ROUNDTABLE: LIFE RE
Q4: WHAT CHALLENGES HAS COVID-19 CAUSED FOR YOUR COMPANIES?
“Remote working has become an effective model for many.”
Faisal Haddad
Haddad: In the beginning, everybody thought remote working might pose insurmountable challenges for business. Over time, companies and people adapted, and remote working has become an effective model for many, at least in the short term. Now is the question of how things are going to look like going forward.
Do we go through this hybrid model, or back into the office, or completely remote? In the long term, I believe that the interaction that comes with people working together in an office will be critical to culture and prosperity. To the extent this includes a hybrid or remote work element, the real question around this is how companies will think about automation and technological solutions.
Technology is going to be a big topic to discuss in the short term. Maybe in the past, companies put up that topic for the near term, but now it has become today’s problem: automation and all the technology needed to run companies to avoid any future disruptions.
Pedro: Last year Sun Life paid out Can$200 million to families for COVID-19 claims. In the context of historical mortality and morbidity tables COVID-19 represents a whole new variable. >>>
“We took care not to overcomplicate technology.”
Allison Pedro
<<< We’re 18 months into the pandemic, but that’s not long enough to understand the long-term impact statistically. That could potentially lead to differences in quoted pricing which could lead to unexpected development of reserves for insurers. It has also introduced a significant challenge in our industry that thrives on face-to-face meetings with banks and brokers.
The sales model that has worked historically is less feasible due to COVID-19. It is more challenging for a client to fulfil insurer requirements in order to obtain a life insurance policy. Medical exams are required, but limitations to travel have created logistical challenges.
Inability to meet face to face has improved technological platforms. Sun Life was already focused on digital solutions, but the introduction of working from home heightened the urgency, and Sun Life accelerated its digital focus by introducing digital solutions and collaboration tools for colleagues in the office or, in this case, working from home; and also interactions with brokers.
We took care not to overcomplicate technology, and focused on use of simple, intuitive solutions.
“We’re slowly reverting to in-person meetings.”
Kai Talarek
Talarek: COVID-19 has been a bit of a non-event for us. From an operating standpoint, we, like everyone else, had to go remote.
As a recently formed company, we were relatively well prepared to make the move. All of our information technology was cloud-based, so the virtual transition was no different from the usual operating paradigm. From that vantage point, it’s been easy.
Now we’re slowly reverting to in-person meetings. I’m in Nashville two days a week. I’m in New Jersey one or two days a week. There’s a massive benefit to seeing people face to face. There are types of interactions that you can’t have when you’re entirely remote.
COVID-19 has affected us operationally, but I would say, not detrimentally. It’s just been a change that we have dealt with, and we’ve dealt with it well.
From an insurance perspective, we have had the benefit of having both longevity and mortality exposures. Regarding exposures to longevity, we’ve seen a mild financial uplift, but when we analyse it, we can’t trace it back to COVID-19. It’s just a coincidence that we haven’t seen much of an impact on mortality.
In the context of the age groups that dominate our exposures, the net effect of COVID-19 has been a positive one. When you think about the lethality of COVID, it is hazardous to the elderly, who don’t make up the preponderance of our exposures. >>>
“We felt that we were still very liquid and solid.”
Kevin Hovi
<<< And for these younger individuals, the absence of many other factors that constitute mortality risk, such as socialising or for more minor communicable diseases, the net basis had a positive effect on mortality experience.
I’m not saying it’s been financially decisive, but we haven’t suffered from COVID-19 financial loss like some other primary insurers might have.
Hovi: There were two things that COVID-19 helped verify for us. One was our tech-enabled operating platform in the US, where we invested in infrastructure to go primarily paperless. This allowed our US retail business to grow which supports our reinsurance business growth.
Second, from an investment standpoint, March 2020 as a terrifying month to be an investor because there were a lot of different outcomes that were possible. It was a stress test scenario in terms of our ability to have appropriate liquidity and have dry powder.
Being a buyer in that market instead of a seller was important for us. Historically, capital doesn’t kill companies as much as liquidity kills companies. We felt that we were still very liquid and solid, able to transact in that period and able to be on our front foot instead of our back foot. And that was validation of a lot of things for us in our investment approach.
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