emerging trends. For example, there’s been a spike in demand for digital and telephone service, as well as for an omnichannel distribution.
“The demand curve for digital services offerings has been accelerated, I think, by years,” Wesseling said. “And I can’t imagine client preferences going back to the way that they were pre-pandemic.”
There has also been “a massive acceleration” of digital commerce across the economy as a whole, Wesseling said. “But again, this isn’t something new that has been introduced. Insurers have known this was coming.
“However, it seems that we’ve jumped years ahead in just a few short months. Economic factors are not simply paving the cow paths. They’re developing entirely new business models of commerce. These new models are creating new risks and they demand our industry to respond,” Wesseling said.
Insurers’ proposed market solutions in the near future need to be low-friction, and they must respond to new and emerging risks. Furthermore, he added, these will need to be embedded in non-insurance transactions.
“The question for us is whether we’ll be the ones to respond, or will we allow someone else to?” Wesseling said.
Feature image by iStock.com/da-kuk