To download the full Summer 2020 issue in PDF format, please click here.
In addition to hitting several lines of (re)insurance business with varying degrees of severity, the Covid-19 pandemic has changed the way business is transacted in the market, with the vast majority of the workforce having moved to remote working since the advent of lockdown in March.
All players in the market – from cedants to brokers to (re)insurance underwriters to ILS funds – were quick to equip their workers with remote working capabilities, and industry leaders have been just as quick to praise their response and handling of the transition.
Business as usual
The insurance market knows it has a problem with technology. London market trading still involves brokers scurrying around Leadenhall Market and Lime Street with bulging manila folders, doing deals in pubs and in Lloyd’s queues, while in the US, the issue might be less visible in the key (re)insurance centres, but ageing technology and labour-intensive processes are still de rigeur.
Confronted with the global coronavirus-induced lockdown, however, the market’s working practices have been pushed into the 21st century, according to Fiona Temple, HR and Academy director of the Lloyd’s Market Association (LMA).
“We have been forced to work in a virtual world, but our market’s IT infrastructure has worked and proved its value. It is now the norm to say, ‘I will Zoom you’ or ‘Let’s catch up on Teams’; phrases seldom heard around Lloyd’s six months ago,” she says.
Rob Myers, the LMA’s operations director, tells Insider Quarterly that it has been “business as usual” for the industry in London, highlighting that “organisations and service providers quickly demonstrated their operational resilience in response to the lockdown”.
Meanwhile, Gary Grose, executive vice president of Argo Group US, describes it as a success story in what is otherwise a very tough time and says he is proud of both Argo and the industry as a whole.
He praises Argo’s success at transitioning 1,400 employees to remote working almost instantly, and emphasises that this was largely aa result of prudent business continuity planning – something he expects to continue to be very important.
While the industry, on balance, handled the transition to remote working well and proved to be quite adaptable, the process was not without its challenges.
After the initial set-up phase, insurers were confronted with the problem of striking a balance between keeping information loops open and letting people get on with working flexibly according to their needs. Other areas of concern that arose included employee welfare and avoiding burnout, and exposure to increased cyber risks.
Patrick Davison, the LMA’s deputy underwriting director, says management in a remote working world is a new skill set for many London market leaders, especially those who may have had little experience of it prior to lockdown.
Davison also says there have been suggestions that the absence of face-to-face meetings has introduced some small underwriting inefficiencies, due to carrier’s inability to quickly address several risks at once with a group of underwriters who work in close physical proximity.
However, he expects these inefficiencies to dissipate over time as workers get used to this new approach and technology continues to improve. Similar issues have been created with regards to business development, but they are also likely to also become less significant over time, he adds.
Meanwhile, Kevin Cleary, chief commercial officer of Optio Group, says that although securing business without face-to-face meetings has been a challenge for some, the firm has continued to see “business coming in and opportunities being pursued”.
“Our underwriting teams are in constant communication with brokers and producers on a global scale,” Clearly says.
Grose says there were some minor obstacles during the transitional phase – such as finding a way to electronically sign documents – but nothing the company couldn’t easily overcome. He recalls some initial challenges when switching to video conferencing tools such as Webex and Teams, which resulted in a slight lag in how Argo conducted business,.
“Ours is still a customer relationship business, but the technology today means that there is no difference in our ability to look at each other face to face and have the conversations that we need,” he says, noting that everyone is in the same boat and “are all absolutely motivated to make this work”.
Grose also emphasises the importance of looking after employees’ mental health when working from home.
“The biggest issue we have to focus on as an industry is the mental health of our colleagues,” Grose says, pointing out that it can be hard to try to end your day and have a cut-off from work when you’re still in the same location.
Temple agrees that the mental wellbeing of workers is “a challenge and must be a priority”. She says some managers initially over-compensated – perhaps with too much micro-management or even forced team fun – as they looked to ensure team members weren’t left feeling isolated.
She points out that people living alone are particularly vulnerable, and stresses the importance of maintaining a good work-life balance, through taking sufficient time off and finding ways to separate the two even when working and living in the same space.
“They’ve found the balance now. Most now understand that staff may no longer work nine-to-five, and instead will fit work around their home commitments like caring and home schooling,” Temple adds.
Cleary says that while recruitment and onboarding new personnel have been challenging, they have successfully brought on three new recruits across different areas of the business – in underwriting, finance and claims.
He says platforms such as Monday.com and video conferencing services have made the process easier.
Another major challenge of remote working and the Covid-19 pandemic is the increased cyber risk to companies’ networks and the confidential information they hold, says Scott Stransky, vice president and director of emerging risk modelling at AIR Worldwide.
“Remote working has made some people in the industry more relaxed and less vigilant – as they are more concerned about coronavirus than digital viruses – and cyber criminals have been trying to take advantage and profit off this. We’ve seen a sharp increase in phishing and other cyberattacks against firms in the (re)insurance sector,” Stransky says.
Remote working perks
Now that firms have found solutions and systems to manage and mitigate these issues, industry leaders expressed optimism that remote working could have a net benefit for their operations.
Perhaps unsurprisingly, some clients have found many workers to be more accessible and reachable when working from home, as there are often fewer distractions at home than in a busy office filled with colleagues.
Grose agrees that Argo’s clients have found the firm’s executives easier to reach when working from home, as there has been no business travel or time lost commuting.
He also says that workers tend to be more focused and tuned into their work at home, which has resulted in higher productivity at Argo. However, he warns, it is easy for employees to overwork themselves, so it is important to ensure they are taking enough breaks and getting sufficient rest.
“The trick is to find that balance, that efficiency level between focused productivity and staff well-being,” Grose says.
Cleary echoes this sentiment, saying he is confident that people are more productive working remotely, but that this hasn’t happened by itself – it’s about finding a balance, a supportive leadership team and utilising the tools available, he says.
Home working and reduced business travel is also resulting in sizeable cost savings for most businesses in the (re)insurance sector, as they don’t have to pay for flights, hotels and other travel expenses, Temple notes.
Webinars and virtual social and industry events are being favoured over physical events, and this could continue even once travel bans are lifted as companies will still need to address issues and concerns surrounding employees when it comes to travelling, especially when the travel is not essential, Cleary says.
“I do expect to see the continued use of virtual events and webinars, even after social distancing measures are changed. Having ‘attended’ recent virtual Insurance Insider events, it is clear that the technology used is effective, and being able to simply click on a link to listen to top industry leaders, in between my own meetings, is very convenient.”
Here to stay
Much of the industry has come to the realisation that remote working is here to stay and will continue in some form even once social distancing measures are relaxed to a point where all workers are allowed to return to the office.
Temple is enthusiastic about the development as a new way of working for everyone, not just the (re)insurance sector, and says she expects us to see much less commuting, post-lockdown.
“We will see more flexible and remote working than before the pandemic. Some people – and their managers – now realise their job can be done from home, and they may never return to EC3. From an employer’s point of view, that will cut the cost of their expensive London real estate.”
Grose echoes Temple’s point about businesses reassessing their commercial property footprint and stresses that significant cost savings can be made by an increase in remote working.
Temple adds that the past few months have shown that the market can operate without visiting the underwriting room every day, and that employees can be trusted to get on with their work.
“We will see a shift to rewards for performance, rather than for presenteeism, which sadly did still exist. The old approach valued you when you turned up in your suit, but now realises you can be equally or even more productive at home in your jeans,” she says
Office attendance is important for building relationships, Temple adds, but few people need to be there five days a week.
Cleary agrees that there has been a change in mindset – and he is certain that businesses won’t look back.
“Business as usual will never be as it once was, nor would we want it to be. This has been a period of disruption and change but we are determined to incorporate and build upon what we have learned into how we operate going forward,” he says.
Grose concludes that all businesses in the (re)insurance market should accept that things will never be the same, and suggests that failing to do so could see the companies fall behind.
“The sooner we think of this as a permanent change and adapt to new ways of working, the better off we will be.”