Military leaders follow an old aphorism, trenchant and transferable to most walks of life.
It runs like this: no plan survives contact with the enemy. It’s impossible to determine who coined it – Carl von Clausewitz, Sun Tzu, the Duke of Wellington, maybe Dwight D. Eisenhower –even the dead want credit, it seems. We suspect Hammurabi, inventor of modern bureaucracy, is ultimately behind it: he was likely the first expert in the sciences of delay, confusion, obfuscation and obstruction, too.
The coronavirus pandemic is giving stern lessons confirming this near-eternal teaching. Under threat from an invisible enemy, we reject capitulation. Instead, we seek creative solutions to preserve our loved ones, our way of life, and even our own lives. Surrender talks will not be conducted.
In the insurance business, we’ve seen the profession buffeted as hard as any, save the lifesavers in the medical field and essential workers. Customers are demanding information about their policies: how well are they covered, do they need more coverage, and how fast can they get it? Some are concerned about potential cancellation – mainly unfounded, but worrisome in the breach. All need immediate attention from a scattered team that is only just learning each day the skills of the remote workplace. It’s a heady challenge that sometimes leaves one spinning.
Some observers are already searching for the silver lining. Customers, wary of the perceived upselling tendency of insurance agents, might be less suspicious in future days: in a sudden crisis, forearmed is just that, and everyone now knows it. Insurers may learn to discard their arcane language in sales pitches and policy statements, substituting a more cogent, human-friendly language that supports easy decisions and wise choices by customers, particularly those under stress.
Insurers are making many hard decisions today, driven by the existential threat to their firms, great and small. Some major life companies have stopped accepting applications from people in certain age groups: for example, Mutual of Omaha won’t consider new clients aged 70 or above, while Prudential Financial has set the ‘need not apply’ barrier at 80. Others have even suspended opened applications from people in their 60s, customers seen as eminently insurable in pre-pandemic times. These age groups are the most vulnerable to the coronavirus, yet insurers seem willing to take a harsh PR hit in order to insure their solvency.
As the viral danger unfolds, old plans are being rapidly amended or discarded. Some insurers have suspended the sale of extended term life policies, including the appealing 30-year variety. The traditional practice of extending coverage to a client while their application is under review is also falling by the wayside.
State governments have been focusing on the insurance industry since the virus first appeared on our shores. Guidance has come in a steady stream from state insurance regulators, varying in volume and severity. Alabama, Hawaii, Illinois and others have merely ‘recommended’ that insurance companies allow their customers leeway in meeting premium payments, urged a moratorium on late fees and policy cancellation, and generally called for the application of more flexible terms to ensure coverage during the crisis.
Meanwhile, Alaska has flat out prohibited cancellation of insurance policies for failure to meet premium payments. This restriction lasts until June 1, and other states have introduced similar grace periods.
Generally, the states want insurers to treat customers humanely, whatever the bottom-line cost. Even if a firm isn’t particularly humane – in which case, we wonder why they’re even in this business – they should at least be wise. The crisis will end one day, and people will undoubtedly remember which firms extended a helping hand, and which did not.
The federal government has been active, too, arranging broad-based voluntary agreements from insurers to waive copays on COVID-19 testing. It bears noting that once a vaccine is developed, it will almost certainly be defined as an Essential Health Benefit, the cost of which all group plans must fully cover. We expect further guidelines from Washington to likely require rapid, full compliance, voluntary or otherwise.
Even the most reasonable insurance industry requirements are becoming casualties of the pandemic. Take the medical exam: annoying to customers, perhaps even dreaded, but no one seriously questions its need. The insurers, fully in line with their nervous customers, must understand what they’re getting into.
Nowadays, gathering in numbers is dangerous and hospitals can’t be burdened by relative trivialities. Normally, at-home testing – the small matters like blood sampling, weight taking, blood pressure and so on – is welcomed, but not today. Who wants a stranger around, particularly one who’s been traveling from house to house? Increasingly, insurers are simply waiving the traditional medical exam.
This change – we might even call it a sea change, an epic shift – has been creeping up for a while. Online insurance providers already had coverage options available that eschewed the in-person health exam. By asking the right questions and gaining access to medical records and other personal data, it was possible to underwrite policies without the customer ever meeting an agent, let alone a needle-waver, face to face. This approach, we think, once seen as daring, could become the new bedrock, even among the most staid traditionalists in the insurance industry.
This would be good news for customers and the silver linings could extend even further. Despite many roadblocks, insurers are open for business and ready to serve clients, including many first timers. The formerly suspect ‘upsellers’ have suddenly become the casters of lifelines. We hope the lessons of the coronavirus crisis sink in with insurers and customers alike, perhaps with Clausewitz’s warning – we’ll grant him the credit – as our guide.