The upheaval for insurance brokers that is COVID-19

The following is an opinion piece written by Robert Cooper of CPR Insurance Services.

March 2020 will go down as one of the months of our lives where we seemed to witness our worlds being turned upside down.

So too in our own insurance brokerage businesses and how we now have to manage this sudden change.

When social distancing and self-isolating was added to the vernacular, suddenly the principals of insurance brokerage had to deal with anxious staff and a major change to operations, while, at the same time still continuing to look after our clients.

• We have stopped visiting clients, accepting their visits to us as well as insurer visits, but we still have to manage their needs.
• We have had staff come back from overseas holidays, forced to self-isolate from home.
• We have had to ask other staff to work remotely from home if they can.
• Not all our systems allow us to work remotely.
  • Not all staff are provided laptops, but just PCs.
  • None had training in working unsupervised with different technology.
  • Not all staff are set up with the right furniture to work from home.
• Where our staff live may not be the best for online work due to poor internet connections.
• Not all our staff are capable of working remotely – how do we supervise or motivate them?
• Working from home has created other risks for a business owner to deal with such as increased cyber risks and workplace health and safety issues, including mental health issues.
• Some of our brokerages have not grasped the concept of a paperless office but now are forced to.
• Staff have gone from going somewhere to work in a social environment to becoming isolated. This will affect some mentally.
• Then there are the circumstances for our own clients - some cannot pay for cover, this has caused cash flow issues which have now been exacerbated by some, not all insurers seek to demonstrate that they are trying to help by extending credit terms for policyholders.
• Then there are others that just want to cancel cover now and the advice around that, that this is the last thing they should be doing.
• Then there have been the client queries that started about whether they are covered for Coronavirus, which began with travel insurance issues and event cancellation insurance, then through to queries on whether business interruption policies will cover them. now management liability policies are in the limelight.
• We are now communicating with our staff and clients in different ways using technology like Zoom, Skype and Microsoft Teams that we did not worry about previously.

Challenge – insurance policy changes
This is a brand new experience for all of us. To quickly change our expected strategy and work methods is a huge challenge. However, it is an opportunity to demonstrate our value as a broker. We have to quickly update our knowledge of how different insurance products react to this downturn.

Then the insurers are thrown around with their risk analysis and measurements. The ultimate theory of negative and positive correlations such as:

• Less cars on the road means less accidents, being at home more means less burglaries and first line defence of fires, water damage and dealing with maintenance issues as we have more time.
• For our businesses, vacant property increases risks of break ins and vandalism, etc.
• Rent default claims are anticipated to increase despite Government intervention.
   

Therefore, we are going to see visible changes in approaches to risks.

We see one major insurer already pulling out of the landlord insurance market. Why was a simple tweak to the rent default section not simply the case when it was the common sense approach a broker would have expected?

We see travel policies with grey areas based on timing of when a booking was made, and when and how a booking is cancelled fitting in to the policy arranged.

Now we see some lawyers acting like ambulance chasers trying to force the hands of insurers in the policy area of “business interruption” with, “you may have cover”! You probably do not! But then there is no Quarantine Act 1908 that insurers have referred to as it has been replaced by Biosecurity Act 2015 (Cth) - that Act is not a ‘subsequent amendment’ to the Quarantine Act. Will we see lawyers having a go here? Insurers will pull out all stops to defend this course as it is unlikely they will be able to seek reinsurance recoveries if a ruling went against them.

Challenge – staff working remotely
Apart from the insurance industry, thousands of Australians are currently subject to social distancing or self-isolation orders as efforts to slow the spread of the current strain of coronavirus expand. The aim is to “flatten the curve”. Where possible employees across all industries are trying to shift to performing their jobs remotely.

For many workers, including insurance brokers, this shift is possible thanks to technology that is already being used every day as part of our business, such as email, smart phones, and other internet-powered communications. However, not all brokerages are able to or want to allow employees to work from home.

Despite this, many of us are now finding out even more about how to use these modern digital tools. Insurance is an advice-based business built on knowledge and information from various sources. We are receiving much of this by paperless means already (links, webinars, pdfs). It has subtly caused many of us to become more and more paperless anyway. We have worked out how to file so much information electronically and access it whenever we want and from anywhere so long as we have a decent internet connection available.

Keeping our valuable employees
We also have to hang on to our good staff as much as possible. It is not in our interests to retrench anyone. We know how hard it is to find good staff and we have invested heavily into tuning them into qualified experts shaped by our own culture. We already have a skills shortage in our industry. We must keep them in the insurance industry during these difficult times.

We also should support our fellow brokers who need help at this time. We are in this together. Our collective reputations are to be experts in general insurance and to be a trusted adviser to our clients. We have to share our knowledge and support where we can.

Managing remotely is a new challenge
Shifting an entire office to working remotely over the long-term was always a daunting concept for many principals at brokerages. They are used to seeing everyone in the office and think that the only way to manage people is in person. However, many of us were already currently doing much of our own work unsupervised without necessarily having to have face-to-face contact thanks to smart phones, laptops and remote accessible client management systems. Not many insurance brokers work a 9-5 job, with 50-60 hours a week the norm. This is not all done “at the office.”

For insurance brokers today, we have been gradually doing this already. When we have gone to a conference or convention, or a short holiday, we have been working remotely by ourselves. We just have to adapt to our staff also doing this. We have to invest in and introduce some new tools and accept that you can still manage people from a distance.

Even when staff are working from home, employers still have the responsibility to ensure a safe work environment under the Work Health and Safety Act 2011.

Regardless of the type of work you do, if you are an employee and you are working for a company or individual, they still have a duty of care for your health and safety while you are working.

Security and privacy
Issues also to be considered, includes whether employees should use their home computers or should the company buy everyone laptops? Will other people in the household be using the employee’s computer? Therefore, we must have very clear protocols and rules. We do have increased privacy and data protection issues as well as the increased risk of cyberattacks.

Security is vital. You have to make sure when anyone works from home that they are appropriately secured. Remote systems have to have adequate virus software and firewall protection. Basic things like turning off your computer each night apply. As do checking the computer is set up not to pick up public access free WiFi, that no passwords are saved anywhere that anyone could easily find and that they are changed regularly. We must have clear guidelines for our staff.

Principals/managers need to set expectations for how often people should meet and how those meetings will take place. Afterall, we have lost that social connection that came from being in an office together. For this, use tools like Zoom, Skype and Microsoft Teams. These are available at low cost to stay connected. It makes it much easier because you can still run your company just as if everyone was in the office, even though they are working remotely.

The trust factor
Employers cannot closely supervise or “micromanage” their employees as they did before. Employees’ own challenge is to establish their schedules and routines that work for them, especially since they may be at home with spouses and children and may prefer to keep different hours during this time.

Being able to offer the luxury of flexibility is a main attraction to the employee which means letting go of close supervision and creating a new trust between employer and employee.

If you cannot trust your people, then maybe you do not have the right person working for you. If you like your team and you believe you have a good team, you do not need to micromanage them. Afterall, they are adults.

There are ways to make sure that employees are being productive, such as management systems that track employees’ activities and exactly where they have gone on their computers. Your IT consultant can assist with this if you do have concerns, but this is only useful if it is your supplied technology.

It may instead be better if you let them know you appreciate how hard they are working from home, and how they are keeping the brokerage going. Without them you would not be as successful. The important thing is to respect that they are doing the work. They in return should appreciate that you respect and trust them for the work they are doing.

Tips to help brokerages be successful when staff are working from home

• Be realistic in your expectations of employees.
• Be prepared to guide them through their role working from home.
• Assist with the setup of a dedicated Home Office, particularly with health and safety issues and compatible equipment.
• Implement simple activity reports and check these regularly.
• Make sure the best possible data security measures are in place.
• Encourage good open, regular and active communications with fellow staff and clients.
• Avoid micromanaging staff but demonstrate trust and appreciation for the work they are doing.
• Challenge – keeping the client relationship going

It is also nerve-wracking for principal brokers to have to change how they do business and lose that face-to-face interaction with clients, especially with so much uncertainty. It is important to communicate to them that brokers are there for their clients during this time of crisis.

We do not always call our clients and ask them if we can we help. Why not do this?

Ultimately, a broker is wanting to maintain their business. The wonderful thing about the insurance industry is we cannot go away in a time like this. Our clients still need to maintain their insurance, because sometimes, in any disaster, the exposure can be greater. We should be advising our clients not to cancel their policies because we expect them to be back in business soon and why have an event occur outside this pandemic that could jeopardise that?

Brokers can also be useful in their communities
There’s a lot of businesses that need help, and with every problem there’s an opportunity to create something that’s meaningful and better, and that might give you more options to build your business. Offer your help.

One thing this unprecedented time will bring out to clients and others, is how much you really do care about other people in difficult times. You have skills as a broker or business owner that can help many others.

In conclusion
As brokers move through this new normal, they should start considering what will the future bring for them? Should they re-focus in a new direction, such as the flexibility that comes with working remotely? This option may work out well for the company. It may assist in keeping good staff or attracting new staff, particularly those that are looking for better lifestyle options. It can be just a change in mindset. When a challenge like the coronavirus comes along, we need to remain positive and say to ourselves ‘I now have to deal with this. This is real. What are the opportunities this creates? How can I benefit from this in my business?’

If these new challenges result in anything, it will be a positive improvement to the way we do business and how we look after our staff. Keeping our reputations intact, enhancing our relationships  and upgrading our approach to the new technologies and communication systems that could bring about a more modern approach for our industry. Most of all, the satisfaction of helping each other through times of crisis.