Crises come and go, and each leaves its own unique imprint on the consciousness and the resilience of those whom it impacts. For many, particularly within the insurance sector, the COVID-19 pandemic has been a crisis unlike any that they have seen before, as the reach and severity of its influence continues to evolve several months after its initial impact.
Paul Smith (pictured), senior risk management consultant at Travelers, has seen the insurance sector through several calamities, from the economic downturn of the late 80s/early 90s to the financial crisis of 07/08. Those two downturns, he said, were very much economically driven, but COVID-19 is something different. While there will be significant economic fallout from the pandemic and the pattern of this impact is still being evaluated, this crisis differs from those economic events with its necessitation of both national and international responses to this global threat.
During the pandemic, he said, businesses and individuals have had to hunker down and act in a concerted and organised way to which they are simply not used. The fallout from COVID-19 will not only be economic but will also impact how people work, and this will likely lead to the development of new risks.
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Smith’s role at Travelers combines his experience of claims management with the application of risk principles to manage the risks involved in legal services delivery, and he has seen first-hand the impact that COVID-19 is having, and will be likely to have, on this space. He highlighted that it is still too early to form a clear view on what the impact of the pandemic will be in terms of changing working practices.
“What tends to happen is that claims feed through about 12 to 18 months after a downturn,” he said. “So, in terms of whether the economic impact will generate claims, that is something that will [become clearer in time]. If previous history is anything to go by then I think we might see an uptick in corporate or company commercial claims. You do deals when times are good, and you litigate when times are bad.”
In times of economic hardship, contracts tend to be reviewed in greater detail, Smith noted, and questions about to what extent more protection could have been offered and how contracts are drafted tend to arise.
Another area which may become an area for concern is that of systems and process failures due to remote working. Many people are working on their own with limited support, he said, and effective communication is a challenge for many companies at this time. Smith lauded the Travelers team for the support it has offered its staff and emphasised that enlightened organisations will recognise the challenges that individuals may be facing at this time and go the extra mile to make sure that their people can work effectively.
“We are looking at people, product and process issues as well as risk maturity, and the extent to which risk management is embedded in an organisation,” he said. “I think one of the challenges is the maintenance of some form of corporate or team spirit as well as maintaining discipline when working outside of the office.
“Further challenges include ensuring the continuation of confidentiality procedures and the maintenance of safe networks. At Travelers we have a VPN which ensures that, irrespective of where you are working from, you can still conduct business securely; but this may be more challenging for smaller organisations which simply do not have this infrastructure.”
When these challenges are not adequately addressed, Smith said, issues may arise with deadlines getting missed, or information becoming misplaced, and work may not be prepared with the same level of care. The delivery of service can fall apart if every precaution is not taken to maintain discipline within organisations, and the increased challenge of generating or delivering a service safely when employees are physically distanced cannot be ignored.
Travelers has sought to offer guidance to its insureds through this difficult time through a range of supports, key to which has been the provision of information regarding how businesses and individuals can offset the challenges they face. There is, Smith noted, an enormous amount of material available to people, with governments, brokers and law firms all producing a vast range of content.
For his part, Smith and his colleague Charles Atwell, look to generating content based on the claims data that they have available, using this as a basis through which they can talk to firms about the real-world challenges they face. This is done with a risk-focused approach which examines the sources of risk within organisations – from people, products, service delivery, and underlying systems, and highlights the need for risk maturity.
“What we try to do is tailor our comments by asking ‘What are the people issues here? What are the challenges of delivering your service? What are the underlying systems that you need to keep up to speed?’ Claim data is effective at providing a steer to these conversations so we try to create and put out content that is focused, and which people can absorb quickly,” he said. “And hopefully, this will help keep people risk aware because there’s a lot to be aware of, and a lot of information out there.”
Find out more about the range of legal sector insurance products offered by Travelers by visiting their website.
