In the wake of the COVID-19 pandemic, a new report from insurance and reinsurance marketplace Lloyd’s of London has called on insurers to build simpler products to protect customers.
The report sets out a number of ways in which the global re/insurance industry could remove complexity and provide better coverage clarity for its customers.
According to Lloyd’s, the coronavirus crisis has highlighted the need for new insurance solutions, and with more businesses now beginning to reopen and recover after global lockdown measures, there is an opportunity for re/insurers to respond.
The need for simpler products is particularly pressing given the distinct complications that have arisen from pandemic insurance coverage uncertainty, Lloyd’s added, as well the resulting court disputes.
Developed in collaboration with Lloyd’s Global and UK Advisory Committees, the report provides three areas of recommendation for re/insurers.
Firstly, Lloyd’s called on the industry to build on the application of existing leading practice, including a linguistics review of customer documentation – for both simple and more complex products.
Next it recommended that re/insurers invest in continuous product design and delivery innovations, including data-led policies and digital contracts, as well as exploring more radical options like parametric or outcome-based insurance.
And finally, the report urged for the more direct involvement of customers in product design to build simpler, more relevant products for changing needs and post-pandemic risk profiles.
Alongside recommendations, Lloyd’s is taking its own affirmative action which includes reviewing how products are developed, designed and distributed, as well as reaching out to trading partners, risk managers and customers.
“As many businesses around the world evolve to withstand the continued impacts of the COVID-19 pandemic, including radically changing their business models, the insurance industry must urgently reassess how it can better serve and support its customers,” said Lloyd’s CEO John Neal.
“While the societal and economic impacts of the pandemic are of a scale that has never before been experienced, it has reinforced the global industry imperative to accelerate its efforts to build simpler insurance products that are more easily understood by its customers.”
Flora Hamilton, Director of Financial Services, CBI, also commented: “In a fast moving, changing market this welcome report from Lloyd’s highlights the importance of simplicity in a complex world.”
“The CBI welcomes the focus on innovation and collaboration, this will be needed more than ever as we build back better from the pandemic. We hope this outcomes-based approach influences wider debates about resilience in the UK economy.”