Will normal service ever be resumed?

COVID-19 disruption has been total, from mass home working to the rise of videoconferencing and the ongoing uncertainty over what is, or isn’t, allowed. How might insurers make the best of the recovery in a new reality that is still evolving? Intelligent Insurer investigates.

As virus infection rates drop in some parts of the world and people yearn for the freedoms they had pre-COVID-19, businesses and society will need to prepare for the challenges of the post-pandemic world, the meaning of which is tricky to pin down as it evolves with the fallout of the crisis.

Lockdown rules are being tentatively eased in many places, prompting businesses to start planning when and how their workforces could return to shared work spaces such as offices.

For some in the insurance industry, known for its preference for face-to-face interactions, the return to physical work spaces can’t come soon enough. However, the threat of a second wave of COVID-19 infections is ever-present, with a number of US states recording a rise in cases after reopening and Melbourne, Australia, and the city of Leicester in the UK placed into new local lockdowns after a rise in infections.

It is under this cloud that employers have had to prepare buildings and employees for the return to the office.

One high profile organisation that has set out its stall for reopening is Lloyd’s of London. On June 24 it unveiled plans to reopen its landmark EC3 Lime Street headquarters on September 1, 2020.

When industry professionals walk through the doors again they will be greeted with clear screens on underwriting boxes and a dramatically reduced capacity in the number of people who can work in the building.

Covering the bases

Plenty has been said about the ‘end of the office’ and the wholesale move of work online. But people like to deal with people and video calls just don’t cut it for some meetings.

For people venturing back into communal work spaces, the hygiene of high-touch points such as lift buttons, handrails, bathroom door handles and pens will be key.

The arrival of hand sanitation points will offer some reassurance, as will limits on the maximum number of people allowed in an enclosed area.

“This online environment will combine the best features of 1 Lime Street with digital technology.”

Lloyd’s appears to have its hygiene bases covered. To enable people to return to the underwriting room, capacity will be limited to 45 percent to meet social distancing guidelines, and clear screens will be installed on its historic underwriting boxes.

Lloyd’s says there will be regular deep cleans of the interior space including “a fogging technique every 30 days” to stop surfaces becoming contaminated and frequent sanitation of high-touch points.

To further reduce unnecessary contact, rather than using multiple entry and exit points, people will be able to access the building via only two entrances and then leave by two different exits. A queuing and one-way system will be put in place to minimise contact.

The photogenic escalators will run as normal, while the vertiginous exterior lifts will accommodate only two passengers at a time. Opening hours may also change to stagger entry and exit times.

Anyone entering the building will be able to check their temperature via a thermal camera but this will be voluntary. A click and collect takeaway catering service will be available for all market participants.

Managing demand

Reducing capacity is a practical way to reduce virus transmission but it brings its own logistical issues. Lloyd’s says it is working with the market to determine a rota system that operates on class of business to manage capacity in the underwriting room.

Given the ongoing restrictions in accessing the physical market, Lloyd’s is also developing existing plans to improve its digital connectivity.

It says: “This online environment will combine the best features of 1 Lime Street with digital technology to create efficient, smart and collaborative ways of doing business, as part of our Future at Lloyd’s ambitions.”

Lloyd’s will also launch a ‘virtual room’ to aid online interactions; the full details of this have still to be confirmed.

Other plans include a new helpdesk on the ground floor, called the ‘connectivity bar’, for anyone using the Market’s virtual meeting platforms. There will be digital booths in the café area and other selected spaces for confidential virtual meetings.

“ This is very much part of the Future at Lloyd’s, the ability to dual-operate.”

Speaking from inside the Lloyd’s Lime Street headquarters, CEO John Neal tells Intelligent Insurer: “We’re having a good look at how the work to reopen is progressing, and it’s on schedule.

“Respecting all of the social distancing obligations, we can operate the room at close to 50 percent capacity on September 1, so the room can work well and really.”

Highlighting a “substantial” technology upgrade in the building, Neal says: “The underwriter at the box can simultaneously operate really and virtually. This is very much part of the Future at Lloyd’s, the ability to dual-operate.”

In terms of what the technology upgrades and virtual access points will mean for Lloyd’s, and London as a physical location in the longer term, he says: “We believe it reinforces the value proposition of a marketplace and of a physical presence, so it’s encouraging us to think quite deeply about what the underwriting room could look like in the future.

“We think its value proposition has actually gone up, not down. The simple truth is that today the vast majority of business is transacted outside the underwriting room, but there is still the discussion that’s initiated or concluded with a physical presence.

“Our job is to encourage that we can do both as effectively as we can, and that will start on September 1.”

Home bodies

The desire to return to the office and its camaraderie might be strong for some but one expert points to a trend for continued, and contented, home working—for the time being at least.

Wolfgang Seidl, leader of Mercer Workplace Health Consulting at Mercer Marsh Benefits, explains that there may be some extroverts who are missing the office and want to get back to bouncing ideas off others.

But, he adds, there is also “a silent majority of people who really enjoy working from home because it gives them more control over their workflow”.

The debate about how productive home workers are has been raging for years.

Seidl says many would argue that the pandemic has proved the effectiveness of remote working beyond doubt. In his role as chair of the International Health and Wellbeing Network, Seidl recently asked members if they had seen a drop in productivity caused by home working during lockdown. They said no.

“Uncertainty needs leadership and that’s why we are talking about line manager training.”

“They said agile working has now been tested and they find it has more advantages than disadvantages. Their staff are either more or equally productive than when working in the office,” he says.

Home working remains a crucial option as office capacity restrictions continue, but where people work is not the only challenge as the post-COVID-19 world begins to take shape.

Engaging and motivating staff, whether they are in an office or working remotely, will also be a task.

On top of this ongoing adjustment, businesses need to be prepared for a dramatic rise in mental health issues caused by the pandemic, which will affect productivity, Seidl explained in a Mercer Marsh webcast “Managing people risk and motivating employee post-COVID-19” broadcast on July 1. There is a way to counter this, he says.

“Uncertainty needs leadership and that’s why we are talking about line manager training,” Seidl says.

A Mercer survey conducted with Business in the Community in 2019 found that 84 percent of managers agreed that their behaviour affects the wellbeing of employees.

Getting management right is crucial, argues Seidl, because everyone expects 2020 data to show a huge rise in anxiety disorders, depression, domestic violence and loneliness—issues that were already significant before the COVID-19 crisis.

He says his company has been “inundated with enquiries from clients about manager training and mental health”.

Seidl says better wellbeing and mental health of employees translates into improved sales and performance, something that is vital for insurers aiming for the best business recovery after the pandemic.

“Empathy helps people reach their potential, so we teach managers to recognise links between stress, good management, wellbeing and productivity and their role in the organisation.

“Productivity is a function of health and engagement. It’s not about free fruit, an extra day off or taster mindfulness sessions—those things didn’t help us in this crisis.

“It’s about designing work around human needs, and the future requires that strategic and evidence-based approach based on meaningful data—not big data,” he says.

Insurers will also need to “identify the new risk universe” for post-COVID-19.

P&C insurance rewritten

Dramatic changes at work are not restricted to people management and cleaning regimes.

The pandemic has “rewritten the definition of an extreme insurance event, with knock-on effects for risk assessment, management and mitigation”, according to a report “Five steps for P&C insurers on the path to ‘new normal’ resilience”, by Willis Towers Watson (WTW), published June 2020.

This is because economic losses from COVID-19 continue to accumulate as disruption is ongoing, with a variety of long-term effects.

The professional services firm advocates a stepped approach to deal with such far-reaching shifts, starting with re-planning the business outlook to December 31, 2020 and preparing more than one scenario. Ideally, says WTW, the scenarios will cover insurance volumes, premium rates, direct claims costs, indirect claims costs, expenses, and investments.

For example, for insurance volumes WTW says insurers should look at “how changes to personal behaviour and economic activity might impact the need for insurance and customers’ ability to pay, as well as changes to purchasing habits that will affect new business versus renewals”.

Such scenarios will give an idea of what a consistent forward-looking business plan might look like, which will help for 2021 planning.

Insurers will also need to “identify the new risk universe” for post-COVID-19. Risk reassessment has always taken place but, WTW says, “the critical difference is to re-evaluate the views that were previously held and to see how these views have changed in light of the COVID-19 experience”.

The firm advises insurers to “update the capital model” to reflect other changes such as additional uncertainty caused directly or indirectly by the pandemic, newly revealed gaps in past risk modelling, and the new norms as society and insurance change after the event.

“Why do we think this is necessary when, for the most part, insurers have weathered the initial storm of COVID-19 impacts remarkably well?” asks WTW in its report.

“Because the economic uncertainty it has engendered is unlikely to pass any time soon, probably not until a vaccine shows signs of fully quelling the pandemic.

“This is not a time to try and sit out the storm.”

WTW argues that insurers that make decisive moves to adapt to the new reality, along the lines of its stepped approach, have an opportunity to build a more resilient short- and longer-term position.

Any plans to return to offices will need to be as dynamic as the evolving situation.

There are difficult decisions to be made but the return to something like normality cannot be postponed indefinitely, or there will be little to come back to.

Any plans to return to offices will need to be as dynamic as the evolving situation and experts have suggested that humankind will need to find a way to live with the virus for the long term.

Mike Ryan, head of the health emergencies programme at the World Health Organisation (WHO), said COVID-19 could “become just another endemic virus in our communities”.

“HIV has not gone away—we’ve come to terms with the virus and we have found the therapies and we found the prevention methods,” Ryan told at a WHO briefing in May 2020.

“People don’t feel as scared as they did before and we’re offering a long healthy life to people with HIV. "I don’t think anyone can predict when or if COVID-19 will disappear.”

So the new reality looks very much like ongoing uncertainty, for now at least—which fortunately is something insurers have always been experts at managing.

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