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Impact of COVID-19 on Motor Insurance & Practical Challenges for Insurers

5 minutes, 36 seconds read

The outbreak of COVID-19 shook the very foundation of many industries. It is probably the first time that a pandemic created a dent in the world economy. Statista estimates that COVID-19 will bring down the global real GDP growth by 0.5 percent in 2020 compared to the previous year.

Consumers have become conscious of their expenditure. Due to disruptions in supply chains, many small and medium businesses have suffered huge losses. A dip in international trade has created a ripple effect across all industries including travel, hospitality, insurance, and manufacturing. 

The pandemic has different effects on the life and non-life segments of Insurance. While the rising concern for health has led to a spike in life and health insurance demands, the general insurance sector is suffering a setback due to restrained expenditure. 

Motor insurance is no different from being severely hit by the pandemic. Amidst this crisis, people are not keen on purchasing cars, bikes, which is directly affecting the insurance sector as well. Re-negotiation on premiums is another big challenge for Insurers. Let’s delve deeper into the impact of Covid-19 on motor insurance and practical challenges for Insurers.

The Real Picture

Till a cure is available in the market, there will be travel restrictions to a certain extent. People will hesitate to commute daily and avoid long-distance travel. The significant drop in the usage of motor vehicles is impacting claims and sales differently.

Claims and Premium 

In the initial lockdown period, many people were not able to drive their vehicles. The domino effect of this was a reduced number of motor insurance claims. 

At first, it sounds profitable for Insurers. But, for policyholders, continued premiums on policies they can’t use seems an additional burden. So most customers are either asking for bailouts or reduced premiums or refunds on premiums. 

Some major Motor insurance companies in the US and UK have already refunded 10-15% of annual premiums back to customers. In India, the finance ministry has extended the validity of the third-party insurance policies which were up for renewal during the lockdown.

Sales 

Moody’s Investors Service, expects a 20% drop in global auto unit sales as compared to its earlier projection of 14%. In many countries, Motor Insurance is compulsory. However, if people won’t use vehicles, there’ll be a significant dip in the requirement for Motor Insurance policies. 

In the wake of the current situation, IRDAI decided to withdraw its earlier policy of long-term third party vehicle insurance coverage from August 1, 2020. Earlier, the third party insurance was mandatory (three years for new cars and five-year policies for two-wheelers). 

The IRDAI’s decision is a result of concerns over the implementation of a long-term insurance cover package which made buying new vehicles an expensive affair. This will reduce the price of vehicles, which, in turn, will boost the automobile and motor insurance sectors.

Prevailing Challenges for Motor Insurance Companies

Motor Claims Process

Vehicles can still suffer damage due to theft, natural calamities, non-usage, etc. Moreover, once people start traveling, accidents are prone to occur. It will be difficult for claims investigators to assess the damage through an in-person visit.

Some insurance companies are accepting claims and renewing premiums through online inspection and vehicle photograph assessment. This procedure, however, is still in a nascent stage. Despite high-resolution cameras, it is possible to overlook a dent due to deflection caused by sunlight. 

[Related: How Machine Vision can Revolutionize Motor Insurance]

Sales and Marketing

Even though automobile sales dropped in the short-term, it is expected to pick-up in the early quarter of 2021. 

On one hand, marketing & selling policies at the original price will be difficult for motor insurers, and on the other hand, people will avoid public transport and prefer personal vehicles for commuting. 

Insurers, thus, have a challenge for positioning their product that suits both — customer requirements and their profit margins amidst fierce competition with InsurTechs.

Policy Changes due to Volatile Consumer Behaviour 

Since there were no clauses or policies for the pandemic in place earlier, some immediate mitigation measures had to be taken such as refunds on premiums to safeguard customers’ interests. 

Going forward, till there is a conclusive solution to this crisis it will be difficult for Insurers to formulate policies that preserve both – their and customers’ interests.

Business Continuity

With lockdowns, major workforce resorted to working-from-home. In the beginning, some companies faced issues in making sure whether their employees had the means to work remotely. 

Even though the lockdowns have been eased a bit and the workforce is getting used to collaborating online, the situation is here to stay. Smooth operations with a major part of the workforce working remotely is still a challenge, especially for call-centers, surveyors, and field investigators. 

[Related: Business Continuity for Call-Center Operations: Case Study]

Lack of Historical Data

During the SARS and Ebola outbreaks, only some countries like Singapore, Thailand, China, the African continent were affected. To a certain extent, businesses were cognizant of the effects which COVID-19 would have on their businesses. 

Therefore, insurers had come out with new policies and clauses on pandemics. However, the outbreak of a pandemic of this scale where the entire world felt the effects had not happened earlier. Lack of historical data for motor insurance is making it difficult to come up with mitigation strategies and business models for a sustainable and profitable business. 

Mitigation Measures and The Way Forward

“Claims” is one of the most important aspects of motor insurance and will now witness automation more than ever. Coupling Machine Vision technology with panoramic/360° pictures can give insurers a holistic view of the extent of the damage.

Car rental services have an extensive guide to click pictures of the car rented before driving which makes the process very tedious. This can be simplified through apps having pre-shot pictures of the car before renting it out. AI can also help assess the accuracy of the images. 

[Related: How can Artificial Intelligence settle Insurance Claims in five minutes?]

In the short run, finance ministries in many countries have taken steps to lessen the burden of the insurance premiums. But in the long run, insurers will have to come up with policies that are more viable for the insurance buyers. ‘Pay-as-you-use’ policies will see more demand because of their small ticket size. 

Technologies such as IoT can help gather data through sensors that could help underwrite insurance premiums for vehicles. The data gathered can help understand consumer behavior and profile them for creating future strategies. 

We’re an InsurTech100 firm, building AI-First Solutions for the new age Digital Insurer across the entire Insurance Lifecycle. For your specific requirements and Machine Vision for motor claims, please feel free to write to us at hello@mantralabsglobal.com.

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MantraTalks Podcast with Parag Sharma: Delivering Digital-first Health Experiences for Patient Care in the New Normal

6 minutes read

The healthcare industry took the brunt of the Covid-19 pandemic from the very beginning. It was, and still is, a humongous task for hospitals to deal with the rising number of COVID patients as well as handling the regular consults. 

To delve deeper into the state of healthcare in the COVID times, we interviewed Parag Sharma, CEO, Mantra Labs Pvt Ltd. Parag shares his insights on how technology can help in delivering digital-first health experiences for patient care in the New Normal.

Parag is a product enthusiast and tinkerer at heart and has been at the forefront of developing innovative products especially in the field of AI. He also holds over ten years of experience working in the services line and has been instrumental in launching several startups in the Internet & Mobile space. His rich domain expertise and innovative leadership have helped Mantra climb to the top 100 innovative InsurTechs in the World – selected by FinTech Global. 

Catch the interview:  

Connect with Parag- LinkedIn

COVID-19 and Its impact on Healthcare Organizations

Considering the COVID situation, according to you how has COVID-19 impacted the IT & service operations among healthcare organizations?

Parag:  Since the onset of COVID-19, the healthcare sector has been deeply impacted. Institutions are facing a serious crunch in manpower. IT support systems which were usually manned and managed by a large team of IT professionals are not available in the same strength. Resource allocation’ is one of the biggest concerns due to physical and mental exhaustion of the healthcare workforce. 

Hospitals are facing issues such as operational disruption due to staff quarantine, supply-chain delays and sudden decline in patient footfalls, difficulty in sustaining fixed costs, etc. People are not comfortable getting out of the safety confinements of their homes due to the rising risk of getting infected with the virus. Hospitals will have to reassess their future strategy and budgets in light of the uncertain economic situation.

Preparing for the Future

What can hospitals do to ensure the continuity of their customer-facing operations in the wake of a second Pandemic wave?

Parag: There are many things that hospitals can do to manage themselves in this hour of crisis. Being more digital than what they are would be one step forward for all of them. They can bring their IT systems to the cloud so that the person can access data and manage their work remotely. They can enable their patients to book appointments and enquire about services through apps and chatbots which won’t require them to call the reception or come to the hospital. These are some of the services which hospitals can provide to their customers with minimum physical contact. 

Related: Manipal Hospital’s move to a self-service healthcare mobile application

Hospitals can extend Telehealth services to their patients. Recently, telehealth has proved to be useful especially when there is asymmetry between the number of patients and healthcare providers. I think it will be very useful for healthcare institutions to deploy telehealth solutions to provide medical facilities to people who have so far been outside the benefits of healthcare.

New Expectations in Health Experiences

Is consumer behavior defined by the ‘new normal’ going to change the way we access healthcare from this point on?

Parag: Yes, people will expect a completely different way to access healthcare services from now on. Hospitals should gear-up and rise to this occasion. The pandemic has also provided a new opportunity to adopt a completely different approach in the way healthcare is delivered. They always felt that medical care cannot be provided remotely but now this is happening and people are appreciating remote healthcare services. Hospitals and healthcare institutions are convinced that telehealth and remote care will be more successful soon.

Technology in Healthcare can Bridge Operational Gaps

What are the operational challenges, as far as digital capabilities go, that hospitals are facing currently? And, what steps must they take to bridge these gaps?

Parag: Operational challenges are not just digital challenges. But a lot of these challenges can be addressed with technology. For example, Electronic Health Records which hospitals manage within the premises can be moved to the cloud so that the person can access these records on the cloud itself and need not come to the hospital. 

Related: Medical Image Management: DICOM Images Sharing Process

Secondly, if you deploy telehealth and telemedicine solutions, irrespective of where your patients are or doctors are, hospitals can deliver the required care to its patients. You can even extend your diagnostics services to your patients by giving them an application through which they can seamlessly book appointments for consults, diagnostics, or pathological services and resolve their queries, etc. Simply by giving a seamless interface either through bots or applications can go a long way in providing better health experiences to the customers.

Role of Chatbots in Superior Customer Experiences

According to you, what role does chatbots powered by Artificial Intelligence have in the Healthcare CX landscape?

Parag: Chatbots are the simplest example of the implementation of AI-based technology in healthcare. There are a lot of things which bots can do simplistically. For example, if a patient wants to book an appointment with the doctors, instead of going through a complex web applications and interfaces, what if I can simply write “I want to book an appointment with the doctor Dr. XYZ at 4 pm” and the bot can figure out in case the time slot is available with that particular doctor, it will confirm the appointment followed by a payment process if the payment has to be made upfront. 

Apart from this, you can extend your bots to provide e-consultations where doctors can do remote consultations via audio and video features of a chatbot. So there is a huge scope for bots beyond answering routine queries by customers or booking appointments. It does not stop just there. You can extend chatbot functionalities to support functions such as admin, HR, finance, and business process efficiency so that they can provide better services to their customers.

Related: Healthcare Chatbots: Innovative, Efficient, and Low-cost Care

Chatbot Use Cases in Healthcare

Could you tell us some possible bot use cases for delivering better customer experiences to digital health users?

Parag: Apart from booking appointments and resolving customer queries, these bots can conduct remote consultations, internal processes, health symptom checker, out-patient video consultation, second opinion consultation, ordering medicines, psychological counseling & mental wellness, scenario-based risk advice, Heroism Recognition for employees, etc. Also, it can be further extended to help patients enquire about health insurance related queries, and all the interactions between insurance companies and hospitals can be provided to the patient. 

Related: Healthcare & Hospitals Use Cases | Digital Health

The Road Ahead

COVID-19 has forced hospitals to revise patient support strategy with limited operational staff that is bringing every day a new challenge. A way out is to heavily rely on digital innovation.

In India we have a disparity between the no. of healthcare providers and care seekers. Without technology, I don’t think there is any way healthcare institutions will be able to scale to a level where they can provide meaningful services to such a large number of people. Hospitals can invest in setting up an information exchange; making the process as seamless as possible; and removing all possible inefficiencies from the supply chain through technology.

Future growth for hospitals will come from digital technology because patients will opt more for digital platforms. And it is up to hospitals to catch up with the pace at which modern technology is developing. We, at Mantra Labs, have achieved several use cases including hospitals/diagnostic centers that are able to deliver superior health experiences.

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